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San Diego Housing market may lower House Prices after a landmark Legal Settlement

San Diego Housing market may lower House Prices after a landmark Legal Settlement

San Diego, CA: After a historic settlement involving a national real estate agent association, residents in San Diego County may see a decrease in the cost to sell their residences.

In a settlement for $418 million, the National Association of Realtors has resolved multiple cases that claimed the group colluded to maintain high agent commissions. Typical commission rates range from 5% to 6%, and the association will eliminate the regulations that lead to these rates as part of the agreement.

In a statement released on March 15, the association confirmed the impending settlement while denying any misconduct.

Housing prices could fall nationally as a result of the settlement, according to industry experts, as commissions constitute a major component of home sales prices. It is anticipated to have a significant impact in pricey markets such as San Diego.

The real estate professor at the University of San Diego, Norm Miller, has stated that if commissions were lowered to three to four percent, both buyers and sellers would benefit financially. While a drop in the median home price is unlikely anytime soon, fewer fees could encourage more sellers to list their properties, which would increase supply and decrease competition.

In January, the average price of a home in San Diego County was $802,500. That works out to over $48,000 if the seller paid 6% in real estate commissions. That amounts to almost $32,000 if the commissions were 4%.

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People who work in real estate are already facing a lot of challenges, and now there’s talk of a commission adjustment. In January, the state’s Employment Development Department reported that there were approximately 23,000 real estate brokers in San Diego County. According to CoreLogic, that month had the joint-lowest number of house sales in the county’s history, with only 1,678 transactions.

Listing a home on an MLS requires consumers to pay a brokerage fee, which ranges from 5% to 6% of the sales price, depending on their location. Half of the commission goes to the seller’s agency after the sale, and half goes to the buyer’s agent.

When agents aren’t guaranteed a certain commission, they may cut their prices to attract clients. A common complaint leveled against buyers’ agents was that they would push their customers toward more expensive properties in order to maximize their compensation. As part of the agreement, internet databases must remove any fields that show broker pay.

Buyers and sellers in San Diego County should be patient because they will not see a change right away. First things first: the arrangement needs to be approved in federal court by the National Association of Realtors. It may be some time before the approval is announced and the industry learns how it will affect fees and overall performance.

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In addition to the problems caused by poor sales figures, there is conjecture that many real estate agents may quit the field if the likelihood of a set commission is reduced.

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