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House hunters fear Realtor settlement could make homebuying harder

Jeff Collins, The Orange County Register on

Published in Business News

Erin Pan, 36, of Cypress, California, believes buyer-broker contracts could increase transparency, spelling out the commission rate and responsibilities of both sides.

But as a homeowner shopping for a bigger house, Pan worries about speculation the settlement could lower house prices.

“For me, I want to sell my house at the highest price,” Pan, who works in corporate finance, said while touring homes with her husband, Tim Wang.

Steven To, 60, of Walnut said he thinks the settlement could be good for buyers and sellers if commissions do shrink.

Fermin Diaz, 44, of Norwalk said he likes the idea of having a buyer-broker agreement when he buys his next home.

“It has its good and its bad,” Diaz said. “The good is you can negotiate the price. The bad is if they have a minimum, and they go up from that.”

After five years of renting, Morgan and Sam Hedrick finally bought their first home in Long Beach, California, in February. But Morgan worries future buyers like themselves will struggle to buy a home if they have to pay commissions.

“To have to pay 3% on top of a home that you’re already shelling out close to $900,000 on, you know, it’s a lot,” she said. “It’s going to be up to us as buyers to make sure that we can take out that extra percentage to pay our Realtors to find us a home.”

The idea that some buyers will go directly to listing agents “is a little worrisome,” she added.

“We’re making one of the biggest purchases of our life. And to put that into somebody we’ve never met before, we don’t really know if they have our best interest at heart,” she said.

 

Falese, the Huntington Beach real estate investor, is worried about the buyer contract requirement.

She once signed a contract with an agent to find a rental house in Long Beach. But, she said, “the contract was crazy because it covered all of California.

“I ended up buying two properties in Huntington Beach. So, if I would not have gotten out of that contract in Long Beach, I would have had to pay the agent in Long Beach who did nothing for me in Huntington Beach,” she said.

Does she think the settlement will be bad for buyers?

“How can it not be?” she asked.

When she bought her first house, she emptied her coin jar to help pay her closing costs.

At today’s prices, buyers already are paying a premium, she said.

Paying the buyer’s commission “just adds more burden to the buyers,” Falese said. “It’s a struggle for young people that are trying to get their very first home. I can’t even imagine how kids are making it work these days.”


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