"Saving on Real Estate Agent Fees: Insights and Strategies for Homebuyers and Sellers"
Economists from the Richmond Federal Reserve Bank propose a new "à la carte" compensation model for real estate agents in the U.S. that could potentially slash roughly $30 billion from buyer-agent commissions annually. They argue that the current U.S. model for real estate commissions is "puzzling" and propose a shift to a cost-based commission model to increase homebuyers' welfare. The proposed model would require both homebuyers and sellers to pay their own agents separately and independently of the final home price, aiming to prevent steering and overuse of agent services. Despite potential negative impacts on the real estate industry, the economists believe their proposed model would be beneficial for the economy as a whole.