How new realtor rules are keeping buyers on the sidelines

Redfin chief economist Daryl Fairweather joins Wealth! to break down the new rules about buyer-broker agreements from the National Association of Realtors.

"It used to be that if you were a buyer, you didn't really have to pay a lot of attention to how your agent is paid. The seller would pay the buyer's agent. But now, buyers are paying the buyer's agent directly, and they need to set a contract at that first tour, or at least sign something that outlines how their arrangement is going to go," Fairweather tells Yahoo Finance.

She explains that this new rule is keeping some homebuyers on the sidelines as they are intimidated by the agreement. However, as it becomes more normalized, it won't become "that big of an impedance."

As low inventory has caused the housing market's affordability crisis, Fairweather notes, "It's going to take years and years of building new homes to get to a place where we have sustainable affordability."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video Transcript

But there's some significant new rules from the National Association of Realtors as well that could impact that relationship or the percentage payouts as well.

What do new home buyers and even people who have bought a home before but had a different experience under the previous pretences need to know about these changes?

Yes, there are new rules.

It used to be that if you were a buyer, you didn't really have to, you know, pay a lot of attention to how your agent is paid.

The seller would pay the buyer's agent, but now buyers are paying the buyer's agent directly, and they need to set a contract at that first tour, or at least sign something that you know outlines how their arrangement is going to go.

And that's one thing that's holding back.

The housing market right now is people are just intimidated by that agreement and this new procedure.

But I think over time, as you know, it becomes more normalised.

People learn from other people's experience, it will start to feel more natural, and it won't be that big of a impedance.

When we think about the amount of supply that still needs to come on the market to meet demand.

I mean ballpark.

What are we talking about right now In terms of the number of new homes that also need to be built out as well?

It's gonna take years and years of building new homes to get to a place where we have sustainable affordability.

I know that, uh, Harris has talked about building 3 million homes over her term, and those are the kinds of numbers that we actually need to get to, and it's gonna require a lot of federal investment if it's just the private market, you know, I think we will see more new construction next year, but they're motivated by higher prices.

And so I don't think it's gonna be enough to make prices stabilise.

The new construction will help.

A lot of homeowners are locked in.

They're not selling.

So more Homebuyers will go to new construction.

And that will be good for the long term health of the housing market.

That there are these new units coming online.

All you tell me there's some affordability up in Wisconsin, so I might have to break it out the park.

I don't know.

Uh, I still have to be an Eagles fan up there in Packer land, though that's gonna be difficult.

Thanks so much, Dale.

Thank you.