New York Real Estate Agents Face Uncertain Future as Lawsuits … – Off Plan Property Exchange

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Real estate agents in Manhattan are finding themselves confronted with another significant obstacle as lawsuits emerge, challenging commission structures. With an already struggling market, characterized by limited inventory and high mortgage rates that are deterring potential buyers, agents now have to navigate an uncertain future.

One recent case in New York adds to the growing concerns, following a bombshell jury finding in Missouri. These legal battles surrounding sales commissions and the responsibility for payment are causing agents to feel a sense of unease and ambiguity about how to react. The Real Estate Board of New York has attempted to address the issue by modifying its policy. Starting next year, commissions for buyer’s agents will need to come directly from sellers.


Buy/sell, rent/lease residential &
commercials real estate properties.

This change has left agents like Vickey Barron, who works with Compass Inc., faced with the challenge of adapting to the new policy. Compass is proactively hosting workshops to provide agents with clarity on the revised rules, and Barron notes that nearly every agent she knows has signed up.

The lawsuits are aimed at challenging the current commission structures, both in Missouri and New York. The plaintiff in the New York case, Monty March, alleges that the seller paying the fee for the buyer’s broker artificially inflates residential real estate broker commissions. The Real Estate Board of New York is pushing back against the lawsuit, asserting the accuracy and compliance of their rules.

These legal challenges come at a time when the market is already experiencing a downturn. High mortgage rates above 7% have led to a slowdown in sales, with Manhattan home sales down by around 23% in the third quarter compared to the previous year. Affordability concerns and growing awareness of high brokerage commissions have fueled sellers’ suspicions about the current model.

Despite the uncertainty and potential hurdles, experts believe that agents will adapt to the changing landscape. The transition may be challenging initially, but as agents adjust their approach and communicate these changes to buyers, the industry will find new ways to structure payments and redefine its practices.

FAQs:

Q: What are the main challenges facing real estate agents in Manhattan?
A: Real estate agents in Manhattan are navigating a difficult market characterized by limited inventory, high mortgage rates, and now, lawsuits challenging commission structures.

Q: What changes have been made to commission policies in New York?
A: Starting next year, commissions for buyer’s agents in Manhattan must come directly from sellers, as per the revised policy of the Real Estate Board of New York.

Q: Why are sellers growing suspicious of the current model?
A: Affordability concerns and a growing awareness of high brokerage commissions compared to other countries have led sellers to question why they are paying higher commission rates.

Q: How do experts believe the industry will adapt to these changes?
A: Experts believe that although the transition may be rocky initially, agents will adjust their approach and find new ways to structure payments, ultimately redefining industry practices.

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