A surprise influx of Twin Cities home listings as agent commission uncertainty looms

House listings are increasing at breakneck speed this spring in the Twin Cities, but that’s doing little to satisfy buyers in many parts of the metro.

Last month, 4,667 houses, condos and townhouses hit the market, a 34.5% increase compared with last year at the same time, according to a monthly report from the Minneapolis Area Realtors. That was the fourth-consecutive monthly increase in listings, providing a bit of relief for house-starved buyers who wasted no time snapping up the increased inventory. Buyers signed 3,308 purchase agreements in February, 13% more than last year, according to the report.

This rebound comes in the midst of unprecedented uncertainty for Twin Cities real estate agents who are struggling to understand how a blockbuster real estate commission settlement the National Association of Realtors made last week will impact their income as well as the future of the industry.

Under the current practice, sellers pay a 5% to 6% sales commission split between the listing agent and the buyer’s agent. The settlement, which needs judge approval before implementation this summer, bars agents from advertising their compensation in listing materials and would essentially force buyers to pay their own agents, if they hire one. The upshot, critics of current practices say, is it could make buying and selling a home cost less at a time when a prolonged shortage of listings and higher mortgage rates have pushed housing costs to all-time highs.

Last month, the median price of all closings increased 4.5% to $357,700, a February record. If the sellers of a house at that price were paying today’s customary 6% commission, they’d share about $21,480 of their equity with the listing agent and the buyer’s agent.

“Immediately, I think [the settlement] creates a situation where the consumer will see immediate relief,” said Greg Lawrence, broker/owner of Golden Valley-based HomeAvenue, a flat-fee brokerage.

Competition, prices still high

For now, however, there aren’t many breaks for buyers. Even now with a jump in listings, buyers are still outpacing sellers in many parts of the metro with houses selling almost as soon as they’re listed and often for more than the asking price.

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