The already exorbitant cost of purchasing a new home in San Francisco may get even higher for first-time buyers thanks to new commission rules due to go into effect this summer.
Last week, a $418 million settlement agreement by the National Association of Realtors radically reshaped a key part of how homes will trade hands in the U.S. Soon, sellers will no longer have to pay commission fees to both buying and listing real estate agents involved in brokering the deal.
But what’s good for sellers may turn out to be bad for buyers, who will now possibly have to account for an expense they haven’t had to pay for in the past.
The powerful association, which sets guidelines for most home sales in the country, agreed to eliminate its rules on commissions, changing a decadeslong system that required homesellers to pay both buyer and seller commission fees. Pending court approval of the settlement, the new policy is set to take effect as early as July.
Most experts agree that the settlement will be an immediate boon for homesellers. Even though broker commissions are technically negotiable, the norm has generally been 5% to 6% of the sale price. If a house is sold for $1.57 million today—the median price for a single-family home in San Francisco—the seller would have to pay around $95,000 in fees split between the buying and selling agents. With the new rules, half of that bill could be wiped away.
“Sellers win off the bat because they no longer have to pay for something they weren’t really responsible for,” said Avil Soleiman, a Bay Area residential real estate agent for Compass. “But in real estate, everything is negotiable, and nothing is firm until it’s on paper.”
Irrespective of new rules, buyers and sellers might still offer each other concessions to help move a sale along, said Soleiman. For example, in a slower market, sellers could offer to pay for some or all of their counterparts’ agent commissions, even if they’re no longer obligated to do so.
That means home sales negotiations probably won’t shift dramatically overnight because demand still greatly outstrips supply in the region and consumers have more online research tools than ever, according to Danielle Lazier, a San Francisco real estate broker.
A storied Bay Area estate that has failed to sell twice already is once again up for grabs.
Green Gables, a massive 74-acre compound at 329 Albion Ave. in Woodside, is for sale for $110 million. The historic property has been in the same family, the Fleishhackers, for five generations. It includes seven homes and a 100-yard Roman pool (the family had a thing for huge pools) flanked by dramatic stone arches and sprawling gardens.
The seven buildings include a total of 34 bedrooms and 26 bathrooms, with a main house spanning 10,000 square feet. There are also three additional swimming pools, a tennis court and even a reservoir that’s exclusively for the property.
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The Peninsula compound first hit the market in 2021 for $135 million and went on sale again in 2022 for $125 million, but never nabbed a buyer.
Aside from the big price cut, another change from previous years is that a reality TV star has joined the marketing team. Mauricio Umansky, perhaps best known for appearing on Bravo’s “Real Housewives of Beverly Hills” and being Kyle Richards’ husband (though the couple is reportedly separated), is also the founder and CEO of The Agency, a global real estate group. The company has been expanding in Northern California and now has several offices in the region.
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“Whether it be a visionary tech magnate seeking a secluded retreat, an entrepreneur envisioning the birthplace of the next great think tank, or a forward-thinking family aspiring to create a timeless compound for future generations, Green Gables offers endless possibilities for the next buyer,” Umansky said in a statement emailed to SFGATE.
Marketing materials also emphasize redevelopment opportunities and even include renderings of potential additions like equestrian amenities, other sports facilities and another residence.
The celebrated estate has a serious architectural pedigree. Renowned architects Charles Sumner Greene and Henry Mather Greene, known for their work during the early 20th century Arts and Crafts movement, designed the property for San Francisco businessman Mortimer Fleishhacker as a summer escape. In 1933, William Wurster, one of California’s prominent modernist architects, designed a six-bedroom home that was added to the property. Celebrated landscape architect Thomas Church designed a wooden cabana and pool house.
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We’ll see if anyone bites this time.