That’s at the heart of the industry debate over how much of an impact changes set to take effect Aug. 17 as a result of billions of dollars in lawsuit settlements will have on the housing market. At its core is how agents get paid — and who pays them.

“I think there will be confusion for a few more years until something resembling the status quo returns,” said JM Reed, an agent with Gurney Becker & Bourne.

Until now, sellers have typically paid all of the commissions associated with selling a home, historically between 5% and 7% of the sale price. Those commissions are then split between the seller’s agent and the agent working with the buyer, and then further divided between the agents and their brokerage firms.

But that changes on Saturday, when the standard arrangement expires and sellers will no longer have to automatically pay broker commissions on both sides of the deal.

This change means that buyers will now have to negotiate and sign separate contracts with an estate agent before they can view a home.

And the amount of commission a buyer’s agent can receive from a seller is no longer predetermined and published in the regional multiple-listing service that shows all the houses for sale. It must be agreed upon separately.

And the money involved is substantial. For a typical home in Western New York, where the average sales price is about $250,000, that will determine whose pockets will yield about $12,000 to $17,000 in commissions. For a $400,000 home, that’s $20,000 to $28,000 in commissions — the equivalent of buying a new car.

“It’s going to hurt the consumer, on both sides, but it’s going to hurt the buyers the most,” said Howard Hanna agent Kevin Cullen. “Buyers are not going to be happy. They don’t have the money to pay agents. It’s going to be harder for them to buy a house.”

To pay or not to payThe big decision in the future lies with the sellers.

Do they continue to pay the buyer’s agent commissions? Or do they pass those costs on to the buyer, even if the result is that those thousands of dollars in extra fees could result in them bidding a lower price for their home?

“Everything is negotiable. It’s always been that way,” said John Leonardi, CEO of the Buffalo Niagara Association of Realtors, the local trade association for realtors and the operator of the regional MLS. “So now the seller has a better chance of not compensating the buyer’s agent.”

However, some local agents argue that it is still in the best interest of sellers to continue paying the buyer’s commission to ensure that their homes get as much exposure as possible when they come on the market.

Otherwise, they say, purchasing agents who are not paid by their own clients may have no incentive to take their buyers to view a particular home without knowing whether or how they will be paid.

“Smart sellers will still participate because it gives them a larger pool of agents to sell their home and the opportunity to make more money,” said Jerry Thompson, a broker with Century 21 Northeast and former owner of Century 21 Gold Standard in East Aurora.

Agents say the current system is also easier on buyers, who are often faced with higher-than-expected house prices and may not be able to afford to pay their own commission on top of that. That could have a dampening effect on house prices.

“The seller has all the money, so this is just a way to even things out,” said Stephanie Morgan, broker-owner at JRS Morgan Realty, also in East Aurora. “I haven’t had a seller who wasn’t willing to pay the buyer’s commission to get more offers.”

Leonardi, Morgan and others said the changes could hurt lower-income earners and first-home buyers the most. They are even less likely to have extra cash at their disposal and often rely on government-backed mortgages with strict regulations.

“Those are the people who don’t have the means to pay,” Morgan added. “The people who are having a hard time getting into the market right now are going to be at a disadvantage.”

And it means the relationship between a buyer and an agent will be more formal. Agents will require people who want to buy a house to sign an offset agreement before they show them a house. That new agreement will be eight pages. The current exclusivity agreement is one page.

“The more complicated our work gets, do you really think it’s going to get cheaper?” Thompson asked. “It’s going to be a big mess for three to six months while the industry figures out who they are and what they’re going to be.”

At issue is the concept of “public partnership” between real estate agents, which developed when multiple-listing services were created decades ago to share listings and create a better network to support home sales. Eventually, a system of shared commissions was created, where commissions were paid by sellers out of the proceeds of the home sale, but shared between both parties.

That worked for decades until homeowners in Missouri, Illinois and Massachusetts filed a series of class-action lawsuits against the National Association of Realtors and major national real estate firms — Keller Williams, Re/Max, Anywhere Real Estate, which owns Century 21 and Coldwell Banker, and HomeServices of America, part of Berkshire Hathaway — that challenged the way they do business. But class action lawsuits accused the industry of anticompetitive behavior and antitrust violations by allegedly conspiring to inflate commissions and home prices through the cooperative compensation rulewhich essentially required sellers to pay commissions for both parties. The U.S. Department of Justice later joined in with its own lawsuit and settlement, which it then unsuccessfully attempted to withdraw from.

Anywhere and Re/MAX settled the cases before trial for $83.5 million and $55 million, respectively, while the others went to trial — and lost. A jury has ordered NAR and the real estate agents to pay $1.78 billion in damages to home sellerswith the potential for those damages to reach $5.36 billion with triple damages. Additional lawsuits have been filed in other states, including against local Boards of Realtors and their multiple-listing services. Ultimately, NAR and the brokers agreed to a settlement of the lawsuits, with NAR paying $418 million and several brokers paying hundreds of millions of dollars more. But more importantly, NAR agreed to change its practices around disclosure and choice.

Across the country, some have called the settlement far-reaching and transformative, saying it will change the way brokers and their clients do business. They predict it will create more competition and lower commissions, saving consumers money.

In Western New York, however, officers aren’t so sure.

They say that in New York, and particularly in the Buffalo Niagara region, the commissions have always been made public and negotiable — unlike in other parts of the country, where litigation arose.

“We’ve always been transparent with buyers and sellers,” Neil Gerrity, general manager of WNY Metro Roberts Realty. “They need to know where it’s coming from and how it’s being paid for.”

They say there is already a lot of variation in commissions between different agencies and agents. And commissions have already decreased over the years, especially as house prices have increased.

“For as long as I can remember, we’ve had price competition in Western New York,” Thompson said.

Realtors and others say they don’t really expect home prices to change because the perceived value of a home is not affected, nor is the supply-demand mismatch that determines price.

“I don’t think it’s going to bring prices down,” Gerrity said. “I don’t think it’s going to create more inventory. It’s just not going to happen.”

The basic concept of hiring a real estate agent when purchasing a home may also not change.

“Buyers have always been represented. I don’t think that’s going to change,” Leonardi said. “If we’re talking about someone buying their biggest asset, why wouldn’t you want to be represented?”

But the details will be different. Buyers can still walk into an open house without representation. But if they want to go to homes privately, they must have an agreement with a real estate agent to represent them before they go on a home tour.

And they’ll have to negotiate the terms of that contract, including the scope of work and how much they’ll get paid. For example, they might be hired for the purposes of a single property, or for a specific period of time. And the commission might still be a percentage of the sale price, or it might be a specific dollar amount.

“You can always hire someone cheaper,” Thompson said. “You can always get less service for your money.”

But now every purchasing agent must justify why he or she should be hired and demonstrate his or her value to the consumer.

“They will have to demonstrate that they can help a buyer find a home,” Leonardi said. That, in turn, could push some agents who sell just a few homes out of business. Agents split their commissions with the brokerages they work for, so they don’t keep everything they make on a sale. And the vast majority of agents don’t do much business, Thompson said.

According to Thompson, the average annual income in the industry is under $50,000. Additionally, agents typically work as independent contractors for brokerage firms, requiring them to purchase their own health insurance.

“They don’t get any benefits,” he said. “They’re entrepreneurs. They’re struggling to make ends meet.” He said 80 percent of agents fail in their first five years in the business. “It’s going to weed out agents. People who can’t prove their worth are going to be out of business,” Thompson said. “None of us work for free,” Cullen said. “I’m just a guy who walks down the street every day. We get paid for what we do. The monopoly has nothing to do with me. I wish I was making the money that brokerages make.”