Has the NAR Settlement Upended the Industry?
I have been seeing a lot of dramatic headlines since Friday about changes happening in the real estate industry. I thought it would be helpful if I shared my perspective since I’m getting questions from clients and friends.
Background: It’s a bit complicated, but the basis of the National Association of Realtors (NAR) lawsuit boiled down to NAR's cooperative commission sharing rule. To list a for-sale property on the multiple listing service (MLS), the seller was supposed to offer a cooperative commission on MLS to the agent who ultimately brings in the winning buyer. Historically, this has resulted in a 5% to 6% commission, with half going to the seller’s agent and half to the buyer’s. The buyer didn't pay their agent’s fee directly. Rather, the seller paid a 5% to 6% commission to the listing agent, and the listing agent cooperatively shared it with the buyer's agent.
If the proposed settlement gets approved by the DOJ and the FTC, here is what will change starting in July 2024:
- No Commission Listed on MLS: A cooperative commission will no longer be listed on MLS. Now, the seller/listing agent will need to disclose what commission the seller is offering outside of MLS. If the seller offers none (which I think will happen on a rare occasion), the buyer will pay the agent's fee. Please know, we are already coming up with innovative ways to keep upfront costs down for buyers. Don't worry!
- Mandatory Buyer Representation & Broker Compensation Agreements: While I've always trusted my clients, now I'll have to ask you to sign a buyer representation agreement before touring homes. This new requirement is mandated as part the NAR settlement. If you are a current buyer, I'll go over it in detail with you before July.
While there will be an adjustment period over the next year or so, I do not believe compensation will dramatically change, nor do I think home prices will drop.
As I continue to monitor new developments, my job remains the same. I will continue to help you buy or sell a home to the best of my ability and provide exceptional customer service throughout the process.
If you have any questions or thoughts about these changes, please feel free to call me. It’s an interesting time in the real estate industry!
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