NAR Settlement ➡️ What Really Happened
So, you’ve probably caught wind of some changes happening in the real estate industry as of late, and you may have even possibly run into that nasty “lawsuit” word being tossed around. Here’s the scoop…
Back in October of 2023, a jury found that the National Association of Realtors and a handful of brokerages were guilty of anti-trust violations surrounding agent compensation. Fun fact – most jurors of which had never bought or sold a property. The suit was settled by the NAR and the brokerages back in March, then subsequently misinterpreted and misreported on for the next five months, and now here we are. So, in an effort to make sense of all the noise and bring some clarity to the topic, we thought that it would be helpful to dilute the hours and hours of training that we’re spent into a neat, compact package of info. Spoiler alert, this will be anti-climatic.
The lawsuit has actually been in process since 2019, but with Taylor Swift in our lives, it’s hard breaking into the news cycle these days.
As a part of the settlement, a few other rules were implemented into our day to day processes, but in reality, nothing much has changed. There was never a commission % mandate in the industry, only more and less commonly utilized solutions, so a lot of the post-settlement reporting that “prices will go down,” “prices will go up,” “consumers will be adversely affected,” “consumers will be positively affected,” or “agents will become extinct,” is (in my opinion) sensationalized for effect. It’s also bafflingly conflicting.
One of the biggest misconceptions seems to be revolving around the assumption that buyers will now be on the hook for their agent’s entire compensation. While that could be the case in some situations—as it already has been for some time—if home buyers were going to incur new, burdensome costs in order to utilize the services of a professional, supply and demand will drive prices down to compensate for the amount that buyers would have to pay for representation. Sellers walk away with the same amount, and buyers pay the same amount, albeit with a larger out of pocket requirement. It’s a lot of expended energy just to end up in the same place, so for that reason we’re not predicting much change in home prices going forward.
Here’s what you need to know:
Buyers:
– As a part of the settlement, home buyers will now be required to sign a representation agreement with an agent before touring any homes.
– All agent compensation will be outlined in your representation agreement, including any expenses that you may incur. Your agent’s commission can still be negotiated to be paid by the seller as a part of the contract on your new home
Sellers:
– Agent compensations are no longer visible within any MLS platform, and any advertisement of compensation to buyer’s agents must be communicated through other avenues.
In summary, commissions are (still) negotiable. You also (still) get what you pay for. Talk to your friendly neighborhood real estate agent (ahem, us 👋) to discuss the pros and cons of all your options!
Cheers,
Jeff Probst
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