You may have seen the news stories about the recent proposed settlement from the National Association of REALTORS® (NAR). The media coverage has in many cases been inaccurate and I want to provide you with a basic understanding of what this proposal means, as well as address the misinformation that has been circulating in the media.
WHAT IS THE NAR SETTLEMENT ALL ABOUT?
On Friday, March 15, 2024, The National Association of REALTORS® announced a proposed lawsuit settlement that included two changes to business practices and a financial settlement. The new proposed changes scheduled for mid-July include the removal of the offer of Buyer Agent Compensation in NAR-owned Multiple Listing Services (MLSs) and an added requirement for Buyer Agents using an MLS to have a Buyer Representation Agreement in place that transparently addresses compensation.
DID OR DOES EVERYONE CHARGE 6%?
No. This allegation is wildly inaccurate. Different marketplaces see different ranges of compensation. From town to town, company to company, and listing to listing, there has always been variation in our marketplaces. The industry does not – and cannot – collude or collaborate on commission rates. Commissions are derived from the brokerage. We discuss our services, market share and experience; not what our competitors are asking for.
WHAT IF I HAVE AN EXISTING CONTRACT?
Nothing is likely to change before the July target date. However, we are awaiting the final details of the settlement as approved by the court. At this time, our understanding is that when the July target date arrives, the only change to an existing contract will be that no offer of Buyer Compensation from the Listing Agent or Seller can be published in the MLS; agents working with Buyers will need to have written contracts to represent them.
HOW DOES THIS AFFECT SELLERS?
After mid-July, any offer from the seller of compensation for the buyer’s agent will no longer be published on the MLS. Sellers are not required to cover the cost of the Buyer’s representation, but there can be benefits to doing so that outweigh the cost, which is why this model has successfully lasted for decades.
HOW DOES THIS AFFECT BUYERS AND WHAT ARE THE RISKS OF A BUYER NOT HAVING A REPRESENTATIVE?
After mid-July, brokerages that participate in the MLS will be required to have Buyer Representation Agreements with their buyers. This clarifies the duties and compensation paid to the buyer’s agent. Buyer’s agents can provide many advantages for home buyers. The risks of not having a buyer representative include:
- Not having professional guidance to help review disclosures and inspection reports, identifying potential issues
- Not being informed and educated about the market with comprehensive market analysis for offer pricing
- Not being able to thoroughly evaluate the pros and cons of a property
- Not having expert advice for a well-prepared, competitive offer, and negotiation strategies to compete in a low-inventory “seller’s market”
- Not learning about off-market and coming soon listings
- Not getting a house
A home represents an important investment — one that continues to be at the heart of financial stability and investment strategies.
I have always provided my clients with an experience they can have confidence in as they navigate one of life’s most important and complex transactions. I will continue to communicate as we understand more about the settlement and the ongoing industry dynamics. Please don’t hesitate to reach out to me with questions.
