Inside the NAR Settlement and What it Means for You!

I assume most of you have heard about the recent NAR settlement. Many news sources have made a considerable deal about it over the past couple of weeks. In my opinion, the news sources blew the implications way out of the water and did it to get more clickbait, which is ultimately their primary goal. If you have not heard all the fuss, the NAR recently agreed to pay a 418-million-dollar settlement. The main accusation in these lawsuits was that several large real estate brokerages were not transparent enough in stating that the seller was paying the buyer’s agent commission. Below, I want to touch on the impacts of this settlement and the changes that will occur in the future.

1.     Commissions no longer listed on the MLS: As of the summer, listing agents will no longer publish the commission provided for that home on the listing. This change was because critics argued that buyer’s agents could steer their buyers to the home that offered the most commission. For example, if a home provided more than 3%, they would push the buyer there rather than what they genuinely think is best for their client.

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Really, the seller was not paying the buyer’s agent, but the listing agent was splitting his commission the agent who brought the buyer to help get the home sold faster.

2.     Buyers must enter into an agreement: In the past, no agreement was required to be signed between the buyer and the buyer’s agent. That will change come summertime. Buyers must enter a deal with their agent where their payment and services are explicitly stated. Time will tell how these will play out, but I would imagine the contract saying if the listing agent is not providing me “x” commission it will come out of the buyer’s pocket.

I think agents who want this as their career and want to be successful will have no issue pushing through. Low-tier agents who cannot negotiate for themselves or their clients might run into problems. This is not a big deal because not much is changing in the market as people think. Buyers have always been able to buy a home without an agent, and sellers have always been able to sell their homes without an agent. In addition, the sellers have always offered the full commission to the listing agent. The listing agent just shared the commission with the buyer’s agent as an incentive to get your home sold faster. Not to mention, the commission has always been negotiable; if the listing agent did not clarify that with the seller, then shame on them. While the market set a rate, plenty of agents sold homes for 1%, 2%, and even fixed rates like $1,000. One thing that will remain the same is the correlation between higher commissions and better service. If you pay a higher commission, you will get a more premium service than paying a lower commission. Essentially, the commission is the marketing budget for your home. The higher the commission, the more and higher quality marketing you will get, resulting in a quicker and higher priced home sale. It is just impossible for agents charging a fixed fee of $1000 to do their job well and still make money on servicing you as a client.

The long-term effects this ruling will have on the market have yet to be determined, but I know there will be more transparency, which is always a good thing. Buyers will have access to more data than before, and commissions and services will be clearly outlined in contracts.

Kyle Camerlinck | Taiter Realty | 561.371.5143 | kyle@taiter.com