The NAR (National Association of Realtors) lawsuit has flooded mainstream news outlets going on a week now. The lawsuits alleged a conspiracy between the NAR, MLS's (multiple listing services) and real estate agents to keep commissions high by largely requiring home sellers to pay buyer-broker commissions, and to require those commissions as part of being listed on listing services.
In addition to the financial payment of $418 million over roughly four years, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS- also known as buyer's agent commission. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate agents. Their reasoning on this is that agents will see a home that meets the needs of their client, but see the commission is 2%, which will keep them from showing the house if other houses also meeting the client's needs offer a 2.4% compensation. Offers of compensation (commission) help make professional representation more accessible, decrease costs for home buyers to secure these services, and increase fair housing opportunities.
The NAR has agreed to enact a new rule that would require MLS participants (any agent with MLS access) working with buyers to enter into written agreements with their buyers. If you have purchased a property in North Carolina before, you were likely asked to sign this agreement before the house hunting would commence, or your agent (like myself) could have had their own policy such as a 'three for free' - showing three properties before asking for the commitment to the agent by signing the contract to use them as your exclusive agent. These changes will go into effect in mid-July 2024.
News outlets claim the deal will slash realtors' standard 6% sales commission fee, potentially leading to significant savings for homeowners. However, there was never a "standard 6% sales commission fee" to begin with. All commissions are negotiable and have technically always been so! Are there some bad apples on the Realtor tree that didn't explain this to their clients? I'd bet my life on it.
News outlets also claim that in addition to slashing realtors' fees that house prices will also begin to drop as a result. This one makes me chuckle. Housing markets are based on supply and demand, not what I as an agent bring home after a closing. Home sellers should keep in mind that while commissions are, and always have been, negotiable that going cheap will likely result in tiered services becoming more widely seen. Agents may switch to offering a "silver, gold or platinum" experience with varying percentages to let the seller decide what they want to spend on representation. While this is not something that I personally offer as of the time of this post, it may be the direction in which things go.
Should sellers decide not to offer a buyer's agent commission when selling their home, it is my belief they will only be limiting their pool of potential buyers by doing so. I work primarily with first time home buyers with average incomes. Many of my clients do not have the additional funds to pay my commission on top of their due diligence money (North Carolina), earnest money, appraisal fee, home inspection costs, down payment and closing costs. The cost of buyer's agent commission has typically fallen to the seller to pay as part of the total percentage of commission on the sale of the home- what the media is claiming is "a standard 6%". Buyers could choose to purchase a home unrepresented, which I strongly discourage, as a result of the potential added expense.
As the take away of my long winded thoughts, speak with your agent. Work with an agent you trust, that is transparent and ethical. We aren't all the bad guys the media is making us out to be.
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