NAR Settlement Questions

Recently, I have had several past and current customers and clients reach out to me regarding the interesting situation that the real estate industry is currently in.  Headlines, commentaries, and opinions are not helping clear the way. It is through some of this reporting that the unintended consequences of misinformation happen. Let’s break some of the major questions I have received down. 

The National Association of Realtors® (NAR) is involved in a lawsuit that alleges that NAR and other brokerages “conspired” together resulting in a violation of the Sherman Anti-Trust Act of 1890. Currently, a settlement agreement with all but HomeServices of America (my own brokerage parent company) has been submitted. As of this writing, nothing by any party, court, or DOJ has been approved.

However, the consequences of the proposed settlement directly affect buyers and seller by requiring that agents (brokers) who belong to NAR would be required to have a Buyer Broker Agreement and that the listing agent will no longer be able to publish or communicate through the MLS the buyer’s agent commission. 

Honestly, my brokerage has advocated for all buyers’ agents to use a Buyer Broker Agreement for at least the 6 ½ years I have been an agent with them. Regarding the commission for buyers’ agents, the reality is that it has always been negotiable. If I were to represent a buyer in a For Sale By Owner, I would negotiate my commission. My fiduciary responsibility is to serve my client to the highest possible level of service and ability – including cooperating with other licensed agents. 

There has always been a variety of options for sellers in the type of representation to sell their home. Limited representative through full service, or no representation at all but a limited opportunity to list properties on the Multiple Listing Services. By listing a property on the MLS it offered full transparency to cooperating brokers as well as brokers.   This was a true benefit to sellers and is the core of the current changes proposed. It will affect buyers in a more dramatic fashion. Outside the MLS, nonmembers of NAR, are not subject to these new rules.

Commissions: Our MLS model required a cooperative model – in fact it is part of our Code of Ethics. BUT, and a big but, that could be a buyer’s agent commission of $1 to a %. Real Estate in general is a competitive industry – just as any service providing industry is. I don’t see anyone asking if lawyers, plumbers, accountants, or electricians are also conspiring with one another regarding their fees. The bottom line is service providers of any industry set their fees in accordance with the value that they bring to the service.

Recently we shared another article with the builders we are honored to work with and talked about data syndication. Finding a home to purchase used to be pretty darn hard without a real estate agent. Now a days technology will even alert a buyer when a home hits the market on their smart phone – regardless of where it is listed. So seller’s in some respects just need to ensure their property is syndicated to the right places to hit the right buyers. That again is where the value of the agent comes in. Understanding the market, understanding the demographic of the potential buyer, and knowing where to send the listing to for syndication. 

Let’s talk about the commission for a moment. When you list a home for sale with a real estate agent you sit down (I like the kitchen table) and review the listing agreement. You discuss the various aspects of the agreement. When it starts to when it ends, what information the owner wants out in the public and what they don’t, is there a tenant, the price and terms the seller wishes, what the agent obligations are, where the property will be advertised, to the obligations of the seller and more. 

And yes, you obviously discuss compensation for listing the property and for procuring a buyer who is ready, willing, and able. The purpose of listing the property is to find that ready, willing, and able buyer. It provides a second service. The first being listing the property. Every single agent I know provides a different set of services from one another – yes, they can cross over and be similar but just as no two homes are alike no two agents are alike. There has never been, nor would you ever get over a million real estate agents to all set the same level of service for the same fee.

The danger that I perceive is that buyers will believe that representation by an agent will cost them dollars and they should allow the selling agent to handle all aspects of the sale to save those dollars. The price of the home did not change because the buyer is unrepresented. Look at new construction, if you choose not to be represented by your own buyer’s agent, the price of the home didn’t change. You the buyer just do not have representation.

Is that not even what the judicial system is. Can you not choose to represent yourself? But then again, it seems like a really good idea to hire a lawyer who understands the courts, the laws, and negotiation to represent you. But it will cost you. Because lawyers do not represent plaintiffs (sellers) or defendants (buyers) for FREE. By the way the lawyers in one NAR case alone are estimated to make over $150 million dollars for representing the plaintiffs. I find it ironic that when you read their website they talk about their services, successes, and that they advertise free consultations. They state, “you will pay absolutely nothing unless you are awarded a settlement or verdict!” Guess what as a real estate agent, I incur the costs of listing your home and I only get that commission if I successfully find a ready, willing, and able buyer. That buyer’s agent spends countless hours researching, showing, writing offers, and negotiating and ultimately does not get a commission until the successful assist a buyer to the closing table.

What won’t change for most agents, we will continue to study a market that is always shifting by looking at new listings, days on market, absorption rate, price reductions, sold ratios, median sales prices, and more and more. We will take continuing education classes that is required to keep our license including law and ethics classes. We will pay our dues that include MLS fees, license fees, E/O fees, NAR fees, and for most of us brokerage fees. We will continue to attempt to stay ahead of the curve with data syndication, AI and marketing best practices (which changes as much as the real estate market). We will continue to serve our customers and clients to the highest level we can with integrity, transparency, and excellence. 

What will and has already changed? You as the consumer are going to have to determine the value of the services that you would like to have the equated cost of those services. My suggestion, before you determine how to sell your home – get educated, talk to a local, trusted real estate agent to compare yourself to the faceless corporations offering you a cash deal. Looking to buy, get educated - sit down and have a discovery meeting with that local, trusted real estate agent and see if you really want to purchase on your own without representation or with a buyer’s agent.

If you still have questions, reach out and I can attempt to answer them or find the answers for you.

Carla Goddard | East Pasco Living Team Lead

Graduate, REALTOR® Institute | Residential Specialist | BHHS-Certified New Home Specialist | Certified National Home Specialist – Residential Construction Certified (CNHS-RCC) | NHCB Certified New Homes Co-Broker |BHHS-Certified eCertified® Specialist | BHHS-Certified rCertifiedSM Referral and Relocation Specialist | Tampa Bay Builder Services Manager

Berkshire Hathaway Home Services

📧email: carla@eastpascoliving.com

📲text/call 813.716.4498