NAR SETTLEMENT EXPLAINED!

By now, I’m sure you’ve heard about the lawsuit that led to a settlement with NAR (National Association of REALTORS®) and the new real estate rules that took effect on August 17th. I’ve been having multiple conversations with customers about this daily and the one thing I’ve found, is that most are very confused about what happened and not sure how this will affect them moving forward. The information out there is very contradicting and, in many cases, not the full picture. I’m here to help clear some of this up!

HOW THIS ALL STARTED:

NAR settled a series of class-action lawsuits (starting in Missouri) alleging that its compensation rules essentially amounted to antitrust, reducing competition and artificially inflating commission prices. This basically means that agents where setting informal industry standards for commission and not being clear on who is paying what. The court decision was made in May and the new rules took effect on August 17th.

WHAT CHANGES:

*REALTORS® must have a written buyer representation agreement in place with their buyers before they can schedule showings.


*Offers of compensation to the buyer’s agent (from the seller) are no longer allowed to be displayed on the MLS. This offer must be inquired about individually and then clearly stated in a written agreement.


*New forms have been written to make commissions and who is paying them clearer and more transparent to all parties.


*PLEASE REMEMBER THAT AGENT COMMISSIONS ARE NEGOTIABLE. THE FEE PAID TO AGENTS HAVE NEVER BEEN SET BY LAW AND HAVE ALWAYS BEEN NEGOTIABLE!


HOW THIS EFFECTS BUYERS:

*To show homes, realtors® must have a written agreement with their buyer. This will clearly state what each party promises to one another and what the compensation will be to the buyer’s agent upon a successfully closed contract. This will strengthen the relationship between buyers and their agents. Agents will no longer meet a strangers at a new listing. It will require a REAL CONVERSATION up front, where the buyer and their agent will discuss their search, their needs, timeframe, financials, etc. This will streamline the process so that buyers no longer waste time seeing homes that won’t work for them or fall in love with a home they aren’t prepared to purchase. It will also make sure buyers have a good solid relationship with their agent before they get to the harder things like negotiations and dealing with closing issues. (Keep in mind that many realtors® have always used these agreements and some states made them mandatory years ago.)


*Buyers can still attend OPEN HOUSES without representation. However, the listing agent will not be able to answer any non-house related questions (such as seller’s motivation, other sales in the area, enquiring about offers, writing an offer for you, seeing other properties, etc.) without getting an agreement signed by you that they will represent you as a buyer’s agent (and of course the compensation you will be paying).


*Buyers will be paying their agents’ commissions (upon closing) as negotiated in the written buyer representation agreement. This will show up as a line item on your closing statement. Good news is that most sellers are still offering compensation for buyer’s agents. If this is the case, then your agent will get a commission form signed by the seller’s broker and that will be used to override the commission that you have agreed to pay. If they are not offering compensation, then a percentage can be negotiated in the contract to help with the buyer’s closing costs (including buyer’s agent commissions).


*Buyers can always choose to represent themselves and write their own contract, but if the seller is offering compensation to the buyer’s agent and you don’t have one, this will then be given the seller’s broker on top the amount that the seller has already agreed to pay the listing agent. This will result in no savings to the seller while the buyer moves through the complicated purchase process without representation. You basically paid the seller’s agent to NOT represent you.


HOW THIS EFFECTS SELLERS:

*Buyer’s agents may ask the listing agent if the seller is offering compensation to the buyer’s agent before they even view your home. Offering compensation can help you attract more buyers as they look at their bottom line of what the buyer will owe in closing costs.

*Sellers can decide if they want to offer buyer’s agents compensation upfront, if they would like to negotiate this fee in the contract as concessions toward the buyer’s closing costs or choose to offer none.

*If the seller decides not to offer compensation upfront, they need to be aware that they will probably be seeing this concession request in the offers they receive. This is something sellers should be prepared to see moving forward.

*If the seller chooses to offer no compensation at all, they should be aware that this will eliminate any buyers that won’t have the extra funds to pay commissions as part of their closing costs.

*Sellers will experience less stress if their buyers are working with an agent. Selling/buying real estate can be very emotional and tedious, so having an agent on both sides can help avoid common issues and find solutions when two parties can’t find common ground.


MY TWO CENTS:

Even though all this might sound confusing, I truly believe that this will strengthen our industry by helping us form stronger partnerships with our customers with clear communication and procedures. I’ve been attending trainings for months in preparation for these changes so that I can work with these new rules as well as help my customers navigate them. It will be important to find an agent that understands and embraces these new changes and moves forward in this industry with confidence.

I would love to chat with anyone that is still confused by this subject. It’s become one of my favorite topics to talk about. I’m here to help answer any questions that you might still have. Give me a call and let’s discuss!

Star Fisher
Realtor®
Realty One Group MVP
239-572-4433
StarSellsParadise@gmail.com
www.StarSellsParadise.com