Illustration by Lanette Behiry/Real Estate News
The recent proposed settlement from the National Association of REALTORS® (NAR) has been in the headlines for a few weeks now. As a result of all the misinformation that is spreading, we thought we would offer you a brief understanding of what the proposal actually is all about.
The lawsuit/settlement is about the following claims which in essence are not true.
Realtors colluding on listing commissions of 5.5%-6% Buyer commissions cannot be negotiated.
These claims are inaccurate as we see different ranges of compensation in different markets. Commissions vary based on services, market share and experience, and not what our competitors are asking.
On March 15, 2024, NAR announced a proposed lawsuit settlement that included a monetary settlement, as well as two changes to business practices:
Removal of the offer of Buyer Agent Compensation in NAR-owned MLSs.
Adding a requirement for Buyer Agents to use Buyer Representation Agreements.
This lawsuit, at its core, is about transparency - making sure that all parties to a real estate transaction know how agents are being paid for their services and hard work.
In general, Sellers pay their listing agent and then make an offer of compensation to the agent that represents a buyer. The reason for this is that the buyer often uses ALL of their financial resources for their down payment, to obtain a loan, and to pay all of the other expenses associated with a home purchase.
In this lawsuit, all of the plaintiffs, who were home sellers, claimed they had no idea that they could offer whatever they wanted to a buyer agent. This case creates clarity for sellers throughout the U.S. All real estate agents must fully disclose that commissions are negotiable as they have always been, and not set by law. They are also required to inform their clients that their services are not free.
The NAR and several other brokerages, including Compass, settled this lawsuit, but the court must approve the settlement. Assuming this proposed settlement is approved, the changes will take place in mid-July of 2024. NAR-affiliated multiple listing services can no longer offer compensation to buyer’s agents in their system. Buyer’s agents will need to contact the listing agent to find out if compensation is being offered to a buyer’s broker.
Although it’s been a requirement in Virginia for a long time, buyer agents nationwide will now have to get a signed agreement before showing a property to a buyer. Buyers do not need to use a buyer agent. However, in a “seller's market”, competing against other buyers who are getting expert advice on offer strategies and negotiation could put unrepresented buyers at a disadvantage as they will not have the guidance they may need.
Finally, listings that a buyer’s agent may find to show their buyer client cannot be sorted based on the buyer broker commission offered. Our multiple listing service does not allow this type of sorting so this is not something that was done in our market. We will always make you aware of every property that might fit your needs.
If you have any questions about this please let us know! We are always here to help.
