Understanding the NAR Lawsuit: What Home Buyers and Home Sellers Need to Know
You may have heard about the recent news regarding the National Association of Realtors (NAR). There has been a proposed settlement of several antitrust lawsuits concerning broker commissions. The media often sensationalizes topics with attention-grabbing headlines to gain more clicks and this situation is no different. You may have seen the story lines about slashing realtor fees and falling home prices. My personal favorites are the ones that use words like destroy and obliterate (insert eye roll). The more dramatic, the better when it comes to media! However, it’s crucial to understand the situation clearly and its potential impact on both sellers and buyers in the real estate market. So let’s take a look at what the lawsuit settlement will actually change. Keep in mind, this has not been finalized yet but this is what we know at this time.
Changes in Commission Disclosure
If the proposed settlement accepts, sellers will lose the ability to advertise buyer’s agent commissions on the MLS (Multiple Listing Service). However, they can still offer compensation. The method of documenting this change and its variation by state remains uncertain. There may be a revision to the contract or a new document to clarify compensation for all parties involved. The goal is to enhance transparency. A few years ago, there was an effort to increase transparency by making buyer’s agent compensation public and visible on home search websites. With its removal from the MLS, this information will also disappear from those sites. Personally, I see this as a step backward, but I hope that upcoming changes will address this issue.
Buyer Representation Agreements
Buyers would be required to sign a written agreement before an agent can show them a property. This step aims to protect buyers’ interests and ensure clarity in their relationship with their agent throughout the transaction. If you have bought a home with me, you know this was already common practice for my business. Some buyers do have concerns about signing a representation agreement and getting “stuck” with a bad agent. Here is what I suggest. First, interview the agent. It is customary that I meet with buyers for a consultation and this is a great time to ensure you feel like this is a good fit. Second, you can have an agreement for a specific property (or properties) instead of an open representation agreement that keeps you locked in for 4-6 months. I have done this many times before and expect this will become more common.
Importance of Professional Representation
While buyers have the option to work without a buyer’s agent, it’s essential to consider the potential downsides and difficulties that may arise. Hiring a professional agent or Realtor can provide valuable expertise, guidance, and negotiation skills, ultimately benefiting both buyers and sellers. I do worry that the media headlines will scare buyers away from hiring an agent because they are worried they now have to pay for their own agent. If this is a concern, let’s talk. I am happy to share more about what is happening in the market and with this lawsuit settlement and how it could impact you. We can also discuss ways to ensure you are protected.
Transparency and Negotiation
Commissions have always been negotiable in real estate transactions, and this settlement does not change that. Sellers and agents can still negotiate rates based on the services provided, ensuring a fair and transparent process for all parties involved.
Impact on VA Loan Recipients
It’s worth noting that VA loan recipients are not permitted to pay their agents. This aspect remains unchanged by the settlement and highlights the importance of understanding different financing options and their implications. Again, there is nothing to say that sellers cannot or will not pay buyer agent fees! This is something that the industry is keeping an eye on, though. I do think there will likely be changes to this in the future. We need to ensure that VA buyers have the ability to hire representation even if the seller is unwilling to pay the fees.
If you have any questions or need further clarification on these matters, please feel free to reach out. Nothing is going to change about the services that I offer to my home buyers or home sellers. I am still here to be your guide!