October 2024
You’ve probably heard that the National Association of Realtors (NAR) was sued and agreed to make some industry-wide changes. Unfortunately, there’s been a flood of misinformation. Let’s clear things up. Here are the rumors—and they’re all false:
- The 6% commission is gone. – False!
- Selling your home is about to get cheaper. – False!
- Buyers will now have to pay all the commissions. – False!
- Sellers never have to pay buyer’s agent commissions. – False!
- Agents will be forced to cut their commissions. – False!
- Home prices will drop. – False!
- Past home sellers will get compensation. – False!
- Buyer’s agents are going out of business. – False!
- You can now finance real estate commissions into your mortgage. – False!
None of these claims are true. The NAR settlement only resulted in two significant changes. Here’s what actually happened:
- No More MLS-Based Commission Offers
NAR now prohibits agents from offering commissions through the MLS. This information wasn’t public anyway, so consumers won’t notice much difference. However, buyer’s agents and seller’s agents will now need to discuss and negotiate commission details more directly.
My take:
Real estate agents will never work for free. There’s one pool of money in a real estate deal, and it’s coming from the buyer or the buyer’s lender. Whether the commission is paid by the buyer directly or comes out of the seller’s proceeds at closing, it’s still from that same pool. If a seller refuses to pay, the buyer will just lower their offer by the agreed commission amount, netting the seller the same. In short, it’s all coming out of the same pot, and it’s just a matter of negotiation. Buyers and sellers will still pay and receive market value, minus the typical sales costs. I don’t believe the consumer will even notice much difference in this regard.
- Buyer/Broker Agreements Are Now Mandatory
Buyer’s agents must now have new clients sign a Buyer/Broker Agreement before touring any homes. While this wasn’t previously required, some brokerages—like ours—already used these agreements as standard practice.
My take:
This change is a positive move, and really, no change at all for us. These agreements protect both Buyer and Broker by clearly outlining duties and expectations of both parties. It formalizes the relationship, ensuring transparency and commitment. If a buyer is hesitant to sign with an unfamiliar agent, the agreement can be customized. It could be limited to one property, a single day, or even allow the buyer to exit the deal with no strings attached. Ultimately, these agreements give buyers peace of mind, knowing the broker is legally bound to act in their best interest. No decent broker is risking their license and livelihood by violating that duty.
If you found any of this confusing or want to discuss any nuances in more detail, feel free to reach out to discuss this or any other real estate – related topic.
