Let’s Talk About Recent Headlines

You’ve probably seen the headlines all over lately regarding the NAR proposed settlement (National Association of Realtors). The headlines are eye catching and thought provoking but overall don’t paint an accurate picture of what the settlement means. The court still needs to approve the settlement and there’s still some unknowns about implementation, but here are some things that I do know.

Many of the headlines reference that the 6% commission set by NAR is over and home prices will go down. Let’s unpack this – first and most importantly, NAR has never set a commission; they have always been negotiable. The seller and seller’s agent would discuss and agree to a certain percentage of the selling price of the property. The amount of this commission that would be offered to a buyer’s agent as a cooperating fee has also always been negotiable. This cooperating fee would be stated on MLS and viewable by all agents. Thus, buyer’s agents are paid for their work by the seller at the time of closing. As part of the settlement, NAR has agreed to take this cooperating fee off of MLS. That does not mean that a buyer’s agent can’t be paid by the seller at closing, it just means what that amount of compensation is will be discussed and communicated in a different way.

So why are the headlines predicting that home prices are going to go down? To be honest it’s a little unclear, but it’s likely because they’re assuming that sellers will no longer offer any compensation to a buyer’s agent and therefore list their house for less and pass that hypothetical cost savings  on to the buyer. In my opinion this is not going to happen. First of all, it could be a disadvantage to not offer any buyers agent compensation when selling as it likely limits your buyer pool. Secondly, I find it doubtful that sellers are going to want to pass any cost savings down to the buyer.

What does this settlement really mean for our industry? I believe it means that we are going to have to change when and how we communicate about our compensation with all our buyers and sellers, but it is not going to change how we do our jobs or the value that  we bring as trusted agents.  

What does a buyer’s agent do anyways? Are they really needed? The answer is YES absolutely! A buyer’s agent is someone who works with the buyer’s best interest in mind. They help buyers from the first step of getting approved for a loan, finding the right location and type of property, getting them under contract often in a competitive situation, guiding them through the process of inspection, negotiating on their behalf, communicating with the lender, seller’s agent, inspector, appraiser and other third parties, advising throughout and usually doing work behind the scenes of all kinds to make sure the transaction goes as smoothly as possible.

A good buyer’s agent more than earns their compensation. Not to mention how many hours they’ve likely spent showing people homes that don’t work out or how much they have to pay back to their brokerage and associations for dues and fees. Buyer representation is important and I don’t see the need for this service ever going away, and definitely not as a result of this settlement.

There is more that we are learning as Realtors everyday about the implementation of the new rules so stayed turned for updated information! If you have any questions or want to chat about anything real estate, don’t ever hesitate to reach out.