NAR Settlement News: Check Back Frequently for Updates

Yes, we The Basics: The National Association of REALTORS (NAR) was named (along side some specific brokerages nationwide) in a class-action lawsuit brought by a group of plaintiff Sellers. The lawsuit alleged that NAR's policy of having Buyer Side fees pre-determined by Sellers and published in multiple listing services (aka, the MLS) amounted to collusion to set and keep Buyer Side fees artificially high. A jury found in favor of the plaintiffs last fall, and NAR has been fighting the ruling.

Just last week, NAR proposed a settlement, and once that settlement is approved by the courts, we will see some changes to how the residential real estate industry functions. free property valuation services to help you determine the market value of your property.

No. The settlement maintains that NAR denies any wrongdoing with the way business has been done up until now.

Per US News & World Report: "The Settlement...makes clear that NAR continues to deny any wrongdoing in connection with the multiple listing service (MLS) cooperative compensation model rule, which was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation." 

This is, indeed, a watershed moment for the residential real estate industry, and we do expect real changes to come. That said, homes will continue to trade, and agents--on both the Buyer and Seller--who are professional, knowledgeable, and service oriented will continue to have a place in the industry for those who want representation for the buying and selling process.

As it currently stands, brokerage fees are negotiable, and neither buyers nor sellers are obligated to work with a real estate agent to buy/sell a home (though many choose to do so, recognizing the value that a professional agent brings to the process). South Carolina has also one of 18 states that already requires a Buyer Agency Agreement, and this has been the practice in SC for almost 30 years. These things will not change.

What will likely change, however, is the way that Buyer-Side fees are structured, so those of us who frequently represent buyers are keeping a close ear to the ground to figure out the best path forward to continue to offer full professional representation for buyer clients.

Yes? No? And it depends on what you mean by "slashed" and for whom.

Media outlets are reporting expectations of lower real estate fees in the future. However, if what emerges from all of this is an increase in Buyer Side fees being negotiated as part of a contract on a home purchase, then actual real estate fees paid are not likely to change all that much moving forward.

Sadly, this is unlikely, as I can't imagine an Seller being willing to accept less than market value for their home simply because they may be paying slightly lower fees.

If anything, home buying could actually feel more expensive to buyers who want representation, as they could be on the hook for fees that, in prior years, were already built into the price of the home.

• Sellers who may pay less in fees and thus pocket higher proceeds. 
• Listing agents who are unlikely to see much change in typical Seller side compensation.
• Experienced buyers who feel equipped to manage real estate negotiations and contract-to-close aspects of the transaction without professional representation. 

• Buyers who want or need representation but who cannot commit to paying a Buyers' agent above and beyond the purchase price of a home .
• Buyer agents who specialize in working with first time Buyers or Buyers who are not cash-flush, as the new compensation rules may drive some of these Buyers to try to go it alone.

As of now, the proposed NAR settlement is not yet approved by the courts; however, we will likely know if the settlement is accepted within the next couple of months. If accepted, changes could go into effect as early as mid-July 2024.

However, it is likely to see changes to start happening sooner than that, as many Buyers and Sellers who engage real estate representation in April, May, or June are likely to still be using those services after July, given the time it can take to buy or sell a house. 

I strongly encourage any would be buyer or seller to start having conversations with their intended agents as early as possible. We don't have all the answers yet, but agents can begin to help you chart a path forward so you are prepared as any real changes come to fruition.