NAR Settlement - What it Means for Buyers, Sellers, Realtors and the Market

NAR Settlement: What You Need to Know

Written on 3/19/24.  Will update as we gain more clarity***

Recently, the National Association of Realtors (NAR) proposed a settlement in response to the Sitzer-Burnett class action lawsuit. This lawsuit, initiated by a group of home sellers in Missouri, targeted NAR and several other defendants, alleging inflated commission rates and excessive payments to buyer representatives. The proposed settlement, subject to judicial approval, is set to take effect in July 2024 and aims to absolve NAR and its members from the lawsuit's claims. If approved, the settlement will bring two significant changes by July 2024:

1. Changes to MLS Compensation Offers: Offers of broker compensation will no longer be communicated via the MLS, but can still be negotiated off-MLS. This aims to make professional representation more accessible and reduce costs for home buyers.

   
   

2. Written Agreements for MLS Participants: MLS participants working with buyers will now require written agreements with their clients, ensuring clarity on services and fees.

  Amidst media coverage and speculation, here are some key insights:

1. Decoupling Commissions: While removing buyer agent commissions from MLS listings may seem significant, sellers may still offer compensation to buyer agents off-MLS, affecting market dynamics minimally.

   
   

2. Impact on Buyers: Buyers relying on agent representation may face challenges, potentially leading to a decline in buyers hiring agents. However, buyer agency remains valuable, and new processes may emerge to streamline transactions.

   
   

3. Market Dynamics and Commissions: Market conditions have a more significant impact on commissions than their listing in the MLS. While changes may occur, the fundamental law of supply and demand governs housing prices.

   
   

4. Transaction Mechanics: Despite changes, transaction processes may remain similar, with adjustments in sourcing compensation. Buyers may negotiate seller concessions to cover agency costs.

   
   

5. Seller Experiences and Pricing: Sellers may experience different outcomes based on their strategy, complicating valuation and pricing. Transparency in disclosing seller concessions becomes crucial.

   
   

6. Affordability and Consumer Impact: Changes may not necessarily make housing more affordable, with potential shifts in who bears transaction costs. The role of agents in ensuring smooth transactions remains vital.

   
   

   This year will bring a lot of uncertainty for consumers and their agents, making navigation challenging. My advice? Seek out the best representation available. Waiting for things to settle or hoping for affordability may lead to disappointment. With the evolving landscape, new business models will emerge, along with changes and the potential for predatory practices. Stay vigilant!
   

Given the extensive information, you might start to wonder about the roles of agents. Let us know if that's the case and we'll help you figure everything out.