By now, you’ve likely read headlines regarding the latest real estate industry news and the sensationalized narrative concerning real estate commissions and their potential impact on homeowners, home buyers and real estate professionals.
After meeting with a few clients to discuss the National Association of REALTORS®’s (NAR) proposed settlement, it became clear that there was a lot of confusion fueled by misrepresentation in the media.
So, let’s make plain – clear-up some of the biggest industry misconceptions and share what you can truly expect to change in mid-July 2024.
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NAR has NEVER set commission guidelines.
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NAR’s proposed settlement does not call for an adjustment in commission rates.
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Brokerage commissions have always been negotiable and are not set by law.
The (2) standard practice changes expected to change in mid-July 2024:
1. NAR has agreed to put in place a new rule prohibiting offers of Buyer Agent compensation on the MLS.
For Sellers, this changes nothing as compensation was never visible to principals only MLS participants. This change was put in place to avoid steering and address concerns that some real estate agents would only show homes offering higher commission rates. In my 25 years of experience, however, Buyer Agent compensation rates have remained consistent. Other states, like Missouri, where the case was originally filed may have other practices different from our top markets here in California.
Come mid-July, we can expect more visibility into Buyer Agent compensation details. Since NAR has no authority over marketing channels and platforms, compensation will be advertised more publicly (to incentivize Buyers and their agents) on home advertising materials like property brochures, printed assets, and digital marketing.
In my opinion, it’s premature to say the days of 5-6% commissions are over. Discount brokerages like Redfin and Zillow have existed for years in an effort to disrupt the industry but data shows most Sellers choose full-service, full-fee representation to ensure highest and best value for their home. Ultimately, we’ll have to see how our local markets react to these changes knowing the implications for all involved as eliminating Buyer Agent compensation has the potential to impact Buyer affordability, offer price (and therefore home value), extended days on market and much more.
2. The settlement provides that MLS participants working with Buyers must enter into written representation agreements with those Buyers. For my clients, this is business as usual.
Buyers will continue to benefit from representation probably more so now than ever before as the practice changes could leave some Buyer’s vulnerable to entering a transaction with no representation or solution to finance professional real estate services.
A written representation agreement solidifies the Buyer-Agent relationship and offers insight into a Buyer Agent's fiduciary duty, the exact services and value being offered, and at what cost. I firmly believe this change will up-level the industry to meet professional business standards and best practices.
So, here’s your one big takeaway from all of this: you have the freedom of choice – to choose a real estate advisor you believe will go above and beyond to advocate for you, think critically and creatively to get you the ABSOLUTE best terms and outcome possible on the home you wish to buy or sell.
For a lot of you, you’ve already made that decision when choosing me to represent and advise you in your many real estate purchases and sales and for that, I 'THANK YOU!" a million times over.
Curious to know how these changes impact your future plans? Contact me today!
