August 17, 2024 marks the implementation of new and very major changes in National Association of Realtors®️ (NAR) practices. If you follow the news, you’re likely at least vaguely aware of the NAR settlement agreed to in late 2023. The settlement stems from the antitrust lawsuit Moehrl, et al. v. National Association of Realtors, filed in 2019. According to the Cohen Milstein law firm, the suit’s filer, there existed “longstanding anticompetitive practices in the residential real estate industry that have inflated the cost of broker commissions throughout the United States.” The purpose here isn’t to debate the merits of the case but to help consumers understand what the changes mean for them, as buyers and sellers.
For its part, NAR has spent most of 2024 planning for the implemented changes. While there’s obviously a lot of work behind the scenes and many details to be worked out moving forward, the implementation equates to two basic points consumers need to be aware of:
- Offers of Compensation - Previously, offers of compensation were included in Multiple Listing Services (MLSs). In simple terms, agents could see the compensation percentage (aka the commission), which traditionally would be split between the buyer’s and seller’s agents at closing. Under the new practice, offers of compensation won’t be listed in the MLS. Instead, they can be communicated via telephone, text messages, or even via social media.
- Written Buyer Agreements - In the past, written agreements between buyers and brokers weren’t always executed. This was based upon the longstanding practice of commission divvying that led to the antitrust case. Now, before a buyer is allowed to tour a home, they must sign a written buyer agreement. This agreement doesn’t, though, constitute or require an agency agreement with the broker’s agent.
Sellers who are willing to compensate the buyer’s agent will be able to, but transparency is required. Is there more to it than this? Yes, there’s a lot more, and it will likely be a rocky road initially for agents and brokers as the new law of the land becomes the norm.
From a buyer and seller perspective, it’s less to absorb, but it can still be confusing. The NAR-produced infographic below makes things a little visually clearer. If you’re planning to buy or sell anytime soon, it’s definitely in your best interest to obtain and consult with a licensed agent who can outline what the changes specifically mean to you. Ultimately, it remains in a seller’s or buyer’s best interest to obtain Realtor representation to help navigate the complicated process from offer to closing and ensure maximum Return on Investment (ROI), from either side of the closing table.
As always, you can always give me a call for a no obligation assessment of your needs and how I can help you attain them.
Best Regards,
Justin E. Gehrke
Source: National Association of REALTORS®, 2024
- For more information visit the NAR Settlement FAQs page. https://www.nar.realtor/the-facts/nar-settlement-faqs
- Informacion en Español disponible aqui.