My Thoughts On The Recent NAR Settlement
Hi, and thanks for joining me. I’m Tim Tanz, with Platinum Realty of St Louis. Today, I just wanted to share some information and my thoughts on the recent proposed NAR Settlement. There’s a lot of mis-information out there regarding this settlement, and I’ve done a lot of reading on this to try to educate myself on what is going on, so I can better inform my buyer and seller clients.
Now, this is just a proposed settlement. It’s subject to court approval. And if approved, it’s supposed to take effect around mid-July.
The Sitzer-Burnett Lawsuit was a class action lawsuit brought by a group of Sellers against the National Association of Realtors (NAR) and some of the largest real estate brokerages in the country. The plaintiffs argued that NAR and these large real estate companies colluded to artificially inflate real estate agent’s commissions. NAR stated that in fighting this lawsuit, and not agreeing to a settlement, they would have had to put up a bond of such a high amount that it would have bankrupted the association.
Per the settlement, NAR has denied any wrongdoing, but has agreed to pay $418 million over the next four years.
Two Rules have come about as a result of the settlement –
First, it prohibits the offer of compensation for a Buyer’s Agent on the MLS (Multiple Listing Service). We can no longer advertise the Buyer’s Agent compensation on the MLS. Commissions have always been negotiable. Even though the norm across the country has been a certain percentage of sales price of the home for many years, they have NEVER been set in stone.
A Seller is no longer required to cooperate with & compensate the Buyer’s agent, instead forcing the Buyers to pay their own agent. But the Sellers can still choose to pay the Buyer’s agent’s commission. It just cannot be advertised on the MLS anymore.
Personally, I feel it is still in my Seller’s best interest to pay the Buyer’s agent commission (as has been done for many years). The commission has always been factored into the sales price of the listing. And most buyers today cannot come up with the extra money at closing, if they have to also pay their Buyer’s Agent commission, in addition to their down payment and all the other closing costs involved. If you are not offering to compensate the Buyer’s agent, the Buyers will just choose not to view your home. As a Seller, do you want to lose 90% or more of your buyers and not be able to sell your home, or do you want to cooperate, and compensate, the Agents who are actually bringing you the buyer. 9 out of 10 listings are sold by Buyer’s Agents who bring the Buyers.
The second rule is that there must now be a written Buyer’s Agency Agreement between the Buyer’s Agent and the Buyer. This really is no big deal, as we have been doing this in St Louis for years now.
I hope this info dispels some of the fear and mis-information out there. If I’ve learned anything over my 27 years of selling real estate, is that things always change. Nothing ever stays the same. We just need to keep a positive outlook and keep moving forward. Buyers are still going to buy houses, and Sellers are still going to sell houses. And we Realtors will continue to be essential in the process. Thanks for joining me today. Make it a great day.
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