The National Association of Realtors just settled an antitrust lawsuit and it will have some interesting ramifications for the national Real Estate Market later this summer.
Based on what we know about all the nuts and bolts of this business, the potential effects of this are complicated and it opens up a large list of new questions that no one can predict how "the market" of sellers and buyers will put this into play, but we definitely have some opinions.
Also, none of this will be in play until a federal judge approves the settlement which is expected by Mid July
The fact was, is, and will still be, that all broker commissions have always been negotiable. This won't change that.
You have tons of options in commission rates and service levels from Real Estate service providers today. This won't change either.
The basic impact of the settlement is that NAR has agreed that buyer's agent commission offers will no longer be able to be posted on the MLS listing.
They CAN be made anywhere else.
In theory, this could potentially change nothing. As it stands today, a listing agreement defines a total broker compensation between the seller and the listing agent, and then typically the listing agent discloses in the same agreement that they are going to offer some of that fee to the buyer's agent as a a way to market the property. I'm not using any numbers or percentages on purpose because that is literally the reason the lawsuit came about.
This is where things get interesting. The MLS is an extraordinarily useful tool for exposing a property to the market, and working with a community of agents allows for minimal days on market, and protects the seller from liability because all parties have representation.
Will some sellers decide they don't want to do that any longer? That's one of the big questions. If that happens, the listing agent will start fielding more buyer phone calls, arranging property tours, and ultimately handling the paperwork for both sides if necessary.
This is not unprecedented, but it's generally not advisable, because the buyer has no one guiding or advocating for them. People should have professional representation in a matter like a Real Estate transaction.
On the buying side, if a buyer wants to go look at a home that isn't offering any buyer agent compensation, will buyers then decide to write a personal check to compensate the buyer's agent to help them find and acquire that home? Will we go to an up front payment retainer model?
As a real estate agent, I have quite a few thoughts and opinions about how this will play out, and there are so many speculative directions this could lead.
So instead of trying to predict the unpredictable, the best thing we can all do is go to work every day, tell the truth, and give good advice that supports the client's best interests.
My prediction is that this will be a great thing for homeowners and the industry at large, and a bad thing for part time and low skill agents.
Buyer's agents will have to raise their standards and professionalism to justify a buyer's need to work with them. I think in a normal market where you NEED exposure, the majority of sellers will want to keep the same level of MLS exposure they have always had.
However, in a market such as the one we had in 2020-2022, I think a listing agent will have to become an auctioneer, which will require a whole different skill set to help the seller net the most money possible.
Based on what I have observed in agents over the last 6 years, I think a fair percentage of them may find the new dynamic challenging and I am thinking the agent population may decrease by 20-30%
