My Response to the NAR Lawsuit (Real Estate Is Changing Forever)

The NAR Realtor Settlement:

What Is The NAR?
This is a trade organization that real estate agents can pay into if they want to receive the designation of becoming a Realtor®. This means they’ve pledged to a higher code of ethics, adopt additional industry standards, and they get access to a wide range of services and forms.

The Current Payment Structure:
The commission is - and always has been - completely negotiable. However, the MLS previously required that the listing agent offer some form of compensation to the buyer’s agent - even if it was just $1. Despite this, most buyer’s agent commissions were listed at 2.5% in the MLS.

The NAR Lawsuit:
The lawsuit alleges the “existence of an anticompetitive agreement that resulted in home sellers paying inflated commissions to real estate brokers or agents in violation of antitrust law. Their entire argument relies on the belief that - if commission rates were negotiated directly by the home buyer, for their own services, commissions might begin to fall as agents compete for the buyer’s business.

The NAR Outcome For Housing Prices:

FOR SELLERS: The only confirmed change is that the MLS is no longer required to display buyer’s agent commissions. This doesn’t mean that sellers can’t (or won’t) pay commissions - but it’ll no longer be a required section to list.

For buyers, it’ll soon be required that they sign a buyer’s representation agreement before touring any MLS-listed property, that specifically states the amount or rate of the agent’s compensation.

The Realistic Changes:
I believe that buyers probably wouldn’t want to pay a cost like this out of pocket, especially when so many of them are already cash-strapped to begin with. This means, any commission would have to be written into the offer and “baked in” to the selling price of the home.

Second, I wouldn’t be surprised if some buyers simply chose to forgo any representation, entirely, as a way to either save money or make their offer more competitive - which, can be incredibly risky.