NAR Settlement Agreement
If you’re wondering about upcoming changes with real estate commissions, this article
will answer your questions and maybe clear up some misinformation.
The National Association of REALTORS® (NAR) has announced a complex settlement
agreement that would resolve litigation brought on behalf of home sellers related to
broker commissions. The settlement, which must be approved by a judge, resolves
claims against NAR and most members and brokerages and in return NAR will pay
$418 million over 4 years.
Berkshire Hathaway’s parent company, HomeServices has recently agreed to settle in a separate settlement for $250 million, which helps protect our 51 brands, nearly 70,000 real estate agents and over 300 franchisees from similar litigation.
What changes can consumers expect ?
In Colorado, the settlement may not impact home buyers and home sellers very much.
Some media reports falsely suggest that the settlements will make real estate
commissions negotiable so sellers will save money. In truth, real estate commissions
have always been negotiable. There is no standard fee or percentage, and you should consult with an experienced real estate agent to determine the commission amount. But remember, it’s not just about paying your listing agent, it’s also about offering a desirable incentive of compensation to the buyer’s agents that will be showing your home.
Compensation and Paying the Buyer’s Agent
Another key aspect of the settlement is that it will allow the continued practice of
cooperative compensation, or the offering of compensation to buyer’s agents. But
offers of co-op fees compensation will no longer be noted in the MLS (multiple listing service used by real estate professionals).
The practice of sharing commissions goes back many decades. While some argued the
practice increased seller cost, the counter-argument is that offering compensation to
buyer buyers helps sellers get more showings and thus, a higher sale price in a shorter
period of time.
By removing co-op commissions from MLS, real estate companies anticipate providing
this information on a separate website for the benefit of buyer agents and their clients.
This may be an extra step but is not expected to substantially change the selling
process.
Home buyers in Colorado are not expected to experience much change, either. For
decades, our state has encouraged buyers to engage their own real estate agent to
represent them in the purchase, and buyer broker compensation is part of that
agreement.
Co-op commissions for buyer brokers has made home ownership more affordable for
buyers who are already struggling to save for down payments and closing costs.
Moving forward, we will sit down with prospective home buyers and sellers and discuss
the process and expense of buying and selling And as always, we will give our clients
the risks and benefits of various options.
As agents, we strive to provide housing opportunities for as many buyers as possible,
so we are hopeful that the majority of home sellers will continue see the benefit of
offering a co-op commission.
If a seller does choose to not to offer compensation to a buyer broker, they are free to
make that choice. But that has always been the case.
Putting Our Clients First
Our goal to provide value to our clients is unchanged and we remain committed to
ensuring that in every transaction, your satisfaction is our absolute priority. If you have more questions, we’d love to hear from you directly. Reach out anytime to your favorite agent and we’d love to help you understand the how the NAR settlement may affect your next real estate sale or purchase.
