04/2

4 takeaways from the potential NAR settlement

The landmark commission lawsuit against the National Association of REALTORS® appears to be headed for a settlement. However, how much change is on the horizon for buyers, sellers and those of us in real estate is still unclear. 

Since we take pride in the real estate industry, we wanted to take a moment to summarize what happened and provide a few takeaways related to the potential settlement. 

What happened? 

Here’s a recap. Back in October, a federal court in Missouri found NAR and two brokerage firms liable for $1.8 billion in damages for conspiring to keep commissions high in a case known as the Sitzer/Burnett decision. That ruling then prompted similar lawsuits across the country. While observers first predicted the resolution of the case could take years for a final judgment to be rendered, the head of the national association now says that reaching a fair settlement allowing NAR and real estate, in general, to move forward was always a viable option, especially compared to drawing out an appeal or declaring bankruptcy as an organization to pay for the said appeal.

“Despite what people may have said, we’ve always been open to settlement,” NAR President Kevin Sears said in a recent video message. “In fact, we had conversations (about) settlement talks before the trial, during the trial and obviously, after the trial.” 

Takeaways

Know what the settlement is—and isn’t. The proposed settlement includes the association paying $418 million in damages over four years. It also prohibits seller’s agents from listing buyer agent compensation on the MLS listing and requires buyer’s agents to have written contracts in place with their clients for official representation. These changes could significantly impact how real estate transactions are conducted, and it’s important for all parties involved to understand and adapt to them.

The assumption is that commissions, particularly on the buyer side, will decrease because of these new rules. It’s why there has been a host of headlines claiming that it will soon be cheaper to sell a house or that there will suddenly be a new way to sell homes, but the truth is it’s impossible to determine how much these changes will affect how business gets done. As the head of the president of the Greater Nashville REALTORS® told NPR, it could be a wrinkle or landmine, but he’s betting on the latter.   

Be ready for questions about the value you provide. There’s one thing the settlement and the headlines generated by it guarantee: people will have questions about what this means for real estate, and the validity and understanding of those questions will vary greatly. However, everyone deserves a thoughtful answer that provides education and truth. Even before this lawsuit, surveys showed the role of a buyer’s agent was largely misunderstood. Don’t get defensive about commissions and how you do business. Instead, let your work and expertise showcase your value. 

Continue to emphasize what sets you apart. Real estate is all about using your unique knowledge and experience to smooth a complicated, sometimes stressful experience. Most of us got into this industry to help people realize their dreams and build the communities around us even stronger than before. Now, it’s just more important to talk about the worth we bring as real estate professionals. According to Sears, the NAR president, it’s an opportunity worth seizing. Your expertise is invaluable and will continue to be in high demand, no matter the changes in the industry.    

“As far as I’m concerned, anytime we have the opportunity to have additional conversations and explain our value and worth to the consumer … is a good thing for all of us,” he said.   

Don’t be afraid of change. Our teams know we work with some of our market’s best real estate professionals. Many of you will continue excelling because you care about your clients and community. Clients will still need – and find value in – a professional to guide them through the process, no matter which side of the transaction they’re on. If you’re an agent specializing on the buyer’s side especially, we know this settlement clouds the future of your services – but continue to provide expertise and guidance and see where that takes you. Your role remains crucial and irreplaceable. 

There is still much to figure out when it comes to the effect this settlement will have on how real estate gets done. No matter what happens, we’re excited to continue working with the buyers and sellers our customers bring to the closing table. Reach out whenever you need us for our title and closing services or general industry expertise. We’re always here for you.

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