NAR Settlement Changes and What It Means for You

By Tricia Turner

Tricia Turner, a seasoned real estate broker from Houston, has over 25 years of diverse industry experience, including home sales and mortgage services. She is renowned for her leadership and training expertise, guiding over 50 agents at REAL Brokerage toward a $100 million sales goal.

This month, a huge settlement that changes how homes are bought and sold takes effect, adding more responsibility and cost to would-be homebuyers. Last spring, the NAR settled a class-action lawsuit for $418 million. The lawsuit claimed a price-fixing conspiracy to inflate broker fees, which led to changes that aim to provide some transparency to the home-buying process. This adds yet another challenge to our already tight housing market.

According to data, 50% of all real estate agents have not sold a single home this year, evidence that real estate professionals are already struggling. Selling in this market is challenging for many because of low inventory, high prices, and rising interest rates. The Houston Association of Realtors also reported that June sales were down more than 11% over a year ago.

Before this agreement, when a house went on the market, the seller typically paid the cost of all the agents involved. It was usually about 6% to 3% for each side, and that information was stated on the MLS. This information included how much the buyer’s broker and agent would get out of the deal for bringing somebody in to take a look at the place and maybe put their money down.

Now, if you want to buy a home, buyers need to find their agents and brokers, negotiate how much money they will earn, and then sign a Buyer Representation Agreement every time they want to look at a house. From the point of view of consumers and Realtors, this means extra work, as brokers will have to justify their earnings. The reason behind this is to give buyers and sellers flexibility over what they pay. If you’re a buyer’s agent, you will want something rather than nothing. So you’re going to have to make the deal work.

Conditions in the buyer agreement can also be changed. So just because a buyer’s agent says, “I want you to pay me 2%,” and the buyer says, “Yes,” those can be adjusted. The overall effect here is that sellers will generally see their costs down, while buyers will often have to pay for a service previously included in the whole market deal. Because of this, buyers will want to find someone who knows what they are doing.

While the settlement is intended to benefit consumers, more research is needed to see how it impacts the housing market. Only time will tell whether the increased transparency and flexibility will outweigh the added costs and complexities for buyers and sellers.

Feel free to reach out if you have questions or would like more information about the NAR settlement. Give us a call at (832) 563-0916 or send me an email at tricia@triciaturnerproperties.com.