Lynley Sides’ Post

Adapting to Change: The NAR Settlement's Call to Realtors Background: A Shift in the Landscape The real estate world was shaken when home sellers challenged the National Association of Realtors (NAR) over commission policies. The heart of the dispute? A rule mandating brokers to compensate buyer agents, a practice facilitated by the Multiple Listing Service (MLS). Critics argued this stifled broker competition and kept commission rates artificially high. The Settlement: A New Era Begins In a landmark decision in March 2024, NAR agreed to a $418 million settlement, altering the course of real estate transactions. A pivotal change is the prohibition of advertising buyer agent commissions on MLS listings. This shift opens the door for direct negotiation of commissions, potentially fostering a more competitive landscape and offering an opportunity for sellers to negotiate lower fees. Who's Affected? This settlement impacts a vast network within the real estate industry, including over a million NAR members and most real estate brokerages affiliated with NAR. It's a call to action for these professionals to rethink their approach to business. The Significance: A Call to Adapt and Innovate For realtors, this settlement isn't just about a change in policy; it's a wake-up call. The removal of buyer compensation from MLS listings means realtors must now emphasize their value proposition more than ever. It's an opportunity to stand out through exceptional service, expertise, and negotiation skills. Realtors who adapt to these changes, focusing on their sales skills and unique offerings, will thrive in this new competitive environment. Looking Ahead: The Future of Real Estate Transactions While the settlement marks a significant shift, its long-term impact is yet to be fully realized. One potential outcome is an increase in pocket listings, challenging both buyers and sellers to navigate a landscape where not all properties are as visible as before. Conclusion: Embrace the Change For realtors, the message is clear: adaptability, enhanced sales skills, and a strong value proposition are more crucial than ever. In a world where negotiation takes center stage, those who excel in these areas will not only survive but flourish. National Association of REALTORS® #realestate #realestateagent

Amidst all the chatter on news outlets from discount brokerages and sideline reporters keep the following in mind. The real estate industry in itself is going to find a way to continue serving our consumers that need help navigating the difficult transaction of buying or selling a home or property. It will push some additional transparency into the transaction and could also shift some more of the expenses to the buyer. Whom already has difficult purchasing homes as a first time homeowner so the rental industry may skyrocket. The news reports are falsely guiding the consumer, which is exactly the opposite of what we need. Commissions have always been negotiable. The current settlement suggests the cooperating commission offered to a BUYER agent is no longer going to be ADVERTISED on the mls system which is already private to members. It does not change the fact that buyer agents will be paid to perform their fiduciary duties with buyers in the US. It will be negotiated in a purchase. This also is going to give the attorneys who filed these suits a lot more money, and it will push some agents out of the business who can not adapt so the unemployment rate will go up. Clip from the NAR statement at the very end- Ultimately, while NAR continues to believe that it is not liable for the home seller claims related to broker commissions and that we have strong arguments challenging the Sitzer-Burnett verdict, we decided to reach this settlement to put claims to rest for over one million NAR members and other parties who would be released under the agreement. What’s next? The settlement is subject to court approval, which is a process that we can expect to take several months or more and will include an opportunity for interested parties to object. In large class action settlements like this one, objections are common. INTERESTING LAST COMMENT We will move to have litigation about the MLS cooperative compensation Model Rule stayed, or paused, as to NAR pending the settlement approval process.

According to the NAR settlement, several key changes will take effect for listing agents on August 17, 2024 that we all need to be familiar with and follow: Compensation Offers: - Offers of compensation will be prohibited on Multiple Listing Services (MLS) - Listing agents cannot include agent compensation information on MLS listings. - Compensation offers can still be made off-MLS through direct negotiation. MLS Changes: - MLSs must eliminate all broker compensation fields and compensation information. - MLS’s cannot create or support any non-MLS mechanism for making compensation offers. Communication with Sellers: - Listing agents can explain to sellers that buyers will know who is paying commissions. - They should inform sellers about buyer costs and how to market properties considering those costs. Disclosures: - Listing agents must still adhere to NAR's Code of Ethics regarding commission disclosures. - They should explain marketing options, costs, and potential buyer responses to sellers. Other Considerations: - Sellers can still offer buyer concessions on an MLS (e.g., for closing costs). - Listing agents must not tell sellers that brokers will steer buyers based on compensation. These changes appear to aim and increase transparency and negotiability in real estate transactions while maintaining consumer choice. Let’s all hope is for the best. What are your thoughts on this change? Please 🙏 follow me for more real estate tips and trends. #yamipastorrealestate #NARrules #instagood #instalikes #instarealtor #listingagent #newrules #realestate #ladiesofrealestate. Sources: 1. National Association of Realtors® Provides Final Reminder of NAR ... https://lnkd.in/eSegNupX 2. What the NAR Settlement Means for Home Buyers and Sellers https://lnkd.in/eGvvq6qs 3. NAR settlement set to hit real estate agents this week - CNN https://lnkd.in/eMTJZD2U 4. NAR Settlement FAQs - National Association of REALTORS® https://lnkd.in/e4-VcJYy 5. NAR Practice Changes to Take Effect Aug. 17 https://lnkd.in/eMHJtse7.

Anna K Cordell, of Bigger Pockets shares this with us: The National Association of Realtors (NAR) announced Friday that it finally reached a settlement with homeowner groups that had been embroiled in lawsuits with the association since 2019. The $418 million settlement effectively ends the current NAR broker commission model, which the homeowners’ claimants alleged forced them to pay excessive commission fees. If a federal court approves the landmark case’s outcome, as expected, it could give the housing market its biggest shake-up yet. The commission rule changes the NAR has agreed to could restructure the entire process of buying and selling real estate and could also deliver potential home price declines across the country. Here are the changes at a glance and what they could mean for investors and agents alike. The End of the 6% Commission-Sharing Structure The most sweeping change introduced by the settlement is the elimination of the current NAR commission-sharing structure. Here’s how it’s always worked: Real estate agents who are Realtors are required to offer a share of commission with the buyer’s agent in a transaction, if present. Given the NAR’s dominance on agent designations throughout the United States, this effectively created an industry-standard commission, thus violating antitrust laws, as the plaintiffs alleged. NAR guidelines clearly state that the commission rate is negotiable and that “commission rates are set by the market.” But in practice, commission rates are always set by listing agents and almost always at a rate of 5% to 6%. For homes selling for $400,000, this can amount to a commission payout of $24,000. Because the sellers pay the commissions, the key argument is that it inflates the prices of homes to make up for it. Seemingly, now that the settlement has gone through, we could very well see a reduction in home prices. Ultimately, listing agents will no longer be required to offer commission to buyer agents, which will bring more competition amongst agents as sellers search for the lowest commission offerings. It’s anyone’s guess how much commission real estate agents will now charge, but some economists think that we will see a reduction of up to 30%.

I'm sure you have heard the BIG news - the 6% commission model is officially gone after the National Association of Realtors agreed to a $418M settlement eliminating commission rules. Here is a quick breakdown of the details. Key changes: 🚫 No more publishing commissions on MLS listings 🚫 Brokers are no longer required to join MLSs ✅ Buyers must get written agreements with agents to allow fee negotiation Experts predict this could slash commissions by up to 50%, potentially saving home sellers $6,000-$12,000 per transaction. It opens the door for flat-fee models and more competition. Dismantling the century-old traditional model allows for more transparency and negotiating power for buyers/sellers. One professor called it "the biggest industry shift in 100 years." #VProperties #herndonva #Virginia #fairfaxcountyva #bignews #realestatenews #agentcommisions #nar

I'm sure you have heard the BIG news - the 6% commission model is officially gone after the National Association of Realtors agreed to a $418M settlement eliminating commission rules. Here is a quick breakdown of the details. Key changes: 🚫 No more publishing commissions on MLS listings 🚫 Brokers are no longer required to join MLSs ✅ Buyers must get written agreements with agents to allow fee negotiation Experts predict this could slash commissions by up to 50%, potentially saving home sellers $6,000-$12,000 per transaction. It opens the door for flat-fee models and more competition. Dismantling the century-old traditional model allows for more transparency and negotiating power for buyers/sellers. One professor called it "the biggest industry shift in 100 years." #VProperties #herndonva #Virginia #fairfaxcountyva #bignews #realestatenews #agentcommisions #nar

The National Association of Realtors’ (NAR) clear cooperation policy, implemented in 2020, requires real-estate agents to submit any publicly advertised listings to local multiple-listing services (MLS) within one business day. The policy was designed to promote transparency by centralizing listings and curbing “pocket listings,” where properties are shared privately among select agents and buyers. Proponents argue that the rule levels the playing field by giving all buyers equal access and fostering competitive bidding. However, critics claim it restricts how sellers can market their homes and increases the legal risk for brokerages. This rule has drawn significant scrutiny, with the Justice Department’s antitrust division investigating it as part of broader oversight of NAR’s practices. A trial related to the policy is set for late 2025, following a string of legal challenges that included a $1.8 billion jury verdict in 2023. That case concluded that NAR’s commission structure inflated agent fees, leading to a settlement of over $400 million and major policy changes. These developments have intensified concerns within the industry that the clear cooperation policy could lead to similar liabilities. The policy has sparked division among industry leaders. Compass CEO Robert Reffkin has called for its repeal, labeling it “reckless” given ongoing governmental scrutiny. In contrast, Zillow President Susan Daimler supports tightening the rule, highlighting how bypassing MLS listings can limit buyer access to available properties. Redfin CEO Glenn Kelman notes that withholding listings from the MLS may consolidate power within larger brokerages, raising competitive fairness issues. A survey by consulting firm WAV Group revealed that the industry remains split: half of brokers and one-third of MLS leaders support repealing the policy, while the remainder is divided between maintaining or modifying it. The policy’s “office exclusive” exception, which allows listings to be marketed only within a single brokerage, has proven beneficial for larger firms but has raised concerns about equity for smaller players. Studies show that homes listed on the MLS achieve significantly higher sale prices. For example, Bright MLS found that homes listed from Q1 2019 to Q1 2023 in five states and Washington, D.C., sold for 17.5% more than comparable off-MLS properties. Meanwhile, Redfin’s data indicates that pocket listings have accounted for 1% to 3% of sales over the past decade. #RealEstate #NAR #ClearCooperation #MLS #Transparency #PocketListings #AntitrustInvestigation #BrokeragePolicy #Compass #Zillow #Redfin #HousingMarket https://lnkd.in/eDdCn4m7

My thoughts on the National Association of Realtors (NAR) Settlement NAR has reached a proposed settlement agreement that if approved by the court would end litigation of claims related to broker commissions brought on behalf of home sellers. Historically, the listing agent and the seller played a large role in establishing in whole or in part the buyers agent commission prior to listing a home. Sellers were never required to offer the buyers agent compensation. However, the discussion as to whether or not to compensate a buyers agent and how much was commonly negotiated prior to listing a home. This was then advertised to buyers agents on the MLS in large part to incentivize buyers to view their homes. With the settlement, listing agent and buyers agent commissions are being decoupled. The buyers agent will still be compensated but how and when that discussion occurs, is changing. The buyers agent will be required to negotiate their commission and discuss the potential pathways by which they might be compensated with their clients prior to showing them a home. The ways in which a buyers agent might be compensated are varied including being compensated by the seller. What's different is now the buyer is being presented with these potential options prior to being shown a home which creates clarity for the buyer. For example, if a seller is not offering the buyers agent commission, the buyer will now know upfront what their options are. They will either be required to pay their agent the negotiated amount, or they will need to include a commission demand for payment of their agent to the seller in any offer submitted. Acknowledgement of this understanding by the buyer is substantiated with the signing of a Exclusive Buyer Agent Contract. Another significant change resulting from the settlement is that offers of commission by the seller to the buyers agent are no longer permitted in the MLS. Sellers are still allowed to offer the buyers agent compensation but this information can no longer be advertised on the MLS. If a seller is unconditionally offering compensation to the buyers agent, it can be advertised anywhere except the MLS eg. personal website, third party sites that syndicated MLS data, word of mouth etc... If unconditional compensation is not being offered, compensation to the buyers agent by the seller will be addressed and negotiated on a per offer basis. #realestatenews #NARsettlement #change #buyingahome #sellingahome #annarborrealestate

The National Association of REALTORS®’ landmark settlement is changing the way homes are bought and sold. Now, another industry dispute threatens to shake up how homes are listed for sale. A rule implemented in 2020 requires most #realestate agents to add listings into local databases known as multiple-listing services within one business day of publicly advertising the listing. Advocates say the rule, known as the clear cooperation policy, makes the #housing market more transparent by putting available homes in one place. The goal of the rule was to reduce the number of home listings that are shared privately with a select group of buyers or agents, known as pocket listings. But opponents say the rule limits sellers’ options for how they can market their homes and puts brokerages at risk of lawsuits. Most home sellers want to market their homes for sale as widely as possible in hopes of getting the highest price. The rule—and the debate—are focused on what options should be available to sellers who don’t want to widely advertise their homes because of privacy or safety concerns. The Justice Department’s antitrust division is investigating the policy, and a lawsuit against NAR regarding the rule is scheduled to go to trial in late 2025. 🔗 Read more from Nicole Friedman on how the industry is divided: https://lnkd.in/ejtMeqXa 

Northwest MLS Rejects National NAR Settlement Agreement. Is this good news? It depends on who you ask. The NWMLS declared in their announcement that it provides more clarity and full transparent disclosure to participants in a Real Estate transaction. They claim the NAR settlement makes room for unseemly and non-transparent deals. Local Real Estate agents are likely going to be happy. They can continue doing business in the way it has been done. To justify this, agents point out that the local MLS already addressed the concerns brought to courts in other areas of the country. The NWMLS press release documents how they changed the rules of requiring seller compensation to buyer's agents in 2019. They say they led the country in offering full disclosure on the ability for negotiations around agent commissions. Buyer's agents also believe that the NAR agreement would make a home purchase much more expensive for many of their clients. This is certainly true. Another contention is the seller should have the freedom to enter into any contract they choose including one where they offer compensation to the buyer's agent. Sellers who think the NAR settlement is in their best interest should think again. (my opinion). Anything that lowers demand on the asset they want to sell will drive down prices. The NAR settlement will definitely do that for many sellers. Critics have a couple of unfounded concerns in my mind. One is agents steer people to the properties where they make the most money. If anyone has paid attention over the last many years, it is the consumer steering their agents to look at homes they found online.... largely courtesy of the MLS. Another concern is that commissions do not go down. When was that the goal and why? A robust market should be the goal for homeowners that want to maximize their investment. Then there is the libertarian argument. Who is holding a gun to the head of homeowners saying they have to list their home on the MLS? If a homeowner does not like the MLS rules, then do not use the MLS to sell your home. As long as the MLS rules are transparent then a free market should allow them to require whatever they want. If buyers and sellers do not like the rules then they can choose not to use MLS aligned agents. #mortgagelender #mortgageadvisor #kingcountyrealestate #snohomishcountyrealestate