The NAR Settlement: Everything You Want to Know

We’re sure you have seen and heard the recent news about the proposed settlement by the National Association of Realtors® and many real estate brokerages in the class action commission lawsuits. 

The media has covered this extensively and unfortunately, some of the news coverage has been inaccurate, so we wanted to ensure you have the most up to date and correct information by providing you with a basic understanding of the proposed settlement and address some misinformation being spread. As a team we have already been preparing for the changes listed below, which is good news for our clients, customers, friends, and neighbors.

The National Association Of Realtors® Settlement

On Friday, March 15th, the National Association of Realtors® announced a proposed settlement and on April 23rd, the settlement was preliminarily approved by a judge, though it will still need final court approval. Plaintiffs have requested a hearing on the final approval to be held on November 26, 2024. The settlement includes two main details - a monetary settlement and specific changes to real estate business practices, which include the following:

• Prohibiting sharing offers of compensation to buyer brokers on MLS platforms that are owned by NAR (Templeton Real Estate Group and our brokerage, KW Vermont, are members of a NAR owned MLS)

• Requiring MLS members working with a buyer to enter into a written agreement with buyers disclosing how they will be paid before showing a property

  
  

What will change and when?

On April 23rd, the settlement was preliminarily approved by a judge, though it will still need final court approval. Plaintiffs have requested a hearing on the final approval to be held on November 26, 2024. However, NAR plans to implement changes to practice in mid-July 2024 and the MLS is expected to remove all compensation offers from their portals at that time. Right now, there is no change.

It is important to understand that offers of compensation outside the MLS are not being prohibited. We have always believed that offers of cooperative compensation benefit both buyers and sellers in achieving their goals. Sellers may continue to offer compensation to buyer agents through other means, and buyers may request that sellers pay the buyer’s agent as part of the transaction. 

We at Templeton Real Estate Group have always practiced transparency around broker compensation. Compensation is, and has always been, negotiable. The proposed new rule that buyer brokers must have signed agreements with their buyers is not new to us and will be standard practice for us as it has always been. It encourages transparency by informing buyers how and by whom their real estate agent will be compensated and the amount of their compensation, similar to a listing agreement with a seller.

Is it true that all Brokers charge the same percentage?

No! This is grossly and inaccurately being strewn through the media, but real estate services are and have always been available at all price levels, and the services provided vary widely among brokerages. The industry does not set commissions, and no universal commission rule exists. Commissions are and have always been negotiable. Each brokerage establishes its compensation for the service it provides and its agent’s experience and expertise without knowing what competitors are asking, similar to many other consumer service businesses. 

Will housing prices fall and costs go down? 

In our opinion - doubtful. When is the last time you remember seeing home prices go down in any meaningful way or stay that way? Like most other things, the prices of homes are largely influenced and determined by supply and demand, and there is nothing in the settlement that addresses the current buyer demand or lack of supply that we have in our market.

There has been some talk in the media that the hope or belief is that home prices will go down if sellers are not offering a buyer’s agent commission, however we are more inclined to believe that most sellers will keep their price exactly the same whether they are offering the cooperating brokerage compensation or not (especially if homes are appraising for these prices) and it is the buyers that will potentially struggle a bit more if they now have to bring more funds to the table to cover their buyer’s agent’s commission on top of the purchase price. 

How will the proposed settlement affect existing listing contracts?

We do not expect changes before the July date and we hope that in July, the only change to an existing listing will be that offers of cooperating brokerage compensation will be removed from the MLS, and that agents representing buyers will need written contracts to work with them. Today it’s business as usual for us! We are experienced and skilled at working with both buyers and sellers, and have the resources to provide our clients with the highest level of service, transparency and care. We are working on any necessary changes and we will share that information with all of you promptly.

Will buyers be required to have representation?

A buyer has always had the right to representation and they have always had the right to forego representation. Home buying is competitive and complicated, especially in today’s market and it is difficult to compete against buyers who have a buyer’s agent giving them expertise on offer strategies and negotiations. As a buyer, working directly with the listing agent, who represents the seller, leaves you vulnerable and, in our opinion, disadvantaged in the buying process.

A skilled buyer’s agent (because there is a difference and not all buyer’s agents are created equally), knows the market and provides invaluable guidance and advice to their client throughout the home buying process that goes well beyond just opening doors and letting them inside a home. From educating and walking them through the overall buying process, to providing market research, formulating and negotiating an offer based on market intelligence, advising on the condition of the home and spotting potential issues that a buyer may not have noticed, having access to properties not on the open market, connecting buyers with lenders, attorneys, inspectors, and other professionals and of course advocating for you and on your behalf, are all things that an excellent and well-qualified buyer’s agent will do for you. 

Will buyer agency disappear?

Absolutely not! A buyer’s agent gives a buyer a distinct advantage in the home-buying process. Purchasing a home is typically the most important investment a person can make and we believe having a dedicated and skilled advisor and advocate throughout the home buying process enhances the experience, and the chance of success, that a buyer will have when purchasing their new home.

Our Commitment

Templeton Real Estate Group is and will continue to be a full-service real estate company and a leader in the Vermont real estate market. We provide a seamless, enjoyable and client-centric real estate experience at all price points for every buyer and seller we have the privilege to represent, and we will continue to be committed to surpassing your expectations and helping you achieving your real estate goals, no matter what those might be! We promise to continue to communicate with you as the settlement date approaches and more details emerge, and to inform you of any changes that take effect. In the meantime, please feel free to reach out to us with any questions or concerns you might have!