03/25/2024
I thought this was a great post on Reddit
The NAR settlement doesn't mean what you think what it means
Post Mon Mar 18, 2024 7:55 pm
As a former commercial real estate agent (15 years out of the business), I've read the broader discussion and reporting around the NAR settlement with a bit of amazement. I almost can't find any source, including say the New York Times, reporting it correctly. This then trickles down to the broader public, including several threads here speculating a little breathlessly on how the world of real estate agency is going to radically change, or something.
Without arguing, writing a mini-essay, or even imposing my personal opinion, just thought I'd set the record straight on a few factual items:
• The settlement is with the National Association of Realtors, a trade group that represents less than half of all licensed real estate agents. The settlement is not with all of the real estate agents in America
• There was never a 'standard' real estate commission of 6%, and in my experience it was lower in big cities (4ish%) and higher in rural areas. There was never a standard or minimum commission to list on MLS, and if you read anyone stating that anywhere, they're simply wrong. Yes this includes major papers like the Times
• The lawsuit was about requiring the buyer's agent to be paid something to list on MLS. You could have chosen to pay a buyer's agent any amount to list on MLS- 2%, 1%, .5%, $50, or $2. It just, previously, couldn't be $0. So pre-lawsuit you could have chosen to pay a buyer's agent $2, now you're free to pay them $0. I cannot find 1 major publication that can report this simple fact
• The NWMLS, which covers part of Washington State including Seattle, voluntarily pre-empted the lawsuit by allowing sellers to pay buyers' agents $0 back in 2022. From what I've seen reported so far, the vast majority of listings still pay buyers' agents 2-3%. So the exact lawsuit settlement terms apparently hasn't changed anything
• MLSes have allowed flat fee listings for $100-300 since back when I practiced, and probably before. Google 'flat fee listings' and see all of the options. And there have always been discount brokers who would accept a lower fee. Again, there was never the slightest prohibition against it
• Residential real estate (which I did not practice) has a median pay equivalent to a Starbucks worker in every survey I've ever seen, and is famously high-turnover. I've never heard of a 'cartel' which doesn't pay much and where the supposed conspirators churn in and out in large numbers. Real estate brokerages are mostly small to mid-sized businesses, and the publicly traded ones where we have actual numbers are not unusually profitable or anything. It's not some kind of 'cartel' guys, it's.... a normal sales job in a normal sales industry.