03/16/2024
Lots of misleading headlines on the NAR settlement yesterday suggesting this is a win for home sellers and buyers. Several clients have asked about what it means.
1. There has never been a “standard” 6% commission. 4-5% negotiated total comp has been far more common in many markets than 6% ever was in the last 10 years.
2. The ban on publicly offering buyers’ agents a commission to bring their buyers will not equal a net savings to sellers most of the time. Buyer agents provide a valuable service— both to the buyer AND to the seller in bringing the buyers in the first place.
For years, the majority of buyers have paid zero commission out of pocket.
Regardless of whether their agent was offered 3% or 1% of a sale price, (split from the listing agent’s negotiated compensation), that buyer would get the same fiduciary responsibility, professional representation and service, assuming they have an ethical agent.
Now by default, buyers will need to pay out of pocket for buyer agent representation on top of closing costs.
And for VA and FHA buyers who are not allowed to pay commissions, this corners them into finding an agent who will be paid on contingency of negotiating concessions from seller to cover this.
I happily offer a generous commission offer to buyer agents when selling my own properties. All successful flippers do the same.
3. Despite being peddled as a suit to protect consumers, this outcome will drive more buyers to go direct to listing agents, resulting in either dual-agency lacking exclusive representation, or going blindly un-represented.
Many aspects of real estate transactions are simplistic, but inexperience in the details can bite you bad.
While I think the settlement is baloney and the suit was flawed, it’s 2024 and nobody is safe from sudden change.
