Hey there!

I’ve noticed a lot of chatter on my timeline about the recent settlement proposed by the National Association of Realtors (NAR), and I think it’s crucial we all stay informed about changes that could impact the real estate industry.

Here’s a brief overview:

A $1.8 billion dollar class action lawsuit was filed against NAR last year, alleging that sellers were pressured into paying inflated commission splits to buyers’ brokers. NAR has agreed to a $418 million settlement over the next four years, though it’s important to note that this settlement is still pending court approval expected this summer.

As a licensed Real Estate Agent, I want to emphasize that commissions have always been negotiable.  There’s a misconception that commissions are fixed but buyers and sellers have always had the flexibility to negotiate these rates.

The media, including a post from The New York Times, has spun some myths around this settlement. They suggest that home prices will drop and the traditional 6% commission will disappear. However, the reality is that commissions are and have always been subject to negotiation.

The sale price of a home isn’t simply the price plus agent commission; the sales price of a home is determined by what the buyer is willing to pay.

Another myth is that this settlement will simplify home buying. If buyers need to save additional funds for agent representation, those struggling to save for a down payment will face even more significant hurdles. This could disproportionately affect first-time homeowners, particularly in the black and brown communities, and veterans who are limited in what they can put towards a down payment. This could actually make it harder for them to become homeowners…

About a million real estate agents may need to reconsider their careers, as the market has more agents than buyers. This settlement could compel agents to demonstrate their value more clearly, potentially weeding out less committed individuals and highlighting the importance of professional agents. This is good for professional Real Estate agents because this will lower the competition!

Now let’s breakdown how this decision can effect you directly.

Sellers
For sellers, this means continuing the option to choose whether or not to hire an agent and deciding on the commission to offer a buyer’s agent. This could lead to more profits for the seller but this also risks potentially fewer showings because less buyers will be able to pay the their agents commissions.

Real Estate Agents
Real estate agents will need to maintain open communication with their clients about commissions and represent their value effectively. The visibility of buyer’s agent commissions on MLS listings might change, requiring agents to verify commission details before showing properties. The Real Estate agents will need to let their clients know that if they find a home and the seller isn’t willing to pay the buyers agent commission then the buyer will need to come out of pocket at closing for their commission.

Buyers
Buyers could be the most affected, potentially needing to save additional money to cover agent commissions if sellers opt not to. This could lead to buyers only viewing properties where the seller agrees to cover these costs or consider purchasing without an agent.

If you don’t have the money for the sales commission this will leave you with 2 options.

Option 1. – Only preview properties where the seller is willing to pay the buyers agent commissions.

Option 2. – Don’t hire a Real Estate agent and purchase the home without professional representation.

My thought is that most people will opt in for option 1 which will ultimately affect sellers ability to sell their homes since that means they may have less showings on their property.

My fear with option 2 is that buyers will be taken advantage of by the seller and buyers won’t understand their rights during the transaction which could lead to additional lawsuits.

​You may also be wondering, okay how does this impact me and what do I need to do?
Short term, if you’re wanting to purchase a home this year but are concerned about saving for a down payment, it might be wise to move up your buying plans. Considering an early purchase could be beneficial, especially if you value the guidance of a real estate agent, which I highly recommend. Acting quickly before the new changes take effect could be crucial.

For those in the Atlanta area, my team of outstanding agents at Strive Real Estate are ready to assist you. Feel free to schedule a free 15 minute consultation with us to explore your options and navigate the home-buying process with expert support.
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Long-term, this decision could introduce more barriers to homeownership and exacerbate the wealth gap, potentially leading to more renters than owners. I hope for solutions that will support prospective homeowners rather than hinder them.

I’d love to hear your thoughts and questions about this settlement and its implications.

What are your concerns or additional insights? Comment below!

Let’s keep the conversation going and support each other in navigating these changes.

In reading a recent article, I came across this line and couldn’t agree more…

“Things are never as good or as bad as everyone thinks”

Did you find this article valuable? Please share this with a friend and share on your social media to spread the word so others can be aware of what’s really going on.

Talk soon!