What the Industry is Feeling and Saying About the NAR Settlement


The real estate industry has been abuzz since NAR’s announcement of their settlement in their ongoing commission lawsuits last Friday. Conversations are spurning left and right about the decision: the terms, what they mean and how that will trickle down the industry.

To break down the proposed settlement’s terms: buyer’s agent commissions will not be displayed on MLS listings, and homebuyers must sign contracts with their buyer’s agent. You can read more about the main takeaways of the settlement here.

This is a big change from how commissions have historically been handled, and leaves a lot of questions floating throughout the industry about the potential effects—good and bad—that the changes could have. 

Real estate professionals throughout the industry have turned to social media platforms such as X, Reddit and Facebook to discuss the settlement, voicing their thoughts, opinions and fears about where the industry goes from here.

Here are some of the main settlement discussions circulating in the real estate sphere of social media:

The outcome of the settlement: the effect on buyer’s, and buyer’s agents

Since buyer’s agent commissions will not be offered on MLS listings anymore, how will buyer’s agents receive their commissions? 

Nothing in the settlement prevents a buyer’s agent commission from coming from the seller, as it has previously. It can still be included as part of the seller’s costs in negotiation (for example: a seller could pay a 6% commission, split 3% and 3% to each agent). Many in conversation on X suggest working with one another to keep this model going.

However, since a seller paying a buyer’s agent’s commission will no longer be the necessity or “requirement” it once was, some sellers may not agree to these terms and will only pay the commission of their seller’s agent.

If a buyer’s agent’s commission is not paid by the seller, responsibility will fall on buyers themselves to cover this cost. This creates a new affordability barrier to homeownership for many prospective buyers in the market.

Prices are still inflated in the housing market, and mortgage rates still remain rather high (despite decreases). In addition—as some users on Reddit pointed out—because commissions may be cut for seller’s agents doesn’t automatically mean home prices will see a decrease. Home prices may see little change overall beyond the usual market trends.

BuyersEffect1 1Because of these issues, many buyers have been using—and will continue to use—low down payment loans and down payment assistance, since they cannot afford to cover the full costs of purchasing a house (like a 20% down payment). As some users in discussion on Reddit concluded, all of this means that many buyers will not be able to afford to pay an agent’s commission.

BuyerEffect2

A possible outcome of this new homeownership barrier is that many buyers will move forward in the market without an agent. This creates another barrier, but for buyer’s agents. They may see a distinct loss in business.

To sum up, if buyers can’t afford commission it makes it harder for them to buy a house, and it makes it harder for buyer’s agents to find work.

Buyer’s agent sentiment around their careers

With the negative effect this can have on buyer’s agents, how will they see their futures in the industry?

Real estate has never been an “easy” career, but the past widely used commission model offered more job security for buyer’s agents. The new way commissions would be handled leaves a lot up in the air for buyer’s agents when it comes to making their money. With the changes proposed in the settlement and the effects they could have, some Reddit users stated that buyer’s agents may choose not to weather the storm and change to a different career path. CareerSentiment2

CareerSentiment1For the buyer’s agents who choose not to leave the industry, they may shift their business from to sellers in order to guarantee business for themselves. Buyer’s agents could become less and less of a population in real estate.

On the other hand, for the buyer’s agents who stick it out, it’s going to be a lot of work. Some Reddit and X users pointed out that the contracts with clients and marketing themselves in the “new normal” are the main challenges, but that these can be overcome.

CareerSentiment4 e1710945204198CareerSentiment3The conversations agents are having with clients

As articles on the settlement float through the mainstream news, it may be a good time for agents to reach out to their clients to start to have conversations about commission and potential upcoming changes in the industry.

Many agents discussed on Facebook that they had broached the topic with their clients, and that the conversations were pretty easy to talk through. 

Buyerconvos2buyerconvos4buyerconvos3

A lot of the ease in conversing with clients on this sensitive topic is attributed to training by Facebook commenters. Good training from brokerages and brands allows for definite ease in having the hard conversations with clients, and breaking down big, complicated topics like this proposed settlement.Buyerconvos1The takeaway

There’s going to be more conversations and even more changes in the real estate industry and housing market as this settlement is reviewed and possibly approved. There’s no answers as to what exactly will be approved—and what exactly will happen in response—but it’s best for real estate professionals to keep their ear to the ground and stay up to date on the news as the story develops.





Source link

About The Author

Scroll to Top