NAR's Settlement Shifts: What Homebuyers and Sellers Need to Know

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The National Association of Realtors (NAR) is steering through a sea of change following its landmark antitrust settlement. With a tight deadline approaching on August 17, the 1.5 million-member trade group is busy rolling out new consumer guides that cast recent changes in a favorable light, despite a backdrop of controversy and evolving industry norms.

In a candid moment at NAR’s midyear conference, President Kevin Sears acknowledged the discomfort among brokers about the settlement's impact. "Some of this stuff, it sucks," Sears remarked, reflecting the sentiment of many within the industry. Among the most contentious changes is the removal of mandatory buyer broker compensation from Multiple Listing Services (MLS), a shift that Sears admitted would be challenging.

As the deadline looms, NAR has introduced two comprehensive guides aimed at demystifying the settlement’s implications for homebuyers and sellers alike. These documents paint a picture of increased transparency and consumer benefits, marking a significant departure from previous practices.

For Homebuyers: What’s New?

The guide, titled “Homebuyers: Here’s What the NAR Settlement Means for You,” outlines critical changes:

• Written Agreements: Buyers must now sign a written agreement with their agent before viewing homes. This contract must clearly state the compensation terms and services provided, ensuring there are no hidden surprises.
• Compensation Transparency: The agreement must specify the compensation amount or rate, prohibit agents from receiving more than agreed, and emphasize that fees are negotiable.
• Continued Seller Offers: Although compensation offers from sellers to buyer agents are still permitted, they cannot be posted on MLS. Buyers can still negotiate seller concessions like closing cost coverage.

For Home Sellers: Key Adjustments

The parallel guide for sellers, “Home Sellers: Here’s What the NAR Settlement Means for You,” reveals:

• Marketing Flexibility: Sellers can choose to offer compensation to buyer brokers as a marketing tool, though this offer cannot appear on MLS. Alternative promotional channels like social media and flyers are encouraged.
• Disclosure Requirements: Any compensation arrangement must be disclosed to the seller in writing before the agreement is finalized, specifying the exact amount or rate.

The shift away from MLS-based compensation is a pivotal change, with NAR’s guides emphasizing the continued relevance of pre-emptive compensation offers. However, this stands in contrast to emerging trends and regulatory preferences suggesting a move towards more direct negotiations between buyers and their agents.

Industry Reactions and Future Implications

At Inman Connect Las Vegas, industry opinions were polarized. NAR’s promotion of compensation practices contrasted sharply with the U.S. Department of Justice’s position, which favors eliminating third-party compensation to buyer agents altogether. The California Association of Realtors has already adapted by removing broker-to-broker compensation offers from their transaction forms, aligning with DOJ guidelines.

As the real estate landscape evolves, the effectiveness of NAR’s new guidelines and their acceptance by consumers and regulators will become clearer. For now, both buyers and sellers are navigating a shifting terrain where clarity and adaptability are key.

Stay tuned as we continue to monitor how these changes reshape the real estate market and impact stakeholders across the board.