New NAR Rules Governing Real Estate Sellers and Buyers With Raquel Fernandez, #214
In March, The National Association of REALTORS® (NAR) settled an antitrust lawsuit. The lawsuit alleged that NAR didn’t allow sellers to negotiate what they could pay buyer’s agents. The changes outlined in the settlement will impact “business as usual.”
As of August 17th, 2024, the way home-buying and selling transactions happen will change. Raquel Fernandez—a realtor with over 20 years of experience—joins me to share what the changes look like for buyers, sellers, and their brokers. Anyone who owns a home—or is looking to buy one—needs to know this information.
You will want to hear this episode if you are interested in...
The NAR lawsuit is settled: Now what? [1:20]
What do the changes mean for you? [2:56]
Debunking the fake news [9:49]
What happens if the seller doesn't pay commissions? [16:42]
What do the changes mean for the future? [27:00]
Debunking the fake news
In the past, the MLS (or Multiple Listing Service) listed how the buyer’s broker would expect to be compensated at closing. You’d contact your client and take them to showings. But some agents would choose not to show a property with a low compensation percentage in lieu of making more money on a different sale.
The premise of the lawsuit was that the option for realtors to do that violated antitrust laws. So now, any compensation given to the buyer/broker is no longer allowed to be divulged on the MLS. The MLS has to overhaul its platform to remove compensation information. Now, you have to call the other agent to find out what the compensation is.
Previously, the seller was responsible for compensating their realtor and the buyer’s realtor. It came out of the sales price. You had to plan accordingly with the pricing of the home. But the settlement also allows sellers to choose not to compensate the buyer’s broker at all.
Brokers now have to explain why this is a detriment. If you want to get top-dollar for your property quickly, you have to offer compensation. If you’re only paying your listing broker, you’ll greatly shrink the number of people looking at your property.
Where does this also create challenges? Listen to hear Raquel’s thoughts.
What happens if the seller doesn't pay commissions?
Aside from the changes to the MLS, It is now law that a broker can’t show anyone a home without a buyer/broker agreement in place. Anyone seeing a house must be presented with a contract explaining that they’re responsible for compensating the broker/realtor.
There are three ways a buyer’s agent can be compensated. Typically, the seller offers compensation. But if a seller has determined that they aren’t going to be paying the buyer’s broker, how is an agent paid?
The seller offers a concession. So if they are willing to drop 2% of the purchase price, that concession goes to the buyer’s agent.
The buyer pays the agent 2% out of their own pocket.
If the seller isn’t giving a commission or concession, the buyer has to pay the agreed-upon amount at the time of closing.
What else do buyers and sellers need to know about the changes? How can this change the negotiation process? Learn more in episode #214 of Retire with Ryan.
Resources Mentioned
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