MASON CITY – Did you pay your realtor too much money when you bought or sold your home? A major settlement involving the National Association of Realtors may diminish the obscene payouts realtors make – and save you money next time.
For decades, realtors have cashed in on 6% commissions simply for finding a buyer or a seller for a piece of property. This could be split between two realtors representing the buyer and the seller – and all land on the seller. Haughty realtors sporting photos of themselves in goofy jackets from the 1990’s and acting like they are God’s gift to home marketing have gotten rich off folks is a perception. Have you ever hired a realtor to sell your home and then they left town for a two-week vacation? Did you ever meet your realtor and were confused because they look nothing like their very old, filtered photograph? Have you ever handed a realtor a bill, only to watch them bitterly cry real tears of confusion and entitlement? Have you ever been threatened by a realtor? We’ve all seen this behavior in Mason City and beyond, haven’t we? Now, perhaps karma has come home to roost for the realtors? Are folks beginning to realize that you don’t even need a realtor to sell a home – only a FOR SALE sign, a bank and a Facebook account? Is this a totally antiquated “service” that should be further sanctioned or go out of style like the horse and buggy?
Now, considering all of these questions and outlooks, and after major investigations all the way up to the Justice Department coupled with anti-trust sentiments of policymakers, the beloved realtors have had to come to the bargaining table. People have reportedly being suing the pants of realtors, costing hundreds of millions of dollars and threatening their businesses. Realtors, starting this year, will have to negotiate harder and be more transparent on their commissions, reportedly. The National Association of Realtors, if a judge signs the agreement, will be forced to change the way realtors for sellers and buyers are paid. In some countries, realtors are just 1 or 2 per cent on the sale, something to keep in mind?
Read more about the possible outcome of this development in this New York Times article.
READ THE STATEMENT FROM THE NATIONAL ASSOCIATION OF REALTORS:
(March 15, 2024) – The National Association of REALTORS® (NAR) today announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.
The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR.
Two critical achievements of this resolution are the release of most NAR members and many industry stakeholders from liability in these matters and the fact that cooperative compensation remains a choice for consumers when buying or selling a home. NAR also secured in the agreement a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it.
NAR fought to include all members in the release and was able to ensure more than one million members are included. Despite NAR’s efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement.
In addition to the financial payment, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers. They are also consistent with the real estate laws in the many states that expressly authorize them.
Further, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much. These changes will go into effect in mid-July 2024.
“Ultimately, continuing to litigate would have hurt members and their small businesses,” said Ms. Wright. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission.”
“NAR exists to serve our members and American consumers, and while the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” said Kevin Sears, NAR President. “NAR is focused firmly on the future and on leading this industry forward. We are committed to innovation and defining the next steps that will allow us to continue providing unmatched value to members and American consumers. This will be a time of adjustment, but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.”
The National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
