I’ve been waiting to send this out until I had time to chill and process. I don’t like the NAR settlement. At first I didn’t like it because it felt like NAR sold us REALTORS out. Then, I realized that it provided a way for us to be left out of the proceedings. They basically took one for the team. Now what I don’t like is the extreme misleading information presented by the media. Let me clarify a few things:
1) NAR has never set commissions. NAR has never provided guidance on commissions. The only thing they have done is to institute clear cooperation which means that listing agents publish compensation offering for a buyer agent. Ultimately, that compensation offering is actually for the buyer in our state as we have buyer representation agreements that spell out the fact that buyer agents work for buyers and buyers are responsible to pay the buyer agent. That offer of co-broker participation is really a credit to the buyer to pay the commission expense the buyer incurred by engaging the buyer agent. When I present my buyer rep agreement, I tell buyers that if the seller does not offer co-broker participation (some auctions, some foreclosures, some for sale by owners), then they are responsible for it. I never skipped showing a house because of the amount offered and I would say many agents show whatever house the buyer wants to see.
2) Buyer agency is important. It is so important that TN codified it in 1996. Prior to that, everyone dealt with the listing agent. No one had a fiduciary responsibility to the buyer. Truly a buyer beware state. The state realized how bad this was for consumers and made provision and rules for buyer agency.
3) This change to commissions that is reported will do absolutely nothing to reduce the price of homes. Home prices are based on previous home sales. If the market says your house is worth $500k, then that’s what its worth. If your expenses to sell it suddenly drop, are you going to just automatically adjust your home price? NO!!!! And now, if you also don’t offer co-broker participation, they buyer is on the hook for buyer agent commission, the house actually gets more expensive OR they buy without an agent and potentially get in some rough waters.
4) You as a consumer have always, always had a choice. There have always been discount brokerages, flat fee brokerages and the option to sell FSBO. I spend a lot of time talking to folks about these options.
5) Again, NAR has nothing to do with commission rates and structures. This lawsuit now wants NAR to lower commissions, which, is exactly what they should NOT do because that means that they have control over commissions. They don’t. Real estate agents are all 1099, independent contractors. Each agent, even in large firms, is his or her own small business.
Quality, knowledgeable agents will not go by the wayside. There will always be a need for people that understand this business, are good negotiators and can balance the extremely personal nature of this hefty business transaction. I hope that when you take in the media, you understand that there is always an agenda. There is always a reason they say things the way they say them. This particular issue, there is just plain false information being widely disseminated. I also hope that you read it with a skeptical mind. Ask yourself, who benefits from this? What is the end result of this? Who would benefit from that? Ultimately, this, in the form it is being reported, makes home more expensive for buyers, makes transactions more difficult, takes away the transparency of showing the numbers on the listing, and makes it much more likely that there will be unrepresented buyers. Who benefits from unrepresented buyers? Large corporate builders, online brokerages, national conglomerates. Anyone that would like for you to NOT have an expert in your corner or better yet, convince you you don’t need one. Stay curious, question things, follow the money. If you want to talk more, hit me up.
