Ladies and gentlemen, welcome to this week’s: Ask Tim and Julie Harris anything! Many of the questions submitted this week were regarding buyer agency, the commission sharing settlement and the fear that NAR sold members out. Get ready, today, we’re diving deep into the wild world of the National Association of REALTORS® (NAR) proposed settlement.
Question 1: “Does The Settlement Leave REALTORS® Hanging, Did NAR Leave Agents Out To Dry?”
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Answer: NO, Matter of fact nearly every member of NAR (REALTOR®s) are covered by this propsed settlement. Yep, you heard that right! Over 1 million NAR members, state associations, local MLSs, and brokerages with a residential transaction volume of $2 billion or less in 2022 are off the hook for any terrifying liability claims related to broker commissions.
Question 2: “My (Big Name Broker) Isn’t Part Of The Settlement, Rumors Are Swirling We Might Have To Close Shop..Did NAR Sacrifice My Broker Just Because We Closed Over 2 Billion In 2022? What Happened?”
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Answer: The reality is that the proposed settlement DOES exclude brokers who did more than 2 billion in volume. And the unfortunate fact is that not all of these ‘big brokers’ will survive. Most real estate brokerages (big and small) operate on low to NO margin. They make no or virtually no profit from the actual real estate transactions. Their profit comes from mortgage and title. Now, let’s set the record straight. NAR fought tooth and nail to include as many folks as possible in this release. While some big dogs didn’t make the cut, they’re not exactly crying in their coffee. In fact, many are sitting pretty, with thousands of their independent contractor agents getting a get-out-of-jail-free card.
Partial list of excluded brokerages: Home Services of America, World Properties, LLC; Douglas Elliman, Inc.; Douglas Elliman Realty, LLC; eXp Realty, LLC; eXp World Holdings, Inc.; Hanna Holdings, Inc.; HomeSmart International, LLC; Howard Hanna Real Estate Services; Realty ONE Group, Inc.; Redfin Corporation; United Real Estate; and Weichert, REALTORS®.
Question 3: ” Why Did President Biden and Major Media State That NAR Dictates the Commission Rates….Why Did They Say That Commissions Are Set at 6% When Everyone Knows That Isn’t True?”
Answer: Time to bust this age-old myth! NAR ain’t the commission police, folks. They’re just here to make sure brokers play nice and communicate those offers of compensation. Whether it’s 6% or 0%, it’s all negotiable, baby! The fact is commissions have ALWAYS been negotiable.
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Question 4: “I Read That NAR Is Going To Have A Massive Increase In Dues To Pay For All Of This…Should We Be Bracing for a Dues Hike?”
Answer: Hold onto your wallets, ’cause there’s no dues hike on the horizon! NAR’s not about to hit you with a sneaky fee bump ’cause of this settlement. Your pockets are safe, folks! NO DUES HIKE FOR 2024 AND 2025!
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Question 5: “Is This The End Of The Buyer Broker Business Model, Will Buyer Brokers Be Forced to Take A Massive Pay Cut..Is Buyer Brokerage Dead?”
Answer: Fear not, buyer brokers! Your payday is still intact. We expect there to be emerging new fee structures for buyer agents. From fixed-fee commissions, flat fee to seller concessions, there’s plenty of dough to go around. Buyer agents will need to quickly adapt to the new reality that the buyer agent commission is no longer an entitlement. Buyer broker commissions ARE going to continue to be largely paid as they have been, by the seller as part of the transaction. FHA, VA and others also appear to be allowing buyer broker commissions to be part of the financing. The demand for top level buyer brokers is going to only increase. YES, buyer brokers will have to formalize their approach when working with buyers (similar to how listing agents work with sellers, a formal presentation, presenting their USPs etc). Don’t worry Buyer Brokers, you will be fine.
Question 6: “Does This Settlement End Offers Of Compensation, End A Buyer Broker Co-Op?”
Answer: Not so fast! Offers of compensation are still on the menu, folks. Sure, you can’t dish ’em out via the MLS anymore. But brokers can have offers to compensate on their sites. We anticipate there to be a new process/ system outside of the MLS for listing agents to let buyer brokers know what the buyer agent co-op is. Maybe that never happens and no new process is created. That’s fine, the request for co-op will become part of the buyer’s offer to the seller. The buyer would request the seller pay the buyer agent commission in the same fashion the buyer asks the seller for any concession.
Question 7: “Is NAR Guilty, Did Nar Break The Law…Am I As A NAR Member Part Of Some Sort Of Illegal Conspiracy?”
Answer: Don’t believe the hype, folks! NAR’s standing tall and proud, denying any wrongdoing. This settlement ain’t no admission of guilt—it’s just a smart move to keep the wheels of real estate turning smoothly.
So, there you have it, folks! The truth is out there, and we’re here to spill the beans. Keep your eyes peeled and your wits about you, ’cause in the wild world of real estate, it’s all about knowing the facts and focusing on what truly matters: Being of service to others. Now more than ever it is critical that you know that knowledge is confidence and ignorance is fear.
