Dear valued clients, customers, and friends,
You may have seen the news stories about the recent proposed
settlement from the National Association of REALTORS® (NAR). The good
news is that our brokerage has been preparing for these potential
changes for 2-3 years. Unfortunately, there has been a lot of
misinformation about our industry in the click-bait
headlines.
Below is a basic understanding of what this proposal means:
What is the NAR settlement all about?
On Friday, March 15, 2024, The National Association of
REALTORS® announced a proposed lawsuit settlement that included
a monetary settlement, as well as two changes to business
practices: removal of the offer of Buyer Agent Compensation in
NAR-owned MLSs and adding a requirement for Buyer Agents to use
Buyer Representation Agreements.
What will change and when?
Assuming this proposed settlement is approved, the changes will
take place in mid-July of 2024. We expect MLSs to remove the offer
of Buyer Agent Compensation. As this proposal is written, sellers
may still offer Buyer Agent Compensation, without it being
published in MLS. There are some concerns that this could be a step
away from consumer transparency. Buyer Agents will also need to
have signed agreements, just like how Listing Agents need to have
Listing Agreements.
Did or does everyone charge 6%?
No. This allegation is wildly inaccurate. Different marketplaces
see different ranges of compensation. From town to town, company to
company, and listing to listing, there has always been variation in
our marketplaces. The industry does not – and cannot –
collude or collaborate on what a universal commission rate can be.
Commissions are derived from the brokerage and our services,
market share and experience; not what our competitors are asking
for.
Will this lower housing costs?
Home prices in a free market economy are determined by supply
and demand. Nothing in this settlement addresses the lack of supply
or the high levels of demand. Therefore, this does not lower the
cost of buying a home.
What if I have an existing contract?
Nothing is likely to change before the July target date.
However, we are awaiting the final details of the settlement as
approved by the court. At this time, our understanding is when the
July target date arrives, the only change to an existing contract
is that no offer of Buyer Compensation from the List Agent or
Seller can be published in the MLS and agents working with Buyers
will need to have written contracts to represent.
What consumer protections are in buyer
representation?
A Buyer Agent has the responsibility of being an exclusive
Fiduciary. Fiduciary duties are all the duties that a real estate
agent or broker is legally beholden to when working with a client.
These duties, which are in the client’s best interest, are:
obedience, loyalty, disclosure, confidentiality, accounting, and
reasonable care.
Does a buyer in the market need buyer
representation?
A buyer does not have to use a Buyer Agent. However, in a low
inventory “seller’s market”, it is difficult to
compete against other buyers who are getting expert advice on offer
strategies and negotiation.
What can the listing agent not do for the
buyer?
- Offer strategies that have your interests in mind
- Recommend Home Inspectors (Under Massachusetts law, only a
Buyer’s Agent exclusively representing the Buyer can
recommend a Home Inspector) - Act as your exclusive Fiduciary
- Provide Comprehensive Market Analysis interpretation for
pricing - Advocate for you
What are the risks with a buyer not having a
representative?
- Not learning about off-market opportunities
- Not being informed and educated about the market
- Not having a well-prepared, competitive offer in a multiple
offer situation - Not getting a house
Will buyer agency go away?
No. Buyer Agency is the way that buyers get expert guidance
— from preparation and search, to offer strategy and
negotiation, and so much in between. A home represents an important
investment — one that continues to be at the heart of
financial wellness for most Americans.
Gibson Sotheby’s
International Realty’s priority is to focus our resources
on those we serve. To our clients, thank you for the privilege
of representing your interests and providing outstanding service as
you navigate one of life’s most important and complex
transactions. We will continue to communicate with you as we
understand more about their settlement and the ongoing industry
dynamics. Please don’t hesitate to reach out to us with
questions.