What the Recent NAR Settlement Really Means
Photo by Cytonn Photography on Unsplash
As you may have seen or heard, there is a proposed settlement by the National Association of REALTORS® (NAR). While the settlement still requires final approval, there have been plenty of headlines in the media causing confusion.
To clarify some of the misinformation about the settlement, we want to provide a few facts:
Sellers retain, as they always have, the discretion to offer compensation to buyer’s brokers. The proposed settlement does not prohibit their ability to do so.
Commissions have always been and will continue to be negotiated through transparent conversations with our clients. We believe strongly in transparency around broker compensation.
Commissions have always been negotiable and are not set by law. Reduced fee alternatives have been and will continue to be available for consumers seeking those options.
The proposed settlement would require that every buyer represented by an NAR-affiliated agent sign a Buyer Representation Agreement outlining the relationship between the buyer and broker before touring a property, something that is already required in many states for over a decade.
As a part of the Buyer Representation Agreement, the buyer agrees to the buyer’s agent’s commission. In some cases, the seller may offer less than the agreed-upon commission to the buyer’s agent. In those cases, the buyer will be responsible for their agent’s commission, and it will be a part of the closing costs at the end of escrow.
Buyers deserve representation at every income level. Our experience has shown that transactions flow more smoothly when there is professional representation on each side, creating open lines of communication which benefit all parties involved.
Compass agents provide tremendous value to our clients. As a result, we will continue to encourage a transparent commission conversation that reflects the time, effort, expertise, and support we invest in each transaction.
We are fully prepared to adopt the changes laid out as part of the settlement. We see these updates as being positive both for our clients and for the brokerage community, as they provide additional transparency and clarity and will encourage the most professional agents to thrive.
If approved, the terms of this settlement will undoubtedly impact certain facets of the residential real estate industry. Our hope is that any changes will provide an opportunity to enhance the professionalism of the industry across the country and elevate Realtors® to the standards we at Compass have always held ourselves to.
Real Estate is a relationship-based business, and the trust we’ve earned with our clients is something we greatly value. Together, we will navigate any changes to rules and regulations in our industry while continuing to provide our clients with the same exceptional service we always have.
If you have any questions as additional details surface, please don’t hesitate to reach out.