Navigating Changes in Real Estate: Adapt, Serve, and Grow Post-NAR Settlement
The proposed National Association of REALTORs® (NAR) settlement introduces significant regulatory changes, stemming from antitrust violations that will reshape industry practices.
How did we get here?
The lawsuit against the NAR was primarily due to practices in some states that were perceived to inhibit competition and enforce non-negotiable broker commissions. These practices made it mandatory for listing brokers to offer buyer broker compensation when submitting a listing to the MLS. It was argued that this established a “standard” commission offered that sellers were unable to negotiate. This proposed settlement aims to promote more competitive practices and pricing flexibility within the real estate industry.
Understanding the NAR Settlement
In response to the allegations, NAR has proposed changes to its policy framework. These adjustments are designed to enhance transparency and fairness across real estate transactions:
1. Prohibition of Compensation Offers on MLS: The longstanding practice of including compensation offers in MLS listings will be discontinued. This rule was historically intended to promote transparency in compensation making buyer representation more accessible for homebuyers. Seller’s can still offer compensation to a buyer’s agent. However, this compensation can no longer be advertised on MLS. According to NAR, Buyer’s Agents can still be compensated in multiple ways including, but not limited to:
Fixed-fee compensation paid directly by consumers
Concession from the seller
Portion of the listing broker’s compensation
2. Mandatory Buyer’s Agency Agreements: Agents will be required to enter into agreements with buyers detailing the compensation terms. This move aims to clarify financial responsibilities aligning with consumer protection norms and has been a required practice in many states prior to the lawsuits.
How can agents adapt their business model to better serve?
These proposed policy revisions necessitate a proactive shift in how real estate professionals conduct business. The explicit detailing of agent compensation will no longer be visible on MLS, prompting a need for direct and transparent financial discussions with clients before services are performed.
Buyer’s Agents will need to:
Have buyer consultations prior to property showings and discuss all potential transaction costs upfront, particularly concerning agent fees. While this should always have been the case, recent fast-paced markets coupled with many REALTORS® desire to serve, left many agents showing properties prior to having a professional conversation first.
Listing Agents will need to:
Discuss and agree upon compensation structures for both themselves and the buyer’s agent at the listing consultation. Listing agents must avoid suggesting a “standard,” “customary,” “typical,” or “historical” commission rate to avoid antitrust implications.
Leveraging Changes for Growth
Adapting well to regulatory changes provides a substantial opportunity for real estate professionals to refine their service offerings, build deeper trust with clients, and outshine their competition. Transparent, proactive communication about these new rules will be essential in setting expectations, demonstrating value, and serving the consumer the way they deserve.
As we anticipate the final court approval of the NAR Settlement, real estate professionals should begin implementing these changes into their business practices. Proactive adaptation, coupled with a commitment to transparency and communication, will help agents differentiate themselves and move the entire industry towards a higher level of professionalism.
Are you an agent needing help adapting your business practices or conversations to these new changes so you can continue to serve your clients and grow your business? At SMART Real Estate Consulting, we have a comprehensive Buyer’s Strategy Coaching Program that will help you adapt, serve, and grow your business. Contact us to learn more!
