Are you wondering about the National Association of Realtors’ lawsuit? The lawsuit is against the NAR (National Association of Realtors) and many large real estate firms accused of inflating commissions.

Unfortunately, the media has misrepresented the truth. The NAR has never had anything to do with real estate commissions. However, large firms have influenced inflating commissions, a topic we will cover in today’s blog post below.

In this post today, I (Robin with Robin Hickman Realty) will fill you in on what is happening and offer some real estate agent perspectives that cut through some of the media’s inaccurate coverage. Let’s dive in!

The NAR Lawsuit – What to Know:

Source.

I spent my first ten years affiliated with a boutique realty firm well-known in the luxury market. My affiliation with that firm came with specific rules, mainly to gain a 6% commission on all listings. Offering less required permission influenced agents not to negotiate anything lower.

I am sharing this perspective to provide you with context from a realtor’s viewpoint and someone who has worked in the industry for almost 20 years. Transparency and commissions are the primary issue at hand and the National Association of Realtors is working hard to share their side of the story as well (see below):

Here is what the NAR recently published on their website:

There’s much the media has gotten wrong about NAR’s settlement, which would require the association to pay $418 million over four years. Some outlets have suggested that NAR previously set or guided commissions to a standard rate of 6%. Even President Joe Biden, in recent comments, misspoke in suggesting that the settlement makes commissions negotiable for the first time.

You know that is false. NAR does not set commissions, and commissions were negotiable long before this settlement. They are and will remain entirely negotiable between brokers and their clients. And housing prices are dictated by market forces beyond members’ control.

Getting the facts right is important, especially because the settlement agreement is complex. NAR is continuing to engage with media to correct inaccurate reporting about the settlement. Members are also encouraged to refer to official NAR sources, like facts.realtor, for the most accurate and up-to-date information about the settlement and what it means for consumers.

The settlement achieves two important goals: protecting members to the greatest extent possible and preserving consumer choice. The proposed settlement:

1. Resolves claims against NAR and nearly every member; all state, territorial and local REALTOR® associations; all association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below.
2. Preserves cooperative compensation as an option for consumers looking to buy or sell a home—as long as such offers of compensation occur off of the MLS.

Now that you have a firmer understanding of some of the details, here are my takes on that matter below.

First, what are the proposed changes?

As of July this year, it’s rumored that compensation will no longer be offered through the MLS (Multiple Listing Service). As always, commissions can be negotiated, but a buyer’s agent will not know what they will be in advance.

My thoughts on the actual problems and solutions:

My affiliation with a large firm taught me that perception does not always match reality. Regardless of the size of the firm, agents function as sole proprietors. My role and services remain consistent, whether operating as an independent business owner or within a larger entity.

Unfortunately, changing the general public’s perception is a challenge I face alone. With 18 years in real estate, I feel confident in understanding the issues and proposing potential solutions.

Why I say “Hooray” to commission changes!

Many buyers overlook the amount of time and effort devoted to assisting them. They likely do not fully understand that an agent is only compensated if/when they purchase a home. I believe many consumers think an affiliated firm compensates agents, but they are not!

If you think about it, in what other industry does a professional dedicate their time and offer services without compensation? (I welcome any feedback you may have, but I still can’t find a free lawyer 😊).

My goal is to share the facts. Media misrepresentation only adds to the false impression created by consumers who do not understand the role of a Realtor. As always, I am here to serve you. Feel free to contact me with any real estate needs or if you would like additional information about the lawsuit.

1 . My TRUTH:

Here are some quick bullets to help you navigate the complexity of the NAR lawsuit:

1. Robin Hickman Realty is NOT implicated in the lawsuit. We strictly adhere to the regulations the Real Estate Commission set forth, ensuring transparency in our dealings with buyers and sellers.
2. Affiliation with some large firms can resemble Multi-Level Marketing (MLM) models.
3. Our firm operates without the imposed restrictions that may not always serve our clients’ best interests. It is these restrictions that have contributed to the issues prompting the lawsuit. Choose Robin Hickman Realty for a different approach!
4. Should the proposed changes come into effect, I advocate for a business model in which all agents receive fair compensation for their efforts.

2. The PROBLEM:

Some of the common problems I keep seeing with real estate commissions and home buying/selling:

• Some agencies actively discourage agents from showing homes sold by owners who offer low commissions. It remains uncertain how this practice will evolve, especially as consumers gain access through various platforms.
• The current sales value of a home already factors in commissions. However, it’s questionable whether agents will adjust market values accordingly and whether sellers will agree to such adjustments.
• Financial constraints may hinder buyers from covering commissions or retainer fees alongside securing loans and associated costs.
• Changes to the current structure could potentially limit the pool of prospects for sellers by affecting the homes buyers consider.

3. Potential SOLUTIONS

If I had a magic wand, here is what I would propose:

• Implementing a standard for mortgage bankers to include commission as a line item in a buyer’s loan could ease the financial burden on buyers while ensuring fair compensation for agents.
• Introducing a standard retainer fee for buyers to cover the time agents spend with them could address the issue of uncompensated efforts.
• It is crucial to establish measures to weed out agents who fail to adhere to professional standards. Agents should explain real estate transactions clearly to buyers before showing homes, promoting consumer protection, trust, and transparency.

The Verdict –

Sometimes, things can get ugly before they can get better. In the case of the NAR lawsuit, things seem to be trending in the right direction, and the adjustments being made will benefit both consumers and agents.

Here at Robin Hickman Realty, I pride myself on ensuring the clients I work with understand the entire process of buying and selling a home but also see the value in hiring an agent! So if you have a real estate question, don’t hesitate to simply reach out below and I will be sure to help you!