If you’ve been following the news lately, you might believe that the real estate industry is experiencing a major upheaval. We all know that sensational news sells, but here, we’re going to be straight with you in an effort to keep you informed about how the recent changes impact you as a homeowner, current or future.
The NAR Settlement Explained
The National Association of Realtors faced dozens of lawsuits surrounding its policy that requires members to offer cooperative compensation. In plain language, listing agents who were members of NAR had to offer a portion of their commission to buyers agents, and they had to use the Multiple Listing Service (MLS) to do it. There was never any fixed amount that had to be offered. The seller, therefore, paid a commission to their agent, who then paid a portion to the buyers agent. If the proposed settlement is accepted, it would require any offer of compensation to be communicated to the buyers agent outside of the MLS. Furthermore, it would require buyers agents to secure an agreement that lays out their fees with the buyer before showing that buyer homes.
Status Quo in Colorado
Here in Colorado, this proposal represents a very minor change, and one that we are well prepared for. We already have a buyer representation agreement that lays out our fees, and in most cases, that agreement makes the buyers agent fee the obligation of the buyer in the event that the listing agent or seller does not offer to cover it. In most cases, the buyer does not pay anything out of pocket, though, because sellers recognize that they can add the buyer agent’s fee to their sale price, thus enjoying the benefit of represented buyers seeing, and eventually purchasing their home.
Why Buyers Agents Are Necessary
Although the digital age has empowered buyers like never before, savvy buyers still choose to be represented by an agent in their transaction, and savvy sellers are willing to pay for that service. Here's why:
- Finding the Right Property: Agents assist in sifting through listings to find homes that meet all your criteria.
- Negotiation: They are skilled in negotiating deals that benefit you, ensuring a fair transaction.
- Market Insight: Agents provide valuable information on market trends, helping you make informed decisions.
- Smooth Transaction: They guide you through the complex process of buying a home, making it as seamless as possible.
- Legal Protection: Agents ensure all legalities are covered, protecting you during and after the transaction.
Adaptability in the Industry
From embracing online listings to adapting our practices in the face of unforeseen challenges like the COVID-19 pandemic, our industry has adapted to far more substantial changes than this in the past. This rich history of evolution stands as a testament to our industry's capacity to navigate change, assuring us that we, as professionals, are well-equipped to smoothly transition through the requirements of this settlement.
While the settlement does create a pivot in the industry, it is actually a very minor change. Real estate commissions and fees remain negotiable. Buyers continue to enjoy access to legal representation. Sellers retain the ability to increase the interest in their home by offering to pay for those services. The most significant change, in truth, is that the recent flurry of news about this case will encourage more questions from consumers to their agents, and we welcome it. We have always felt strongly that a demonstration of value is warranted and should be demanded by buyers and sellers alike. While some agents may have a difficult time justifying their fees, we are proud of the world-class service we will continue to provide to hundreds of buyers and sellers each year. Let us know how we can help!
