Real Investor Radio

Bonus Content | NAR Settlement Unpacked

March 28, 2024

Episode Summary:

The conversation revolves around the recent settlement between the National Association of Realtors (NAR) and several brokerages, which will result in more negotiation of commissions. This settlement will lower the cost of buying and selling a home for buyers and sellers but may drive some real estate agents out of business. The traditional model of listing agents setting a fixed commission in the MLS will no longer be the norm. Instead, commissions will be individually negotiated between buyers and their agents. This change may lead to the emergence of different models to cater to different levels of service needed by buyers.

Overview of Mini Episode #1

Craig and Jack dive into the NAR Settlement, a pivotal topic in real estate. The $1.8 billion settlement reshapes how commissions are negotiated. Not only does it impact agents, but it also changes buyer and seller interactions.

Commission Structure Transformation

Accordingly, brokers can no longer list a fixed commission in the MLS. Now, the buyer’s agent commission will be individually negotiated. Consequently, agents must explain their value proposition more than ever, which may drive some agents out of business.

Buyer’s Role in Commission Payments

This shift makes buyers responsible for negotiating their agent’s commission. After all, buyers traditionally rely on sellers to cover these costs. As a result, this may limit low-end buyers who have limited cash on hand.

The Role of Online Platforms and Buyer’s Agents

As buyers now find listings on platforms like Redfin and Zillow, they rely less on agents. Nevertheless, high-end agents may adapt by offering tailored services. Conversely, part-time agents may struggle as commission structures change.

New Opportunities for Mortgage Loan Officers

Mortgage loan officers may benefit from these changes. For example, they could become buyers’ first point of contact, offering bundled services, including pre-qualification and real estate guidance. This shift could increase their influence in the real estate transaction process.

Closing Remarks on NAR Settlement Impacts

All in all, the NAR Settlement signals a shift in real estate. It transforms traditional commission structures, impacts buyer-agent dynamics, and opens opportunities for mortgage loan officers.