What’s REALLY in the NAR Settlement? Side effects you won’t hear anywhere else!
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- Опубликовано: 9 июн 2024
- The headlines are getting it all WRONG for the National Association of Realtors (NAR) settlement…we run through a PDF of the settlement to explain the actual changes in buying and selling that are being offered by the NAR (including one that is being consistently misinterpreted for buyers). And stick around to the end because we discuss some possible side effects that you’re NOT hearing anywhere else!
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What do you see as the pros and cons of the NAR Settlement?
1)If the unrepresented buyer goes to the open house, and request concession information (ex.buyers agent commission and any other perks seller is offering ) will the listing agent give that info to the unrepresented buyer?
@@Itiswritten121 Good question! Seems like there shouldn't be any reason that the agent would not give the info...the only place the agent can NOT put the buyers agent commission is the MLS.
I think it further demands that the seller/listing agent have even more dialogue with the owner on the pros and cons of compensating a buyers brokerage. Let the consumer decide although the buyers broker is a key asset in getting properties sold... Just my opinion
For transparency of the transaction, shouldnt buyers know what the seller is offering upfront before they write their offer? Buyers should know this before they select their agent
@@Itiswritten121 Yes, and that will probably be a term included in the buyer written agreement, but we'll see. The irony is that most home search websites were set up for that right now (sharing the buyer agent commission), but have to remove it.
Good and informative! Thanks for breaking it down and explaining what it's about!
Thanks, Carlos!
Really great content on this channel
Much appreciated, Joe!
Interesting points so thank you… I think open houses are going to be a huge opportunity for unrepresented buyers and thereby sellers as well. There are several RUclips realtor videos saying they will not show a property to any unrepresented buyers as a listing agent on behalf of their seller. Essentially, they are trying to force unrepresented buyers into a buyer agency agreement just to see their property.
This is smart.
I don't know why a seller would direct their agent to do that. Instead, I think we'll see listing agents working with more unrepresented buyers who want to make an offer at an open house because the buyers can't afford the buyer agency fee. That will be more work for the listing agent on behalf of the seller.
Very concise. You just said more than most youtube brokers are saying in less than 13 minutes. I forwarded it to everyone in my office.
I see so much potential for issues with dual agency. If you're a listing agent, and you know the seller will take 20K less than asking price, and you're also representing the buyer, half of your job is to get the best deal for the buyer, right? Same with the seller. I don't see how that syncs up. We rarely have it, but when it does, different agents in my office represent each party, and everything has to be approved by me before it's submitted to the client(s). My agents complain about it, but it's my decision, and I just tell them "I heard Remax is hiring." I was listening to a N.C. real estate attorney, and she predicts a lot of lawsuits related to dual agency. I don't know how anyone that knows anything about this industry, could think this is going to lower home prices or benefit buyers. Being our market here is largely military, and the vast majority of sales are to VA buyers, we're all sitting on the edge of our seats to hear what's going to happen with VA loans. Buyers are, generally, young military people that don't have any money to put down or pay closing costs.
First-time buyers and VA buyers stand to lose significantly, as do sellers dealing with buyers who are not represented, increasing the risk of future lawsuits. Not disclosing the commission on the MLS undermines transparency in real estate transactions. This ruling represents a regressive measure and disrupts an otherwise well-functioning system.
I just had a VA loan turned down by a seller. Pretty sure they were worried it wouldn’t appraise for the agreed selling price. They wanted me to switch to a Conventional. Not happening. I have the $ to pay my broker but the seller better not expect to sell for $x above capturing the old way of doing things.
More bidding wars, steering and exploitation on the horizon
@@Peter_WangI have sold a lot of homes and the only real problems I have encountered with appraisals has been VA loans. If the shoe fits….
People should get mad at the VA if they don’t like it….but it’s ridiculous to think a seller is going to be happy with a lender who low balls appraisals versus one that doesn’t. Now I can’t speak to how intentional it is, but I can say in the many home sales I have been involved in….VA loans have caused more problems for me as a seller than conventional, and you add to it VA buyers don’t have any cash and don’t want to put up the deposit that others will, it definitely makes for a less competitive offer in many circumstances.
And my husband served for multiple years…so please spare me the “vet has earned the right through a subpar VA loan to stick it to the seller” argument.
Overall, I think the VA is trying to be better, but there is still room for improvement. I don’t know if it’s just leftover from there past and how they operated, but it does seem they still low ball appraisals as I have been burned multiple times. I have had some instances where they low ball by some silly amount like $1500 and then it becomes a way to blow up a deal over pennies. On a side note, I am not speaking of appraisal problems that were due to overbidding the listing price, but appraisal problems for a home that was priced below market and the neighbor comparable property I sold appraised for 50k more from a appraisal done by a conventional lender within 6 months of the VA sell.
I wish you luck in your home search, and hopefully you will have no problems like I have experienced.
Thanks!
Thanks for that, Eva, very much appreciated! 😍
Hi Christian, Jeff here. So glad I came across your video. Can you please advise me. I am going to list my home in Irving, TX(right outside Dallas) this fall. Already talked to several realtors here re: NAR with varied recommendations relating to commission structure. Usual here is 6%. What is your recommendation? If I understand you, the buyer has to sign the legal document promising to compensate the buyer's agent in the event that the seller does not offer compensation and there is either a percentage of dollar amount listed. And, this has to take place before the realtor can begin to locate/show properties to the buyer, correct? What happens if the buyer refuses to sign the document? Does the buyer's realtor call around until they find a seller who does offer compensation? That could waste a lot of time. Or is the buyer just on their own at that point? I can also foresee scenarios where a buyer has agreed to pay their buyer's agent but then refuses to compensate them at closing. So, both realtors, the seller, and probably the financial institution funding the mortgage loan will all sue the buyer for the deal falling through. Too much fun.
Thanks for watching, Jeff! These are great questions and the short answer is that we really don't know for sure how this will be implemented (or even IF, because it has not been accepted by the judge).
The buyer will need to sign a written agreement of some sort, but my guess is that there will be protections in place to make sure the buyer's agent is paid the agreed upon amount, but agree that it's up in the air. The other scenario that I see is that the buyer says they do NOT want representation, but still want that buyer agent commission as a credit...then the listing agent has to do the deal as a non-agent to the buyer...lots o' ramifications there.
@@WIREassociates Yep, that's what I see happening. The listing agent has to do the deal as a non-agent to the buyer for whatever the seller is paying him. And if the seller is offering a fee to a buyer's agent, I can see the buyer wanting the amount of that fee credited to him at closing.
my sister is an agent san diego so i've been watching closely and nar seems incompetent.
Haha! Al, good to hear from you...there are a lot of people who feel the same way. 😉
Love this guy one ☝️ of the best agents to EVER DO IT ⚡️🤙❤️
You're a good man, Maikai! Waiting for YOUR video on this!
Thanks
Thanks for watching!
🙏🙏🙏 as always!
😁👍
Next lawsuit: sellers sue nar because they have not been allowed to market the buyer broker commission on the mls to ensure more buyers leading to more competition equalling a higher sales price . they'd have a point, unlike the current lawsuit vs nar.
Haha! Love it! Sellers find that this limiting of their marketing freedom is anti-competitive!
@@WIREassociates true!! where's their freedom of speech!? haha
Of course, until mid-July when finalized, there may be further changes?
Yes, good point, the judge may ask for changes to this.
The list of Unintended consequences will grow! Distress sellers? Low equity? Court-confirmed sales? REO’s? Remind agents: this settlement is NOT deal yet.
Very much appreciate your wise perspective, Rick! And yes, still not a settled settlement!
It will not stop at buyers. Sellers will now expect 3% moving forward as well. That ship has sailed already.
Actually the ship sailed well before these changes...despite what the case was about, there have been multiple ways for a long time to sell a property for lower commission amounts or flat fee amounts....
It was never required. My goodness.
I'm now managing a real estate brokerage in Maine. In NJ an agent cannot receive compensation from both sides, only one. I don't see that addressed? Thanks
That's interesting, Rob! We'll have to see how the settlement plays out and if that is addressed in NJ.
When a homeowner decides to sell their house they have an agreement with the listing on how much the commission will be. If listing agent brings a buyer - which creates dual agency - the seller doesn’t have a problem paying the commission they initially agreed upon. If there’s another agent involved and listing agent offers a certain percentage of his/hers commission then that’s a problem? I just don’t get it…
Thank you for touching on open houses. You presented lots of good info in a calm way. Do you think buyers will simply go directly to the seller's agent? I have heard several say many agents will leave the profession. The high side was one million, and the low side was hundreds of thousands. What do you think? I think frustration levels will increase for all. I hear agents say this will increase their workload by handling more calls and negotiations. I don't understand why we didn't tweak the system we had since it was efficient and transparent. This looks like a group of people took a whole bunch of Christmas lights, threw them in a box, and then said you untangle them. I think change was needed, but not convinced all this is good for consumers.
A lot of buyers actually go to the listing agent now, but I don't really see the settlement changing that much. Yes, some agents will leave, but the long and the short is that I think many agents will adapt to whatever the new normal is. Haha! Love your Christmas lights analogy! That's perfect!
@@WIREassociates You're in fantasy land. The number of agents will drop by 60%. The rest of the world (mostly) doesn't have buyer agents. The U.S. system is rigged, as proven by a unanimous jury decision in Burnett v. NAR et al.
I agree. It will just make everything more complicated. If buyers go to listing agents they have to have a buyers’ representation which will create dual agency.
@@eniwilliams5232 As a buyer, I do NOT need representation to buy a house. I buy stuff all the time without representation. Besides, most buyer's agents do nothing other than to drive prospective buyers to the home and open the door. I'm perfectly capable of driving myself to the home and opening the door.
The value of Realtor Associations has gone down as well.
Curious why my MLS just changed the field "buyer broker" to "single agent buyer broker" ... If that is the proposed field ... that could means buyer may not be able to use a transaction broker ... Why would that field be changed? Think about that ... Solve the issue of a list agents dominating a situation and force a commission share from list brokerage ... Some people thinks it a conflict anyway to represent both parties.
how much do attorneys cost to help buy a house?
I'm sure it will depend on what you'll have the attorney do.
Much less than 3% of your $500,000 home!
If I was the listing agent for the seller, I would actually educate the seller on the benefits of paying the buyers brokerage. If he/she agreed that the buyers brokerage should be paid then I would have the CAR compensation agreement handy and that is meant for the buyers brokerage and have the owner sign it right there on the spot at the same time that they sign the listing agreement with me. Have the signed compensation agreement handy and on stand-by and communicate with the buyers agent that owner will be compensating once an offer is made....
I'm coming to the sad conclusion that some agents can have a "me versus them" attitude towards other agents instead of looking out for one another in this market especially after this verdict. I think working in this manner and having the buyers agent in mind will bring us as agents closer and stronger...
Christian, may I have your feedback on presenting the compensation agreement to the owner/seller early on in the listing presentation phase?
Thank you
Agree completely. As agents it is our job to better articulate our value and the value of buyers agent compensation. I had an Open House this past weekend. Before Open Houses I door knock to invite the neighbors and build relationships with them. Two neighbors are thinking of selling their homes in the next year and both really liked my wife and I's listing. (We work as a team.) The NAR settlement came up and one was like I've dealt dual agency before and hated it. She wants to offer compensation so that buyers would be represented separately. The other would be seller agreed that offering compensation would probably yield the best offer and make the selling experience more smooth. I realize this is anecdotal but I think a lot of current homeowners will see a benefit to having two separate agents and provide compensation.
@@andrewkruzienski770 Well stated Andrew.. My point that I wanted to drive and may have not explained it correctly is to have the compensation for the buyers brokerage signed right there and then and when an offer is made from any buyers agent just docusign the buyers agent the approved compensation agreement from the seller...Meaning that I have already removed that obstacle for the buyers agent.. I have no plans on doing dual agency as that can seriously increase chances of litigation as stated by my broker who has over 30 years experience....
Great points, Gabe (and Andrew)! In my listing discussion with sellers, I have always talked about the benefit of the broker community in bringing buyers...I explain that I very rarely double end a deal (represent the buyer and seller) because my goal is to spread the word to get as many agents (and buyers) as possible to come through the door. This competition is what drives the highest net price for the seller. And I explain that the listing commission is split into two parts: what the seller pays me and what the seller pays the buyer's agent. It's negotiable (yes, I have and always have said this), but what is going to get the most agents through the door with their buyers? And what is my service worth to the seller? Maybe I should do a video with this? 😂
when you're trying to secure the listing agreement why in the world would you start advocating for the buyer's broker? absolutely insane approach
@@mikesmith1702 To sell a property for top $, that's how it works...I'm shocked that no one has ever tried explaining this to you? That's not meant to be sarcastic...I am genuinely surprised. Sounds like I need to do a video on this to explain...
Yeah, I don’t think discrimination is strictly the only outcome of that. The point of it is somebody with two days with a license shouldn’t be getting paid the same as somebody with 10 to 20 years in the business. Only in our system does an agent no experience get equal pay to someonewho has been around a while and sold a lot of real estate. So yes, it shouldn’t be blank or unilateral because the experiences of agents aren’t blanket and unilateral. You get what you’re worth.
So, who will represent the buyer ?
Some won't want to be represented because they think that they will be saving money. Or they can hire representation and pay for it themselves.
Christian, why do you think nar and brokerages is settling instead of appealing and fighting?
Because we're all guilty! 😂 (that's sarcasm) For the NAR, one possible reason is that the NAR's insurance policy for fighting legal battles ran out. As for the others, maybe easier and cheaper than a long, protracted legal battle?
Because they would have had to put up an appeal bond of one and half billion dollars.
@@rw9019 not true. This has been false reported, just like what the lawsuit was about and what it means to the industry.
Courts do not want to bankrupt defendants simply to appeal.
Because f they hadn’t settled NAR cound have ended up paying billions that’s what I read.
@@eniwilliams5232 they sold out realtors to keep their doors open and settled. It was a jury trial. The an appeal goes before a judge who you’d think will be smarter and NAr can hire outside counsel to argue the case that they royally screwed up.
Has Berkshire settled yet?
Nope. I have no special insight to it and am not a spokesperson for the company, but I heard they were trying to get the class action decertified first.
This is going to kill the first-time homebuyer market.
How so? Buyers will simply contact seller agents directly. Buyers can hire a Real Estate Atty to draft the PA. They will pay much less than bloated Buyer agent fees
There are a lot of first time home buyers who won't be able to even afford an attorney review...not to mention that there are a bunch of items that the attorney won't help with, including inspection and inspection report, appraisal and appraisal report. Drafting the purchase agreement is a minor part of the deal...
@@WIREassociates Home inspectors are public knowledge and any listing agent would certainly refer one to a buyer. Appraisal is ordered by the lender and has nothing to do with the seller or buyer agents.
Lastly any good atty would include their fees in to the PA. If you were counting on the seller to pay CC for both sides of the transaction for a first time homebuyer you would certainly be happy paying less than the obnoxious 6%(3% seller plus hourly atty fees).
Change us here. Lazy buyer agents who only invested time are going to have to prove their worth.
Intrest rates and high prices are doing that just fine.
@@rack9458 and you obviously haven't sold real estate. There is so much more to closing a transaction, than just drafting a Contract. Is the buyer going to deliver the Earnest Money to the closing company within a required amount of time, or else possibly lose the contract - and if not, be knocked out of contract by a better offer? Will they know enough to have an Inspection, and ask for seller repairs, being sure that all repairs will be negotiated and signed off on by both parties, within the Option Period time line? Or if missing that deadline date, they may not get the repairs, or else lose their Earnest Money if they don't want to buy the house without the repairs? Will they know that there is a negotiated date to which they must have loan approval, or to request an extension of contract, if they do not have loan approval? and to not get loan approval after that date, they lose their Earnest Money if they fail to get financing? Do you seriously think as a sellers agent, I'm going to work both sides of the contract for free, when legally, I don't even represent the buyers??? Open myself up to a lawsuit? There are going to be more lawsuits than imaginable.
Great info. Thank you. It's going to be a disaster in illinois
Thanks for watching! Get your popcorn ready for the show...it will be interesting to see how this is implemented.
side effect is going to be a lot of buyers going straight to listing agent and bypassing buyer agent and their fees which creates a big problem for me as a seller. buyers may say to the listing agent get me this house for this lowball price and here is 2%. that is why in my agreement I will only allow dual agency with 1k flat fee going to my listing agent to handle an unrep buyer and they cannot accept any further commish from the buyer.. and I will be verifying this in the closing docs to avoid any conflict of interest.
You can also request that your agent not be a dual agent...and still give the agent a flat fee for unrepresented buyers. A listing agent can work as a non-agent for a buyer...
Sellers should have been told the truth that they never had to pay a buyers agent.They do not have to pay a % commisson either flat fee only both sides.
There have been different business models for decades or longer, including For Sale By Owner, flat fee sales models and investor buyers (more recently called iBuyers).
Why would open houses become more common? Sorry I didn’t understand what caused that
Good question. Right now, buyers can request a private showing on certain websites without any obligation or written agreement required. Under the new rules, a buyer will need to sign a written agreement with an agent before a home can be showed and some buyers may not be ready to hitch up with an agent. As long as open houses are exempt from the written agreement rule for buyers, then this will be the only way they can get in and see a house. If so, then a LOT of buyers will be hitting open houses. Hopefully that makes more sense!
@@WIREassociates I had no idea there are private showing websites. I thought it is either through a buyer agent or open house.
An open house should be for potential buyers to gather information about the house and what concessions or commissions the seller is offering before contacting the agent. The NAR ruling is about transparency and the right to choose. So why do the buyers have to sign a buyers agreement to find out if any commissions/concessions are offered and to view a house? How does this proposed ruling help the buyer? If anything it has given the buyers agent more leverage over the buyer, especially first time homebuyers . I forsee more of all kinds of exploitation in the works.
Buyers Beware!!!!
The good houses priced to sell will have an offer by the end of the open-house.
@@od2437 Two of the bigger websites out there allow you to tour with minimum to no obligation to use them as agents.
After 7 years, if they dont extend or make permanent, wont the lawsuits just start over? Probably, so probably these changes are here to stay.
I know, I was surprised to see that in there...
Agents keep talking about being discriminated against if not all buyer agents get offered the same thing. Well, first…agents aren’t a protected class from a discrimination standpoint. Second…..by agents thinking all agents should get the same commission is basically proving the lawsuit correct and that agents believe in a universal standard commission….which is illegal and why the lawsuit started to begin with.
On a side note, these agent videos are removing a lot of my comments…they obviously feel like they need to censor things they don’t like. 😂
Think a little deeper on the discrimination aspect...of course an agent isn't a protected class as an agent, but what if a seller wants to discriminate in the commission offered based on a protected class, e.g. I don't want _______ agents to receive a commission. You fill in the blank with a protected class. That's the issue I see. No need to delete your comment because hopefully your question and my answer help people understand the potential issue.
@@WIREassociatesFair housing laws exist for a reason obviously, but the reality is there is never a full proof method to understand all sellers motivations, nor would people disclose what’s in their mind. I don’t think this change is going to make an impact on the amount of true fair housing violations. Sellers want to net the most money number one, green is the universal color always. If a buyer brings a less competitive offer due to commission…..they will loose.
From your standpoint, and believing people will discriminate in the avenue of commission because discrimination is their goal, then you would have to be open to the discriminatory seller walking away from a less buyer commission credits purchase offer because the buyer or agent was a protected class. I see that happening ZERO chance ever. Also, discrimination isn’t only possible with sellers and no other group, you could also argue some agents may refuse to lower or negotiate their commission to weed out certain minority Americans that have less money, or cultural groups that migrate here like Asians, who are known to and haggle everything including commissions. I imagine you would say the amount of agents who discriminate to the clients they take shouldn’t negate the real estate industry moving forward with better business practices…and some of those may be trial and error.
From what I see, agents are jumping on this “oh no, discrimination” as an avenue to push as a veil to try to keep the same archaic system that the vast numbers of people aren’t satisfied with, and that percentage of dissatisfaction vastly outweighs the percentage of fair housing violations, hands down.
If agents really wanted to truly protect buyers from discrimination, while at the same time allowing the buyer the most opportunity to negotiate and get the best deal, they would be advocating for lenders to include commissions in their loan, while making it known the buyers can negotiate the commission their BA provides based on the value the BA brings to the table. This puts the buyer in the driver seat, whereas now standard commission is baked in on the buyer side via coop, the buyer ultimately pays it, and the BA gets incentive the more the buyer pays. Yet, we won’t see any agents advocating for this, it’s all push fear of discrimination by evil seller.
I have been selling RE for 33 years. In all that time, the commission for both sides, buyer and seller agents, has ALWAYS been negotiable. Our Texas listing agreements clearly state that compensation is negotiable.
unfortunate discrimination? waaaahh!!!!
30 seconds of fcking ads! Arggg