What The NAR Settlement Means to You (And Why It’s a Good Thing)

So the NAR settlement, what does it mean to you? What should you do today as an agent?

First of all, what does it mean to us?

Here are three big things it means:

1. Buyer comp is not going to show up in the MLS as of mid-July. If this is approved, it probably will be.

2. You're going to have to sign with your buyer a buyer representation agreement, which says how much you're going to get paid.

3. It's going to outline the fees that are going to be paid to you by the buyer. Now, that doesn't mean that the seller can't pay. This is the biggest misconception of this. Just because the fee is not going to show up in MLS doesn't mean sellers won't still agree to pay it. This is something specifically that was in the NAR proposal.

I'll read it to you:

The NAR said the proposal would allow sellers and their listing agents to continue offering compensation for buyer broker services. That's clear. It's just not going to show up in MLS.

So let's think about that now. How are you going to get paid as a buyer's agent?

You're either going to get paid by your buyer, you are going to get paid by the seller, or you're going to get paid as a combination of both, just like you are today.

It's not like a big, radical change in the way you're getting paid today. The only change is going to be how we negotiate that payment, right? And that's going to be the big kicker here, is that what you're going to start to see in my opinion, is that these compensation conversations are going to be transaction specific. So you have a buyer representation agreement and you say with your buyer, “Hey, I'm going to charge you X.” Let's call it 1%, 2%, 3%, whatever the number is, whatever you decide, not price fixing, and then your buyer says, I want you to try to collect that from the seller on my behalf, so let's make another offer.

So what you're going to see is a lot of offers, in fact, I'm going to say I believe most offers will include language that'll say, “Hey, this offer is subject to the seller paying X percentage of the buyer presentation fees.” That'll be common. I also think it's going to be super common that sellers will proactively still continue to offer by representation. Fees to be paid just won't show up in MLS.

This will be a phone call from you to the listing agent. Is that being offered? The listing agent may send you an email or it may be put into the MLS in a different kind of verbiage, which simply says, sellers offering 3% to buyers as an incentive to bring offers, 3% closing costs or 3% in prepaid expenses, 3% in some kind of incentive.

That could include buyer representation fees. That's the most likely scenario we're going to see play out here. So it'll become real estate transaction specific rather than just a blanket offer of compensation, which is really the way it's always been done. We just kind of forgot about it. When you looked at every single listing in MLS, there were often different offers of compensation. This is just going to make this come off the MLS and become a part of the offer negotiation.

So should we be terrified about this? Not really. It's not going to change that much.

There'll be some sellers that will say, no, I'm not going to pay anything. But then your buyer's going to say, I don't want to write a check. Let's find another house where the seller will pay something and that seller is going to watch the number of showings, the number of offers they receive decline exponentially, and pretty soon you might see them come back, see the light and say, uh oh, I better pay something to the buyer rep. This is going to be interesting. We'll see it flesh out over the next few months. It's going to be a time of rapid change. We're going to have this kind of moment of waves and uncertainty, and then it will settle. We'll all come back to the way that the business is going to be done. We'll figure it out together, and then we'll ramp up very quickly.

Don't be afraid of it. Be excited about it, because what this is going to do is it's going to push a lot of agents out of the industry that can't face change. A lot of agents can't handle change. That's good. Get 'em out. There'll probably be a hundred thousand agents who leave the industry. Fantastic. Get out. That leaves more for you and me. We're going to crush it this year.

This is going to be a much, much, much better year than it was in 2023, not just because of interest rates, but because the agents that are still working that just went through the worst number of transaction volume in 29 years, in 2023 that survived that market. Now coming in, interest rates are getting better, the market's stabilizing. The economy is strong. You're going to crush it.

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