A few words about a settlement between the National Association of Realtors and a lawsuit brought against them. You probably have read about this in the news. The main point of contention relates to sellers and seller's agents offering a buyer's commission with their listings. It is believed by many that this was a cost unfairly passed down to buyers. But more than that, many believe that this is partly responsible for inflated sales prices. Buyer's are paying for this cost, don't realize it, and maybe offer more than they otherwise would. The settlement states that listings can no longer advertise a buyer's commission starting in July. But sellers are still allowed to offer a buyer's commission. They just cannot put it in the multiple listing service.
So, how will this play out? Obviously, that is to be determined. If I were counseling a seller at this moment, I would tell them that they still can offer a buyer's commission and they still should. Most listings in the Montclair/Glen Ridge market offer a 2 to 3% buyer's realtor commission. It is easy to think of that only in terms of a buyer's agent being paid for the transaction. But it actually pays for much more than that. A listing in Montclair will get anywhere from 20 to 50 showings. Anywhere from 5 to 25 offers. All of those agents are putting in time and energy to expose this house to buyers, show it, discuss it, look at comps, put an offer together. Only 1 agent will get paid. But they all try because of the buyer's commission. And they're working to sell your house.
Second possibility is that sellers won't offer a commission at all. As part of this settlement, realtors will be required to have to buyer's sign a buyer's agent agreement. Some buyer's will agree to this. They will likely look to add the cost of their agent's commission into their mortgage. Others will go directly to the listing agent. This would likely lead to more exclusive listings - meaning a realtor lists a house and only he or his office can represent the buyer. In most cases this would be a large team with the listing. And one of the team leader's employees would represent the buyer. They would do this at a reduced commission from their seller because they're getting both ends of the deal. The problem with this, from my perspective, is that dual agency is a conflict of interest in the sale of a home. The buyer is never going to get the representation that the seller gets. Seller will be the priority. My office and my closest group of colleagues take agency very seriously. You are likely getting this email because we met at an open house. I was there to give fair representation to unrepresented buyers. My fiduciary responsibility was to the buyer, not the seller in that instance. In an exclusive, this dynamic goes away and I think that it will leave a lot of first-time home buyers, entirely new to the process, poorly represented.
There will be test cases and we will see how they do! If you have any questions, don't hesitate to ask. Below you will find a few articles to provide another perspective.
Best,
Dave
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