Uncategorized March 29, 2024

Let’s Talk About the NAR Settlement

You’ve likely heard or read about the national news regarding the settlement involving the National Association of Realtors (NAR). The news quickly swept across the US, splashing across major media outlets and ringing alarms about the Real Estate Industry as a whole.  In the spirit of transparency, which is one of the key components to how we manage our business, let’s talk about this. Windermere CEO and co-chair Presidents recently released a statement, but it’s important that you hear directly from us.

Recent developments in the real estate industry concerning the settlement of a class action lawsuit by the National Association of REALTORS® (NAR) has raised a number of questions, especially as it pertains to agent compensation.  Historically, a Listing Agent and their Seller negotiate broker compensation, paid for by the Seller, which is then split between the Listing Agent and the Buyer Agent in the closing transaction.  If you’ve sold a house with us, you may remember this conversation and the Agency Agreement where this language exists.

“For more than 50 years, Windermere has put integrity and professionalism at the heart of our business, especially during times of change and uncertainty like we’re seeing today.” Ashli and I take our responsibility to our clients very seriously and we’re committed to guiding them through any changes that may result from the NAR settlement.

“There has been a great deal of coverage about NAR in the media, which has led to a tidal wave of misinformation. There is also still a lot that is unknown about how the proposed settlement will affect the home buying and selling process. With that in mind, we felt it was important to provide clarity on three of the proposed changes that will likely have the most impact on home buyers and sellers. NAR’s settlement has not yet been approved by the courts, but if it is, the following items will go into effect in July 2024.”

Buyer Agency Agreements:

“Agents representing buyers in every market touched by the settlement agreement across the U.S. will be required to enter into a written agreement with their clients called a Buyer Agency Agreement.” In WA State, this became a mandatory standard of practice as of January 1, 2024. If you purchased a home with us prior to that date, it’s unlikely that you remember this contract. “These agreements cover critical elements of our working relationship such as the term of the agreement, the exclusivity of the representation, the agreed compensation rate, and the agent’s responsibilities to the buyer. We firmly support the requirement of a Buyer Agency Agreement as an opportunity to provide increased protections for buyers (and us) and to create a more informed real estate environment for all parties involved. It’s worth noting that Buyer Agency Agreements are already required by law in certain states where Windermere operates, including Idaho, Utah, and Washington.”

Decoupled Commissions:

“The commissions that are paid to a buyer’s agent and a seller’s agent will be decoupled, a change that is intended to provide more transparency about how agents on both sides of the transaction are compensated. This means that what was once customary, which was for the seller to pay the entire commission to be divided between the listing agent and the buyer’s agent, will now be separated. Under the new rules, the default is that the seller will pay the listing agent and the buyer will pay the buyer’s agent. That’s not to say that the seller has lost the option to pay the buyer’s agent, and in many cases they may choose to do just that. One example might be when the buyer is using a VA home loan which doesn’t allow them to pay a commission by law, or to help a first-time buyer who lacks funding for the commission cost on top of the down payment and closing costs. It could also be a seller who understands the value that a buyer’s agent brings to the transaction and wants to ensure they are compensated for their work. Buyer’s agents work hard for their clients.”

When we work with Buyers, we provide up front education on not only the current market, but the home-buying process as a whole, including preliminary contract form review, Lender recommendations, actual contract negotiation review, and more. This is in attempt to bolster the confidence of our Buyers, ensuring they feel empowered to make informed decisions in what is often a demanding time. Buying a home can often take months, or sometimes years, and we’re with you until you’re holding the keys to your new home.

When we work with Sellers, the effort is the same, but organized differently. Most homeowners are unfamiliar with what goes into selling a home until it comes time to sell their own.  Preliminary prep work includes site visits to the home, consulting on improvements to make the home shine for the next owner, inspections, vendor (contractor) coordination and legal forms…lots of legal forms.  There’s a lot of leg work and market analysis that happens months before a home is listed. As it is with our Buyers, we want our Sellers to feel empowered in making informed decisions when selling their home.

Removal of Stated Agency Compensation In Advertised Listings:

When WA State caught wind of this NAR lawsuit back in 2019, the NWMLS began to implement changes with regards to transparency of agent compensation.  Before this, only an agent could see how much compensation they would earn on any given listing.  To get ahead of the issues raised by the participants in the NAR lawsuit, the NWMLS required that any and all buyer agent compensation be stated publicly on the listing for both agents and their clients to view. If the NAR settlement is approved by the courts, this feature would be removed entirely, and neither the agent, nor their buyer client will be able to see if the seller is offering buyer agent compensation.  This is an interesting concept, especially when considering that Buyers are now required to sign agency agreements that agree to compensate their agent, unless that agent is paid by the seller.  Do you think the removal of this feature will help, or hinder buyers?  We’d love to hear your thoughts, if you’d like to send us an email 

“As stated earlier, there are still many unknowns about how the NAR settlement will impact the home buying and selling process, but what we do know is Windermere agents are ready to fiercely support their clients’ best interests through these changes, as we’ve always done. Windermere has committed to stand alongside us and continue to use their influence to advocate for a fair, transparent, and equitable real estate experience for all involved.”

As with any change on the horizon, we learn first and adapt accordingly. We’re here to answer any questions you may have and have open discussions as new information becomes available.

– Joe & Ashli Haglund, Brokers at Windermere Greenwood