Anyone paying attention to Real Estate knows changes in the industry are on the horizon. NAR (National Association of Realtors) recently entered into a proposed settlement agreement to pay $418 million over the next 4 years to resolve litigation brought by home sellers relating to broker commissions. This proposed settlement, if approved, will be taking effect in July 2024. Unfortunately, the media has created mass confusion by way of false and inaccurate information on what this settlement will mean to both consumers, agents, and the Real Estate industry as a whole.

To be clear, commissions have always been negotiable. Any claim otherwise that the Real Estate market has a set commission is false.

Prior to the settlement, Sellers would enter into listing agreements with their Selling Agent to sell a home. In that agreement, both the total commission and co-op commission to be offered would be agreed. That co-op commission would then be displayed in the MLS (Multiple Listing Service) making it a blanket unilateral offer of compensation to other MLS members. This practice was beneficial to Buyer’s Agents as it helped in guaranteeing their commissions when showing clients property. Now, as a result of the settlement, it will be prohibitive to display Buyer Agent Commissions on the MLS. However, the settlement does not restrict communications regarding commissions off the MLS and would allow for further negotiations.

A second key item of the settlement would now require all participating MLS Agents working with a Buyer to enter into a written agreement with their Buyers prior to touring ANY property. This agreement must specify the amount of compensation that the Agent will receive. This is beneficial as it will help in further professionalizing the industry and eliminate agents from operating on “free” services with potential clients.

For more information on what this settlement means for you and your Real Estate plan, contact us at Cadwell & Co. We’d be glad to discuss in more detail with you.