NAR SETTLEMENT FALLOUT for Buyers, Sellers & Real Estate Industry

Nothing short of a bomb exploded in the real estate industry with news of NAR's $418M settlement to end the minefield of Sitzer Burrnet copycat lawsuits. A seismic shift in the way the US real estate industry operates could drastically change how buyers navigate the housing market if the proposed NAR settlement is approved by the Department of Justice. Realtors are currently public enemy number one in the eyes of media and some of the public who think they're overpaid, worthless paper pushers. On the surface, sellers could potentially stand to save money...but will they really, or will they find their buyer pool dried up? If the groundbreaking settlement is approved Buyers will have to pay their own agent if the seller doesn't agree to compensation. Does that mean many buyers won't be able to afford to hire an agent? Will the change in how commissions are paid lead to a reduction of housing prices and fix what many perceive as the US housing crisis? Are real estate agents done and out of work? Do people realize the proposed settlement's far-reaching implications that could change the landscape of home ownership in the United States?
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00:00 NAR Settlement and Media Misinformation
00:45 Commission Decoupling
01:48 Commission Are Negotiable
02:01 Will Home Prices Fall?
02:39 Offers of Commission Banned from MLS
03:32 The MLS as a Transparent Market Will End
05:26 Why Sellers Should Offer Commission to Buyer Agents
06:43 Challenges to Listing Agents
07:34 What About Unrepresented Buyers?
08:02 Will Agents Work For Free? No.
08:35 A Brief History of How RE Used to Be
09:46 Will Agents Offer Multiple Compensation Methods to Buyers?
10:39 What Happens to Buyers Who Can't Pay Their Agent?
12:05 Have Agents Mistakenly Lead the Public to Believe it's Easy?
12:45 Realtors Offer a Service--You Don't Have to Hire One
13:28 Will the Settlement be the End of Buyer Agents?
13:42 Settlement Throws Buyers Under the Bus
14:16 Is this the End of the American Dream?
16:18 What Do You Think?

[@EmilyFarber]

My opinions in this video are mine alone, and not reflective of my brokerage, Lepic-Kroeger, the Iowa City Area Association of Realtors or the Cedar Rapids Association of Realtors, of which I am a member.

[@hannahhedt6543]

Brilliant video! We have bought and sold 4 homes in Australia without buyers agents and it’s tricky! Even in a market you feel you understand and have navigated before. So pleased you’re going to continue to operate your services as per usual Emily 😊When we bought both our places through you in the USA we couldn’t have been more confident. Don’t know how we would have done it without you, literally! This change creates huge risk and cost essentially for people who don’t invest in buyers agents in the future. If I could pass on any home owner advice it’d be to invest in a great relationship with an agent you can trust. The time, stress and risk without it is going to cost you big time.

[@EmilyFarber]

Awww, thank you, Hannah! Of course, I agree, and I hope people see hiring a buyer’s agent as an investment.

[@Kathleen_Militello_Realtor]

Very well done. 😊

[@edmundohillary]

I think it may lower prices a bit in the sense that people dont feel like they are giving up as much out of their sale price, so dont have to inflate the asking price. More importantly, this hopefully just disrupts this whole percentage model that is nonsense. No reason a 600k home should be a double the commission of a 300k home. There is no increased risk to an agent or inherent extra work. Also, we all know the buyer pays the seller and the buyers agent .

[@EmilyFarber]

More work/risk in more expense homes? In some cases YES, there is a lot more work. I had a very high end, unique property that took about a year to sell. It cost me about $10,000 in marketing and staging expenses and SO much time. That’s a lot of risk with no guarantee of a final payout. The general public typically does not understand or acknowledge the risk/money/work that real estate agents put in upfront with no guarantee because the business model is very different from their lines of work.

[@theGHSV]

If “commissions were always negotiable” in the past, did you ever allow the seller to offer no compensation to the buyer agent in your listing agreement? If so, were you then able to put that listing into MLS?

[@Kathleen_Militello_Realtor]

Why would anyone expect a real estate agent not to get paid😂? Do you get paid when you go to work?

[@theGHSV]

@@Kathleen_Militello_Realtor Feel free to answer my question above. But I’ll answer your question first, I absolutely believe people should be paid for the work they perform.

[@Kathleen_Militello_Realtor]

@theGHSV No restrictions in my mls. We offered as little as 1%, which was negotiated with the seller prior to the offering.

[@theGHSV]

@@Kathleen_Militello_Realtor The problem was that there was a restriction in MLS that required the seller agent to a put a fee paid by the seller to the buyer agent in the listing. It could be 1% or $1 but it couldn’t be zero. So, if a prospective seller client told you that they didn’t want to offer any compensation to the buyer agent up front in the listing agreement, you told that prospective seller client that they must offer something and that offering nothing to the buyer agent was not negotiable.

[@theGHSV]

@@Kathleen_Militello_Realtor If that is true, did you ever submit a listing to the MLS that did not contain any buyer agent compensation included?

[@leah6015]

So if we can, should we be buying a house before July? What if we are in a higher price range than first time home buyers, is there less risk of this impacting us (basically we just have to pay more…)? We don’t want to be paying more than what we were going to be though and we are in a position where we can buy before July.

[@EmilyFarber]

That's a good question. The settlement has not been signed off on by the DOJ yet, so as of now this whole thing is only proposed, but if it is approved there could be big changes ahead. If you buy before July there is no question that your agent will be compensated by the listing broker by whatever amount is advertised in the MLS. If you want until after July, AND these changes take effect, AND you wish you hire a buyer's agent for the service of helping you navigate the housing market and buy a house then you will be responsible for paying him or her IF the seller does not offer a commission to the buyer's agent (some seller's will still choose to offer a co-broke). How much you agent's services and advice will cost you will be negotiable between you and your agent. It might be a percentage of the sale price, it might be a flat rate fee, it might be "a la carte" per service provided, or it might be hourly, etc.

[@randallcarter-carterhillho2277]

I think the system realters have currently works and should be left alone. I think something that hurts for people trying to get into homes is investors buying up several properties to rent and air bnb style rentals. In my opinion this is making it harder for first time buyers to get a home. In conclusion free markets decide what is best if left alone to work itself out. Thank you for your great videos.

[@EmilyFarber]

Thanks, Randall. I appreciate the vote of confidence.

[@hannahhedt6543]

Totally agree Randall. This has happened to the extreme in Australia😢 it is so so difficult for first home owners. Pretty much impossible to break into the market without a mortgage that’ll last more than a lifetime. So unbalanced.

[@edmundohillary]

Or...just show your house yourself! You lived in it , know how it functions, and the best aspects of it. Who better to sell it!

[@EmilyFarber]

Most buyers don’t want to look at the house with the seller there. It is awkward and uncomfortable for them.

[@edmundohillary]

​@@EmilyFarberI've bought and sold from owners and as an owner. Gained insights that never could have gotten otherwise and didn't have to play a game of telephone. If you don't like my house, don't buy it. If I'm making the biggest purchase of my life, darn right I want to talk the person who used that object for the past x years.

[@EmilyFarber]

@edmundohillary I’ve helped hundreds of buyers and sellers buy and sell homes. My experience has been that buyers *consistently* strongly dislike it when sellers are present during showings and it turns them off to the property. When sellers are present while an agent is showing with clients they tend to talk so much they reveal things can be used to negotiate again them. When it comes to negotiations both parties do better with in intermediary rather than talking to each other when their emotions are running high. But, for people who don’t want a real estate agent’s experience or help, they don’t have to hire one and they’ve never been required to hire one. There are options for everyone.

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