What Does the NAR Settlement Mean for Buyers

The recent agreement involving the National Association of Realtors (NAR) signifies a change in the real estate sector especially regarding how real estate agents receive payment. This development not only affects professionals in the real estate field, but also carries significant consequences for individuals looking to buy homes. Understanding this agreement and its impact on the purchasing process is crucial for anyone in the market for a home. I want all my potential buyers and clients to understand the specifics of the NAR, the agreement itself, and what potential buyers should be aware of from the perspective of a real estate agent who values their clients interests.

Understanding the National Association of Realtors (NAR)

The National Association of Realtors advocates for the needs of real estate agents. They have played a role in establishing industry norms and rules especially concerning agent fees. NARs principles have historically shaped aspects of transaction practices notably concerning the Multiple Listing Service (MLS) and broker compensation.

The Landmark Settlement

In a groundbreaking move, NAR agreed to a $418 million settlement to resolve lawsuits challenging longstanding policies around agent commissions. This settlement introduces significant changes to the industry:

  • The NAR will no longer mandate that a listing broker on the MLS offer compensation upfront to the buyer's agent.
  • Agents must now enter into a written agreement with homebuyers that outlines negotiated commissions and fees.

These adjustments are intended to enhance openness and adaptability in real estate deals, which could reshape how agents receive payment and how buyers interact with agents when purchasing a home.

What Does This Mean for Buyers

Buyers and sellers have always had the ability to negotiate real estate commission. There has never been a set-in-stone number although it's implied that 6% is the most common across the board; 3% for the listing agent and 3% for the buyer's agent. This agreement might lead to a more flexible arrangement between buyers and agents when it comes to fees. Buyers can openly reach an agreement on commissions with their agents on services offered and the associated expenses. The intention behind this adjustment is to give buyers control enabling them to make informed choices when picking an agent to advocate for them.

The Value of a Realtor

Despite these modifications it's crucial to recognize the role played by a committed real estate agent. These professionals provide support every step of the way when purchasing a home, from pinpointing properties and negotiating prices to handling legal formalities, solving problems, and finalizing deals. The recent agreement highlights how vital it is to grasp the scope of real estate agents responsibilities and the actual expenses tied to their expertise.

A Realtor's Perspective

From me personally... this settlement brings to light the often misunderstood nature of their work and compensation. The average full-time Realtor works over 40 hours a week, earning an income well below the living wage, with no guaranteed salary or hourly pay. Their income is entirely contingent on successful transactions, and they face numerous out-of-pocket expenses, from broker fees and office rents to advertising and insurance costs.

What Buyer's Agents Actually Do

  • Schedule Time To Meet Buyers
  • Prepare Buyers Guide & Presentation
  • Meet Buyers and Discuss Their Goals
  • Explain Buyer & Seller Agency Relationships
  • Discuss Different Types of Financing Options
  • Help Buyers Find a Mortgage Lenderbuyer's agent responsibilities
  • Obtain Pre-Approval Letter from Their Lender
  • Explain What You Do For Buyers As A Realtor
  • Provide Overview of Current Market Conditions
  • Explain Your Company’s Value to Buyers
  • Discuss Earnest Money Deposits
  • Explain Home Inspection Process
  • Educate Buyers About Local Neighborhoods
  • Discuss Foreclosures & Short Sales
  • Gather Needs & Wants Of Their Next Home
  • Explain School Districts Effect on Home Values
  • Explain Recording Devices During Showings
  • Learn All Buyer Goals & Make A Plan
  • Create Internal File for Buyers Records
  • Send Buyers Homes Within Their Criteria
  • Start Showing Buyers Home That They Request
  • Schedule & Organize All Showings
  • Gather Showing Instructions for Each Listing
  • Send Showing Schedule to Buyers
  • Show Up Early and Prepare First Showing
  • Look For Possible Repair Issues While Showing
  • Gather Buyer Feedback After Each Showing
  • Update Buyers When New Homes Hit the Market
  • Share Knowledge & Insight About Homes
  • Guide Buyers Through Their Emotional Journey
  • Listen & Learn From Buyers At Each Showing
  • Keep Records of All Showings
  • Update Listing Agents with Buyer’s Feedback
  • Discuss Home Owner’s Associations
  • Estimate Expected Utility Usage Costs
  • Confirm Water Source and Status
  • Discuss Transferable Warranties
  • Explain Property Appraisal Process
  • Discuss Multiple Offer Situations
  • Create Practice Offer To Help Buyers Prepare
  • Provide Updated Housing Market Data to Buyers
  • Inform Buyers of Their Showing Activity Weekly
  • Update Buyers On Any Price Drops
  • Discuss MLS Data With Buyers At Showings
  • Find the Right Home for Buyers
  • Determine Property Inclusions & Exclusions
  • Prepare Sales Contract When Buyers are Ready
  • Educate Buyer’s On Sales Contract Options
  • Determine Need for Lead-Based Paint Disclosure
  • Explain Home Warranty Options
  • Update Buyer’s Pre-Approval Letter
  • Discuss Loan Objection Deadlines
  • Choose a Closing Date
  • Verify Listing Data Is Correct
  • Review Comps With Buyers To Determine Value
  • Prepare & Submit Buyer’s Offer to Listing Agent
  • Negotiate Buyers Offer With Listing Agent
  • Execute A Sales Contract & Disclosures
  • Once Under Contract, Send to Title Company
  • Coordinate Earnest Money Drop Off
  • Deliver Copies to Mortgage Lender
  • Obtain Copy of Sellers Disclosure for Buyers
  • Deliver Copies of Contract/Addendum to Buyers
  • Obtain A Copy of HOA Bylaws
  • Keep Track of Copies for Office File
  • Coordinate Inspections with Buyers
  • Meet Inspector At The Property
  • Review Home Inspection with Buyers
  • Negotiate Inspection Objections
  • Get All Agreed Upon Repair Items in Writing
  • Verify any Existing Lease Agreements
  • Check In With Lender To Verify Loan Status
  • Check on the Appraisal Date
  • Negotiate Any Unsatisfactory Appraisals
  • Coordinate Closing Times & Location
  • Make Sure All Documents Are Fully Signed
  • Verify Title Company Has Everything Needed
  • Remind Buyers to Schedule Utilities
  • Make Sure All Parties Are Notified of Closing Time
  • Solve Any Title Problems Before Closing
  • Receive and Review Closing Documents
  • Review Closing Figures With Buyers
  • Confirm Repairs Have Been Made By Sellers
  • Perform Final Walk-Through with Buyers
  • Resolve Any Last Minute Issues
  • Get CDA Signed By Brokerage
  • Attend Closing with Buyers
  • Provide Home Warranty Paperwork
  • Give Keys and Accessories to Buyers
  • Close Out Buyer’s File Brokerage

Whew! Quite the List, Right?

We are deeply committed to our profession, driven by a passion for helping people find their perfect home. We navigate daily challenges, including constant availability, time away from family, and the financial uncertainties of working on commission. This dedication and the substantial expertise we, as Realtors, bring to the table are crucial for buyers to consider when engaging in real estate transactions.

Moving Forward for BuyersWhat Does the NAR Settlement Mean for buyers

For those looking to buy a home, the recent NAR agreement brings forth a perspective on how Realtors can better cater to their clients needs and financial situations. This presents an opportunity for discussions with your Realtor regarding the services they offer and their associated costs ensuring a beneficial partnership based on transparency and fairness.

This settlement serves as a reminder of the often misunderstood nature of real estate deals. When you collaborate with a Realtor who's clear about their services and pricing, it can bring you peace of mind. Realtors enhance your home buying journey. We not only provide care and guidance but can navigate the sometimes confusing legal jargon that goes into a transaction. 

Ultimately the agreement reached by the National Association of Realtors marks a turning point in the real estate industry. It introduces possibilities for buyers to interact with and really understand the importance of real estate agents. AKA - What are you really paying for. Through encouraging conversations regarding fees and assistance provided buyers can gain an understanding of the vital contribution real estate agents make in transforming the aspiration of owning a home into a tangible reality.

Have More Questions? Let's Talk!

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.