To our family, friends, and clients:

 

There have been lots of headlines in the news lately about several class-action lawsuits against the National Association of Realtors [NAR] and major brokerages around the country. As a result, NAR has proposed a settlement which is likely to impact the home buying and selling process. 

 

As your favorite real estate gurus [voted on by nobody], we thought it would be a good idea to clear up the confusion surrounding this settlement, and let you know what is proposed. This settlement is NOT finalized yet, but some proposed changes will take place beginning in July.

 

The settlement proposal has several components, but these are the key takeaways:

• Real estate fees and commissions have always been negotiable, and will continue to be in the future.

• Sellers are not required to offer buyer agent compensation [although we at Ferris Property Group still recommend it.]

• Offers of buyer agent compensation cannot be promoted or displayed on the BLC/MLS.

• Buyer agreements will be required between buyers and realtors, and must be signed before touring houses.

• Buyer agents will be paid in one of three ways:

1. Fixed fee commissions paid directly by consumers

2. Seller concessions

3. A portion of the listing broker’s compensation

 

As is common in this day and age, there is a lot of misinformation online and in the news, which has led to lots of myths and misunderstandings. In order to give you an idea of what is true and what is not, we offer the following Facts vs. Myths:

 

MYTH: This settlement forces a reduction in agent fees.

FACT: Real estate fees have always been negotiable, and will continue to be. This settlement serves only to prohibit publication/advertisement of cooperative buyer agent compensation in the MLS/BLC [MIBOR].

 

MYTH: The “standard” 6% commission for real estate agents is going away.

FACT: There has never been a set or standard fee for real estate agents. Fees have always been negotiable, and there have always been business models that provide options for consumers [from flat fee brokers, a la carte firms, discount brokers, and much more.]

 

MYTH: Sellers can no longer have a portion of the commission they pay towards a listing agent to go towards compensation of a buyer’s agent, who brings a buyer to their listing.

FACT: Offers of compensation are not banned. Buyer and seller can still negotiate credits for closing costs as they always have. The only change will be that listing agents can no longer promote their offer of buyer agent compensation directly through the MLS/BLC [MIBOR].

 

MYTH: For the first time ever, sellers will not be forced to pay a buyer’s agent.

FACT: There has never been a requirement for a seller to pay a buyer’s agent. Sellers negotiate their fees directly with their listing agent. From that fee, the listing agent/brokerage could agree to pay a portion with a cooperating broker who brings a buyer.

 

MYTH: This settlement proves that the National Association of Realtors [NAR] and Realtors in general have done something wrong.

FACT: In this settlement, NAR continues to deny any wrongdoing. NAR and Ferris Property Group remain committed to consumer choice and transparency in the buying and selling process.

 

MYTH: The consumer will be compensated in a big way financially, thanks to this class action settlement.

FACT: If every eligible consumer opts into the class action, the predicted payout would be about $10 per person.

 

MYTH: Buyers will not be required to sign any agreements with a Realtor prior to touring homes.

FACT: Beginning in mid-July, buyers will be required to sign a buyer agreement with the Realtor of their choice BEFORE touring any homes. 

 

MYTH: These changes will be better for buyers.

FACT: This is highly unlikely. Buyers will now have to negotiate fees up front with their agent before viewing any properties. This may force home buyers to purchase homes without proper representation, if they can’t afford to pay their agent out-of-pocket or get a seller to agree to pay the buyer’s agent. [NOTE: The VA loan for US veterans doesn’t even allow buyers to directly pay their own agents.]

 

MYTH: As a result of this settlement, the price of homes will decrease.

FACT: Home prices have always been determined by supply and demand, not realtor fees. This is a basic economic principle that will continue to hold true.

 

MYTH: These changes will take place in the market right away.

FACT: Currently, this is only a proposed settlement. The Department of Justice and the courts have to approve this proposed settlement. The changes are slated for mid-July 2024, if approved.

 

We realize that this email is very “in the weeds” and might not interest you at all. If that’s the case, we apologize for cluttering up your email.

 

However, Ferris Property Group and its agents are committed to dealing with our clients and community with transparency and integrity. As such, we feel it’s important to communicate with you clearly about what’s happening.

If you have any questions about this settlement and what it may mean for your situation, feel free to reach out to us anytime. Otherwise, have a great summer!

Todd, Megan, and Terry