NAR Settlement Explained
The NAR Settlement Explained
Written by: Jason White
Intro
Rumors are circulating among real estate agents, and misinformation is spreading in online group discussions. Some agents feel confused, threatened, and unsure about the future of the real estate industry.
On August 17, 2024, real estate sales in the United States changed for agents and brokers.
The recent settlement by the National Association of REALTORS® (NAR) has resulted in new paperwork and changes to MLS advertising and your business processes.
However, you can adapt and thrive by staying informed and honing your professional skills to articulate your value to prospective buyer clients.
Let's go over these changes together so you can turn challenges into opportunities and ensure a bright future for your real estate sales career!
What's the Scoop with the NAR Settlement?
Here's a high-level overview of the National Association of REALTORS® (NAR) settlement.
The Sitzer v. National Association of REALTORS® (NAR) case was a significant NAR lawsuit that affected real estate agents across the United States.
A group of home sellers in Missouri filed this class-action lawsuit, known as Sitzer-Burnett, against the NAR and other defendants. They argued that real estate commission rates were too high and that buyers' representatives were paid too much. They also claimed that the NAR's Code of Ethics and MLS Handbook led to inflated commission rates, making the process more expensive for sellers.
In response to these claims, the NAR reached a settlement to resolve the issues raised by the plaintiffs. This settlement included changes to how commissions are advertised and negotiated. One significant change was the removal of the standard practice of advertising a 3% buyer's agent commission.
This means that now, commission rates can be more openly discussed and negotiated between the parties involved, potentially leading to lower costs for home sellers.
For real estate agents in the US, this settlement means adapting to a new way of handling commissions.
It is important to stay informed about these changes and understand how they impact your business and your clients. NAR has an excellent resource page for Realtors that they keep up-to-date.
Being transparent about commission rates and ready to negotiate will be key in this new landscape, ensuring you continue to provide value while complying with the updated regulations.
Regardless of the settlement outcome, the NAR change will still occur.
Date of NAR's Nation-wide Rules Implementation Change: August 17, 2024
How Does the NAR Settlement Affect Agents?
The nationwide change in the United States consists of modifications required by NAR, process changes to your business practice, and new paperwork required by your broker.
Two Primary Changes
- Offers of compensation are not allowed in the MLS.
- Before showing homes, a "written agreement" between you and the buyer is now required. The written agreement must describe your relationship with the buyer and clearly define your agreed compensation in dollars ($0-$xxxxx).
Note: Consult with your sponsoring broker for additional information, process, and paperwork requirements.
How Real Estate Agents Can Prepare
Your business practices have now changed, and clearly articulating your value as a buyer's agent to prospective clients is more important than ever.
Consider creating your value proposition.
What's a value proposition, you ask?
A value proposition for your real estate practice is a clear message that compels a prospect to work with you. It highlights your unique benefits and services, such as your personalized service, market knowledge, negotiation skills, and more.
According to Forbes, value propositions are important because when customers are beginning to consider your services, they need to know that you/your service can solve their problems.
How to Articulate Your Value
Buyer agent commissions are big bucks in the eyes of home buyers. After all, they may be thinking about your professional fee as a hefty line item on their closing costs.
During interactions with prospects and buyer clients, consider framing the key points of your value proposition.
Conclusion
By presenting your services confidently and clearly, you help clients see the true value of your expertise, instilling in them the confidence that they are making the right choice and justifying your professional fee.
Your clients will understand "what's in it for them" by showcasing your knowledge, support, and the peace of mind you bring to the home-buying process.
Remember, Realty KickStart is here to support you. If you would like a guide on crafting your value proposition, learning communication skills that build trust with prospects and clients, or role-playing the conversations, consider taking our 1-hour online buyer agent class.
Your dedication to your success makes all the difference!