If you have been reading the news this week, then you have undoubtedly heard about the $418 million dollar settlement with the NAR (National Association of Realtors) and the Department of Justice. This is scheduled to take effect in mid July, so how is this going to affect us in The Bronx?
Overall, the settlement sought to create a more competitive and transparent real estate market, benefiting consumers and promoting fair competition among real estate professionals.
LET’S START WITH THE KEY POINTS.
– Listing agents can no longer advertise buyer broker commissions on the MLS. It can, and will, be communicated in any other way by realtors.
– Buyers agents must have a written agreement that they are representing a buyer. The written agreement will spell out their services offered and provide their expected commission rate.
– The settlement required NAR to repeal or amend rules that hindered competition. Rules related to minimum service requirements for brokers and agents are to be removed, allowing for more flexibility in the services they offer and the fees they charge. Essentially, the goal here is the end of the 6% (3% to the listing agent and 3% to the buyers agent) standardized commission that sellers have to pay.
NOW HERE IS MY OPINION ON THE RULING AND HOW I THINK IT WILL AFFECT US IN THE BRONX.
I think it’s great that buyer agents now have to have a written agreement that makes clear the services offered and the expected commission. I also think it’s great that there isn’t a standardized 6% commission, however this was never really the case for us in The Bronx where in my experience the commissions split by the realtors range from 3-5%.
I think it is also fair for it not to be assumed that the seller is going to pay the commission for the buyers agent. This is just going to be another point that will be up for negotiation in an offer and will be relevant in determining the highest and best offer presented by a buyer. Especially for first time homebuyers I do think buyers agents are extremely important.(Depending of course on the skills and intentions of the agent). Don’t forget that in the 1990’s advocacy groups demanded that buyers have representation because historically they were being taken advantage of by listing agents only representing the interests of the sellers.
I think that if your objective is improved transparency it doesn’t make sense to remove the offered commission from the MLS and that it would make more sense to require it to be publicly stated for the consumer on all platforms.
I think that he best way to improve the consumer experience went unaddressed. Reducing competition amongst realtors by increasing the barrier of entry to becoming a realtor would reduce the cost to home seller and buyers, and increase the expertise of the average realtor. There are too many people who don’t know what they are doing in the industry and if it required a more rigorous and formal education to get your license it would make it easier for the valuable realtors to earn business and thus decrease the costs to the consumer.
I hope this provided some clarity of this ruling in the context of our local market. Call or send me a message if you have questions or want to discuss more!