NAR Lawsuit Settlement 2024 - Explained!

Summary

Brian Eisenhower discusses the impact of the National Association of Realtors settling a price-fixing lawsuit on the real estate industry. He explains the concept of 'decoupling' commissions, the end of automatic offers of compensation in MLS, and the need for agents to adapt by improving negotiation skills. Changes are expected to roll out in mid-2024, allowing time for local associations to guide agents through the transition. The settlement covers most national brands and NAR members, but entities owning high-volume brokerages are not included.

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Q & A

What is the main topic of the video?

The main topic of the video is the recent settlement of a price-fixing lawsuit involving the National Association of Realtors and its implications for the real estate industry.

What is the expected impact of the lawsuit on the real estate industry?

The lawsuit is expected to result in the decoupling of commissions, meaning that the seller's agent and buyer's agent will be paid individually instead of as a combined commission. Additionally, there will be no more automatic offers of compensation in multiple listing services.

When are these changes expected to go into effect?

The changes are not expected to go into effect until mid-July of 2024.

How will the changes affect real estate agents and their clients?

Real estate agents will need to adapt to negotiating commissions per transaction and may need to focus more on getting listings to maintain their income. Clients may be confused about the changes and need to be informed that the total amount paid in commissions is not decreasing, just being split differently.

What does 'decoupling' in the context of the lawsuit mean?

Decoupling refers to the separation of the buyer's agent commission and the seller's agent commission, which were previously combined as a single commission figure. This change is not expected to lower the total amount paid in commissions.

How might the changes affect the role of multiple listing services (MLS)?

The changes may lead to a decrease in the influence of MLS as some agents might opt for pocket listings or use alternative platforms to list properties, given that compensation offers will no longer be automatically included in MLS listings.

What is the significance of the lack of automatic compensation offers in MLS?

The lack of automatic compensation offers means that the buyer's agent commission will be negotiated on a per-transaction basis, which could lead to more variability in compensation and increased negotiation responsibilities for agents.

What is the importance of getting listings for real estate agents in light of these changes?

Getting listings becomes even more critical for agents as it provides them with more control over their compensation and power in the market. The changes may make it more challenging for buyer's agents to secure commissions.

Which major brand is not covered by the settlement agreement?

Home Services of America, commonly known as RE/MAX affiliates, is not covered by the settlement agreement because they are still actively litigating.

What is the role of buyer agency agreements in the new landscape?

Buyer agency agreements will become even more important as they need to be signed upfront to ensure that the buyer's agent gets compensated. The agreements will often include clauses making the offer subject to the seller reimbursing the buyer at closing for the buyer's agent compensation or closing costs.

How might the changes affect the consumer?

While the lawsuit aims to defragmentize the real estate industry for the benefit of consumers, it is unclear whether these changes will directly lead to lower costs for consumers. The changes may primarily affect the way agents operate and negotiate commissions rather than impacting consumer prices directly.