Update on the future of Real Estate in the United States

Many consumers have read recent reports about real estate agent commissions.  Some reports have commented that they believe home price changes will follow.   There has been some misinformation on the internet, and I hope this is helpful to you as you research the way real estate works.

For over 100 years, the National Association of REALTORS (NAR) has held their members to a higher standard through our Code of Ethics. They have championed private property rights, and proactively protected their members as well as consumers. Nykia Wright, Interim CEO of NAR said “NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.”

With that in mind, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.

While this is a change for REALTORS on the way they communicate offers of compensation, this does not mean that there will no longer be offers of compensation.  In fact, NAR stated “Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers. They are also consistent with the real estate laws in the many states that expressly authorize them.

Another important part of the process as we move forward is the fact that written buyer agreements will be required.  Some states, and many brokerages across the country have already required this for years; and almost every brokerage recommended them.  In the proposed settlement, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much.

If approved by the courts, these changes will go into effect in mid-July 2024.

What has changed for the consumer or the real estate agent?  None at this time. However, if approved, this summer consumers will be required to sign representation agreements with their agents when hiring someone to help them buy a home. REALTORS will then spend time communicating with each other regarding offers of compensation on properties the buyer is interested in. Buyers will still be able to ask sellers to off-set their agent fees, and sellers will still have the opportunity (as they always have) to discuss and negotiate fees when they hire a real estate professional. 

Home sales prices will still be negotiated between buyers and sellers, and the real estate market will still work on supply and demand.  Agents will still be able to run comparable sales data and provide that information to buyers and sellers so they can make an informed decision. Prices are impacted by supply and demand – and that won’t change.