• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick Consumer advocates and realtors hail NAR settlement: What it means for buyers and sellers
Editor's Pick

Consumer advocates and realtors hail NAR settlement: What it means for buyers and sellers

by March 26, 2024
by March 26, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The process of buying a home has seemingly never been simpler: Find a property on a listings website like Zillow, Redfin or Trulia; reach out to the listing agent; tour the property; and make an offer.

But for years behind the scenes, experts say, consumers have not been fully aware of the ultimate cost — and potential conflicts of interest — when searching for a home.

Now, a landmark settlement with the National Association of Realtors is poised to upend this model. According to consumer advocates, and even some realtors, it’s a win for homebuyers and sellers.

“Price transparency is a good thing, increased competition is a good thing, and this will increase both,” said Mariya Letdin, an associate professor at Florida State University’s College of Business. “I really welcome this change.”

When someone goes looking for a home today, they are in most cases intercepted by a broker who has access to certain listings and who will work with the buyer at no cost upfront to help them get into a home.

But therein lies a common misconception, experts interviewed by NBC News said. Although a homeowner who puts their property up for sale must hire professionals to market their home, they usually fold that cost into the final price paid by the buyer.

“The buyer brings the entire purchase price to the table,” Letdin said. “And the seller gets to keep a little bit more of that after this ruling.”

As part of the new settlement, the buyer should now be fully apprised upfront about any potential fees or commissions they’ll ultimately have to pay.

That’s because the agreement requires that a buyer sign a formal contract with a broker laying out what services they’ll be receiving, and for how much.

Alternatively, a homebuyer could decide not to hire a broker and instead put their search costs toward a real estate lawyer, appraiser or someone else with knowledge of the housing market, experts say.

And a seller could even offer to cover the cost of the buyer’s team as an incentive to attract more buyers.

Of course, for a property that’s garnering a lot of attention, such buyer incentives are unlikely to be on the table.

And in the months following Covid-19 pandemic reopenings, the hottest U.S. real estate markets were tipped squarely in favor of sellers.

But now, with home price growth leveling off, the playing field is leveling out too, putting more buyers in the driver’s seat, experts say.

“Now you can hire an attorney for $1,500, instead of paying a $50,000 commission,” said Doug Miller, a real estate lawyer based in Minnesota who helped launch the actions that led to the NAR settlement.

Whomever a prospective buyer chooses as their representative in the homebuying process, the NAR settlement now formally bans the seller’s ability to advertise a commission for the buyer’s reps on the multiple listing service.

For its part, the NAR has maintained that the free market has always set commission levels, and that they were always negotiable — and even useful.

“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,” the NAR said in its March 15 statement announcing the agreement.

But in most cases, there was little difference in the amount being offered for those commissions in a given market — usually about 3%.

That’s because any attempt to offer a lower commission to a buyer’s agent would likely motivate the agent to direct their client away from that property.

Miller characterized that behavior as improper and said buyers, in many cases, would have had no awareness of it.

“The future here is that buyers will now be in the driver’s seat,” Miller said. “Instead of that [commission] money going to their agent … it can now go directly to the buyer. It’s the same amount of money, but now the buyer gets money instead of a buyer agent, and they can decide what to do with it.”

What’s more, greater competition for clients is likely to result in lower costs across the board, said Ryan Tomasello, a real estate industry analyst with the Keefe, Bruyette & Woods financial firm.

“When you introduce a ton of transparency to a marketplace that has historically lacked it, any economist will tell you that reduces friction costs — i.e., commissions — and those are some of the highest in the world,” Tomasello said. “So the all-in cost of buying and selling a home, in theory, is going to decline.”

Many experts, including other real estate professionals, agree that the settlement will effectively thin the ranks of fly-by-night agents who served as an intermediary — a phenomenon that surged during the pandemic-era housing boom.

“A lot of folks parachuted in during 2020-2021 to try to make easy extra money by putting themselves out there as a buyer agent and taking 3%,” said Phil Crescenzo Jr., vice president of the Southeast division at Nation One Mortgage Corp.

“But they weren’t bringing 3% of value — not even close.”

Crescenzo compared it to moonlighting mortgage brokers who helped fuel the housing bubble of the mid-to-late 2000s.

“Once they changed the compensation rules, the dominant professionals rose to the top, the bottom disappeared, and the industry got better,” Crescenzo said.

This post appeared first on NBC NEWS
You Might Also Like
  • Meta announces end of its DEI programs. Read the memo.
  • Cruise CEO Kyle Vogt resigns from GM-owned robotaxi unit
  • ESPN networks, ABC and Disney channels go dark on DirecTV on a busy night for sports
  • Musk still needs ‘Twitter sitter,’ judges rule
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Chrysler and Dodge parent recalling 318,000 vehicles over potentially faulty air bag parts
next post
Surprise Negative Divergence on Nasdaq Advance-Decline Line

You may also like

Last-minute summer travelers are finding the best deals in years

August 12, 2024

E.l.f. Beauty to acquire Hailey Bieber skin care brand Rhode...

May 29, 2025

Kraft Heinz recalls 83,800 cases of Singles American cheese slices

September 22, 2023

Modelo tops Bud Light as the top-selling beer in the...

June 16, 2023

Taylor Swift agreed to FTX partnership, but the crypto exchange...

July 7, 2023

U.S. payrolls increased by 150,000 in October, less than expected

November 6, 2023

Kudelski IoT Launches Matter Certificate Authority and Broad Security Portfolio...

February 9, 2023

Torch Introduces Low-Cost Comprehensive IoT and AI Solution for Early-Stage...

March 15, 2023

Google employees pressure costumed execs at all-hands meeting for clarity...

November 1, 2024

‘Trump trade’ returns for second week as bitcoin, Tesla, stocks...

November 12, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    EBay to eliminate about 1,000 jobs,...

    January 24, 2024

    Private payroll growth slowed to 122,000...

    July 31, 2024

    Kroger and Albertsons are spending billions...

    December 15, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here