How the NAR settlement could impact homebuying
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The National Association of Realtors' decision to settle a lawsuit that questions how real estate agents are paid — and who foots the bill — could impact Texas homebuyers this summer.
The big picture: If approved, agents won't be able to make offers of compensation in the Multiple Listing Service, the database where real estate agents post homes for sale.
Why it matters: The seemingly small change, which a court preliminarily approved in April, is causing major confusion.
- And with Austin's most fruitful home buying season in full swing, we thought we'd take a look at what the recent major lawsuit involving Realtors means for the sale or purchase of your house.
How it works (currently): Sellers and their broker negotiate a fee, and that broker decides how much profit they want to share with the buyers' agent.
- That number is advertised in the MLS listing, and the seller pays both agents from the home sale earnings.
- Many are concerned this causes buyers' agents to steer clients toward homes that offer them higher commission.
If the settlement is approved, offers of compensation will not be listed in MLS. Buyers and their broker will negotiate how much the broker should earn — and how they'll get paid, antitrust lawyer Brian Schneider says.
- Increased transparency around agent profits could lead to more competition, he says.
What they're saying: Austin Board of Realtors CEO Emily Chenevert said "it's a great thing" for buyers and agents to start their relationship with clearly documented agreements that give the buyer a better understanding of an agent's value and cost of services.
- But the changes "could present some challenges for buyers who can't afford to pay their agent out of pocket on top of their down payment and the cost of the transaction," Chenevert noted.
Between the lines: Many cash-strapped first-time buyers aren't in a position to pay their agent out of pocket, which could make homes that include a compensation for their agent more appealing.
- For that reason, sellers aren't entirely off the hook.
- Sellers will likely offer concessions to cover buyer agent costs, Faron King, a VP with NAR, tells Axios.
What's next: The practice changes in the settlement agreement will take effect Aug. 17, and the final approval hearing is scheduled to take place on Nov. 26, according to NAR.
- Chenevert said the Austin Board of Realtors will make the change on Aug. 13 to support the 13,000 agents in Central Texas.