The real estate world shifted for realtors and consumers earlier this year after the National Association of Realtors (NAR), representing 1.5 million members, settled multiple class action lawsuits, resulting in changes in how real estate is sold. However, the changes, which took effect on Aug. 17, have resulted in more questions than answers, with confusion reigning in the homebuyer market.
“Every real estate firm handled it differently. A lot of agents were blindsided, and it also takes two to tango, so the consumer also needs to understand it,” Jason Haber, a real estate broker with Compass in New York City, told The Epoch Times. “They’re all confused.”
Confusion Over New Rules
However, the settlement not only affected the NAR financially but also changed the home purchase process.
According to the NAR, sellers are no longer obligated to pay the buyer’s agent’s commission. Buyers can negotiate compensation with their agent and sign a contract outlining the terms of compensation before being shown any homes. Listing agents are also prohibited from advertising a set buyer’s agent commission on their clients’ homes on the Multiple Listing Service (MLS).
More than a month after the changes took effect, Jim Haisler, a real estate broker and CEO of the Heartland Realtor Organization in Illinois, says calling the settlement and new rules confusing is an understatement.
“I think there’s a lot of education in this industry that’s needed for agents, brokers, and the buying public,” he told The Epoch Times. “The NAR settlement confused everybody, and media information has been inaccurate.”
He said that he’s personally conducted training sessions with his 40 offices.
“Most people hear about this and think the settlement says they no longer have to pay a buyer’s agent. The truth is that the agents must now disclose to clients what the fees are.”
“Compensation for your agent remains fully negotiable and is not set by law,” the NAR settlement FAQ states.
“Confusion is the word of the day here,” said Clever Data Writer Nick Pisano, who told The Epoch Times that buyers’ agents are still not asking clients to sign an agreement.
“Seven out of 10 people looking to buy are telling us that they are still being shown homes without an agreement.”
In the Clever survey, a little more than a quarter of homeowners or potential buyers (26 percent) said they have a strong understanding of the lawsuit and settlement rules, compared to 40 percent who either don’t understand the implications of the changes at all or haven’t even heard of the lawsuit.
From the agents’ perspective, 72 percent believe the NAR settlement and subsequent rule changes will negatively impact the real estate industry, compared to 20 percent expecting a positive result.
“NAR has long encouraged its members to use written agreements with buyers because they help consumers understand exactly what services they have agreed to, the roles and responsibilities, and the amount. For this reason, several states already have laws requiring buyer agreements,” the statement reads.
Pisano said that the most surprising aspect of the Clever survey was that most buyers are not planning on embarking on the home purchase journey without agent help.
“The vast majority of people are still going to use a Realtor (71 percent) even though this is all adding extra work for buyers to be fully aware of the changes,” he said.
