Realty Executives of Northern Arizona
The NAR Settlement: Here’s the Truth and How it Affects You.
1. The settlement forces brokers to reduce their compensation. FALSE
The settlement in no way establishes a standard or limitation on Realtors for what they may charge, nor services they elect to deliver. Those fees have always been negotiable and there has never been any collective bargaining. In every market, there is a wide variety of fees, just as there are levels of marketing, service and competence.
2. The settlement will, for the first time, allow sellers to no longer pay compensation for an agent bringing the buyer. FALSE.
There has never been an obligation for a seller to pay buyer agent compensation, yet it is a practice that’s worked well. A past rule requiring an offer of some amount of compensation was a rule of display on a Realtor-owned MLS, yet it could have been as low as $1. That limitation was removed and today the MLS accepts all listings, regardless of buyer agent consideration.
3. The settlement prohibits sellers from paying a commission to a buyer’s agent and relieves sellers of the financial burden. FALSE.
The mandate restricts buyer agent compensation from displaying on association-owned MLS, yet the practice can’t be restricted in any other form of marketing. Sellers may still elect to pay buyer agent compensation to differentiate their properties. While sellers can elect not to pay buyer agent compensation, that doesn’t mean they will avoid the economics as buyers may write into any offer a contingency requiring the seller to cover the cost or request other concessions.
4. The settlement will serve to meaningfully lower prices and make homeownership affordable again. FALSE.
Values in real estate are determined by supply and demand. Fees in a real estate transaction represent additional expenses, yet these include not only commissions but many other related charges. Should real estate commissions be reduced by 1% because of compression, that $500,000 home will now cost $495,000. Do you think the seller now believes the home is worth less and will happily give the difference to the buyer? The reason home ownership is increasingly less affordable is that homes in our market have significantly risen in value these last few years.
5. The settlement is a win for buyers who will now be able to negotiate the fee for representation. QUESTIONABLE.
For readers who have purchased homes, it is more than likely you were happy to have the seller compensate your agent so you didn’t have to. For buyers who had to provide the down payment and closing expenses, having the commission paid by the seller and incorporated in the home price allowed them to finance the amount over time instead of coming up with additional cash at closing, which in turn could allow them to afford a higher priced home. Most buyers do not have cash in their hand to pay an agent directly, so the sale process is used for that. Only about 30% of sales are cash or with buyers able to pay an agent directly.
6. The settlement will result in significant restitution to consumers who were “harmed” over recent years in their transactions by Realtors. FALSE.
The settlement is huge, yet when one divides the amount by the number of potentially qualifying consumers it works out to about $10 per person.
7. My commitment to providing you with the best possible real estate experience will not change. TRUE.
I was born and raised in this community and have been a real estate professional for over 30 years. The NAR settlement does not change my determination to provide professional, top-notch service to buyers and sellers I represent.
I have had the privilege of working with numerous clients in what is likely their largest investment. I enjoy going above and beyond to help buyers realize their dreams and sellers maximize their returns, and making the process a positive experience for them.
As the 2nd generation Broker/Owner of Realty Executives of Flagstaff, the oldest brokerage in Northern Arizona, I have seen many changes in the industry. Our brokerage has always adapted to the best way to represent buyers and sellers whenever there is a shift in the environment. And we will continue to do so.
Wayne McCormick
Broker Owner
Wayne@WayneMcCormick.com
Realty Executives of Flagstaff
http://www.realtyexecutivesflagstaff.com
15 E. Cherry Ave. "Historical Downtown"
Flagstaff, AZ 86001
Phone: (928) 773-9300
Direct Line: (928) 526-9300
Where the Experts are - Serving Flagstaff and Northern Arizona since 1977
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