Skip to main content

WNC Business

WNC REALTORS® respond to NAR settlement

Mar 31, 2024 05:41PM ● By Randee Brown

National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. REALTORS® are real estate professionals who have chosen to join NAR. 

A March settlement proposal stated that NAR will pay $418 million in damages and agreeing to eliminate its guidance around commissions after multiple lawsuits surrounding agent commission rates and policies.

According to Nick Hinton, 2024 President of the Land of the Sky Association of REALTORS®, media headlines potentially paint a false narrative, suggesting that there are standard compensation rates nationwide, and stating that REALTORS® have agreed to “slash commissions” to settle these lawsuits. 

Hinton said compensation for representation in real estate transactions is, and always has been, completely negotiable and there is not a standard rate. Broker compensation has always been decided between a real estate firm and its client, and that practice is not changing, either at the national or local level. 

“I would also like to emphasize that North Carolina has had rules and practices in place for years that require disclosure of how representation in real estate transactions work, including language that clearly outlines how compensation works,” Hinton said. “Buyers and sellers complete agency agreements that specifically state the plan for agent compensation, which again is and always has been completely negotiable. The NAR settlement (once approved) will be implementing similar agreements on the national level as a requirement for all REALTORS®, but we here in North Carolina are ahead of the curve in this regard. The NC Real Estate Commission has prioritized arming consumers and clients with clear information regarding real estate related services and compensation.”

Ben Graham, Broker In Charge at Realty One, pointed out that each state has their own laws around real estate transactions and commissions, and also stated North Carolina already had rigorous laws in place with a goal of protecting consumers. 

“In North Carolina, a buyer agency agreement must be presented in writing no later than the time of the offer,” Graham said. “This document discloses the amount of commissions the seller and the agent agree upon, and traditionally the selling agent discloses an amount offered to a buyers agent in the public MLS listing. It was always supposed to be disclosed, and it was always the law that it was negotiable.”

In addition to releasing NAR members from liability, the proposed settlement includes a statement that prohibits offers of compensation on the MLS beginning in July of 2024. Graham said there is currently a lot of uncertainty surrounding agent commissions and how agents will be compensated moving forward if the proposed settlement is approved by the court. 

According to the NAR, there will continue to be many ways in which buyer brokers could be compensated, including through offers of compensation communicated off MLS, seller concession, broker-consumer negotiations, or a portion of a listing broker’s commissions. Seller offers including items like buyer closing costs may be disclosed on the MLS, but not conditioned on the use of or payment to a buyer broker. Also, MLS participants working with buyers must enter a written agreement before touring any property.

A licensed agent for more than 17 years, Chris Young, ABR. CRS, GRI, RENE said the new law prohibiting the offered commissions stated on the MLS will prevent steering, though she said this has always been a part of the rules and ethics of being a real estate agent, a member of the NAR, and per their licensure. Just like an agent may not steer a client toward or away from any property for any reason, they are not and have never been allowed to steer a client for the purpose of offered commissions. 

Young said her concern is some buyers may feel they need to compensate their agent out of their own pocket, and potentially enter into the biggest transaction of their life with no education and no representation. 

“As North Carolina is a Buyer Beware State, sellers do not have to disclose everything about the property, so buyers must research and investigate the property during a due diligence period,” Young said. “New buyers may not know the potentially detrimental aspects that need to be investigated, and without an experienced agent to protect the buyer’s interests, there is a chance that buyers could sink their entire life savings into homes that are defective, unhealthy, or unsafe.”

Graham and Young both stated the difficulty of the home-buying process, for reasons including frequently changing contract templates, the rising cost of housing, and the limited inventory in WNC. They and the LOSBOR all agree it remains important to have a trusted, experienced advisor to help through the entirety of the transaction; especially one that is surrounded by a team that can ensure things are done promptly and properly.

With many unknowns on the horizon, it remains important for buyers and sellers to interview multiple agents, understand their qualifications, educate themselves on the process, and find someone they feel comfortable with to help them navigate life’s largest and most significant transactions.