With two months having elapsed since the unveiling of the proposed NAR settlement, the real estate industry continues to grapple with its implications. Throughout this period, we've been diligent in our efforts to track and understand these developments from multiple angles. Through rigorous data analysis, insightful conversations within our professional network, and countless listing and buyer consultations where this topic has taken center stage, we've cultivated a nuanced understanding of the proposed changes.
Here are the key changes proposed in the NAR settlement:
Buyer Broker Agreements: Under the new regulations, buyer broker agreements will now be required even before a showing takes place. This means that buyers will negotiate their agent’s commission upfront, assuming responsibility if the commission is not offered in the listing agreement.
Prohibition on Advertising Commissions: A significant change introduced by the settlement is the prohibition on advertising commissions to buyer agents on MLS or IDX platforms, such as Zillow or Redfin. This aims to enhance transparency and ensure fair competition within the real estate market.
Separate Negotiation of Agent Compensation: Sellers will now negotiate their agent’s compensation independently from the compensation offered to the buyer’s agent.
Shift in Minimum Listing Commission: Previously, sellers could list their properties on MLS for as little as $1 in commission, but now, this minimum has shifted to $0.
According to Robert Reffkin, CEO of Compass, an analysis of MLS data in key U.S markets revealed that more than 99% of new listings since the announcement of the NAR settlement included offers to pay the buyer’s agent. Additionally, over 96% of listings included offers of 2% or more, with more than 67% offering 2.5% or higher.
We decided to analyze this data for our specific market here in Santa Barbara and this is what we found: Among 56 listings priced between $2.7 million and $3.7 million, the majority offered a 2.5% commission to the buyer’s side. Of the four that deviated from 2.5%, two offered 3%, one offered 2.25% and one offered 2%.
These findings suggest that while the NAR settlement has introduced changes to the real estate landscape, its immediate impact on agent compensation and listing practices may not be as pronounced as media headlines anticipated. However, it is essential for both buyers and sellers to stay informed about these developments and work closely with their agents to navigate any changes effectively.
As the real estate industry adapts to evolving regulations and market dynamics, staying informed about these developments remains paramount for all stakeholders. The NAR settlement marks a pivotal moment in this ongoing evolution, and we remain steadfast in our commitment to adapt and uphold our tradition of exceptional service.
