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Recent developments in the real estate industry concerning the settlement of a class action lawsuit by the National Association of REALTORS® (NAR) has raised a number of questions, especially as it pertains to agent compensation.
For more than 50 years, Windermere has put integrity and professionalism at the heart of our business, especially during times of change and uncertainty like we’re seeing today. Our agents take their responsibility to their clients very seriously and are committed to guiding them through any changes that may result from the NAR settlement.
There has been a great deal of coverage about NAR in the media, which has led to a tidal wave of misinformation. There is also still a lot that is unknown about how the proposed settlement will affect the home buying and selling process. With that in mind, we felt it was important to provide clarity on two of the proposed changes that will likely have the most impact on home buyers and sellers. NAR’s settlement has not yet been approved by the courts, but if it is, the following two items will go into effect in July 2024.
Buyer Agency Agreements:
Agents representing buyers in every market touched by the settlement agreement across the U.S. will be required to enter into a written agreement with their clients called a Buyer Agency Agreement. These agreements cover critical elements of their working relationship such as the term of the agreement, the exclusivity of the representation, the agreed compensation rate, and the agent’s responsibilities to the buyer. We firmly support the requirement of a Buyer Agency Agreement as an opportunity to provide increased protections for buyers and their agents and to create a more informed real estate environment for all parties involved. It’s worth noting that Buyer Agency Agreements are already required by law in certain states where Windermere operates, including Idaho, Utah, and Washington.
Decoupled Commissions:
The commissions that are paid to a buyer’s agent and a seller’s agent will be decoupled, a change that is intended to provide more transparency about how agents on both sides of the transaction are compensated. This means that what was once customary, which was for the seller to pay the entire commission to be divided between the listing agent and the buyer’s agent, will now be separated. Under the proposed new rules, the seller will pay the listing agent and the buyer’s agent will be paid by the seller or the buyer—or a combo of the two. That’s not to say that the seller has lost the option to pay the buyer’s agent, and in many cases they may choose to do just that. One example might be when the buyer is using a VA home loan which doesn’t allow them to pay a commission by law, or to help a first-time buyer who lacks funding for the commission cost on top of the down payment and closing costs. It could also be a seller who understands the value that a buyer’s agent brings to the transaction and wants to ensure they are compensated for their work.
As stated earlier, there are still many unknowns about how the NAR settlement will impact the home buying and selling process, but what we do know is Windermere agents are ready to fiercely support their clients’ best interests through these changes, as they’ve always done. We will stand alongside them and continue to use our influence to advocate for a fair, transparent, and equitable real estate experience for all involved.
Thank you,
Geoff Wood
CEO & Co-President
Jill Jacobi Wood
Co-President
OB Jacobi
Co-President
