Opinion: Between the lines: Understanding the nuances of the NAR settlement

By Housing News

With
all
the
recent
media
attention,
by
now
most
everyone
is
aware
of
major
changes
afoot
in

real
estate

this
month.
Commentary
has
run
the
gamut
from
the
demise
of
the
industry
to
real
estate
services
in
the
future
will
now
be
essentially
pro
bono.
Pardon
if
my
words
convey
a
dash
of
sarcasm
yet,
after
over
four
decades
of
helping
buyers
and
sellers
and
running
two
of
the
largest
brokerage
companies
in
the
world,
I
am
compelled
to
read
missives
of
the
misinformed
as
they
pop
corks
in
celebration.

Let
us
quickly
review
the
two
primary
changes
required
in
the

National
Association
of
REALTORS

settlement.
The
outcome
stems
from
a
blatant
underestimation
of
the
class
action
attorneys’
ability
to
sway
a
jury
to
a
massive
award,
resulting
in
over
$40
million
in
attorneys’
fees
paid
with
less
than
$15
provided
per
person
in
the
participant
pool,
almost
all
of
whom
had
no
complaints
to
begin
with.

First,
the
compensation
a
seller
offers
to
a
broker
assisting
a
buyer
in
buying
a
home
will
no
longer
be
displayed
in

Multiple
Listing
Service
.
This
means
buyer
agents
must
now
individually
contact
listing
agents
to
inquire
about
compensation
amounts
or
find
an
alternative
method.
Additionally,
the
previously
guaranteed
compensation
is
now
only
a
representation,
requiring
a
separate
agreement
between
brokerages
before
most
offers
from
a
buyer
would
be
submitted. 

Second,
all
REALTORS
are
now
required
to
have
a
buyer-broker
representation
agreement
requesting
compensation
for
real
estate
services
in
place
before
buyers
can
be
shown
a
home.
This
compensation
may
be
fully
or
partially
offset
by
the
seller.
These
agreements
may
include
flexible
terms
about
the
extent
of
properties
covered
and
the
related
time
frame.
Arguably,
some
real
estate

brokers

who
experience
the
all-too-frequent
situation
of
working
with
a
buyer
for
months
with
no
compensation
only
to
see
the
buyer
use
another
at
purchase
may
view
it
favorably.

The
new
rules
were
justified
as
consumer
friendly,
with
class
action
attorneys
portrayed
as
champions
of
real
estate
buyers
and
sellers.
I
hold
a
contrarian
perspective.
In
more
than
40
years,
I’ve
had
no
buyer
prefer
paying
the
commission
rather
than
having
it
included
in
the
purchase
price.
Buyers
also
appreciated
the
freedom
to
view
properties
without
commitment
with
the
ability
to
select
their
favored
representative
when
ready.
Commissions
paid
by
the
seller
to
the
buyer
broker
were,
in
fact,
optional
before
the
settlement. 

An
overarching
goal
of
the
suit
was
a
total
bifurcation
of
selling
and
buyer
commissions,
yet
the
previous
structure
never
restricted
either
party
from
paying
compensation
to
the
broker
of
the
other
party,
nor
will
it
be
restricted
now.
In
addition,
if
a
seller
no
longer
wishes
to
offer
compensation
to
a
buyer’s
broker,
that
outcome
may
still
occur
with
a
request
to
the
seller
from
the
broker
or
a
request
from
the
buyer
in
a
contract
offer.
More
complication
and
uncertainty.

Real
estate
transactions
are
emotional,
yet
the
efficiency
and
customer
satisfaction
in
how
real
estate
is
transacted
in
this
country
have
been
the
envy
of
the
world.
The
foundation
of
real
estate
sales
evolved
not
out
of
collusion,
as
I’ve
never
had
a
conversation
with
a
competitor
about
commissions
since
first
licensed
in
1981.
Nor
out
of
decree,
since
sellers
were
not
forced
to
offer
buyer
compensation
and
buyers
could
have
elected
to
pay
directly
at
any
time,
but
rather
out
of
practicality
and
success.

What
previously
was
a
process
described
in
10
seconds
now
requires
a
decision
tree
flow
chart
that
is
more
complex
than
a
chemistry
periodic
table.
Beyond
that,
these
changes
lead
to
reduced
choices
for
real
estate
customers
and
infringe
upon
the
rights
of
property
owners
to
sell
or
buy
homes
as
they
see
fit.
I
cannot
help
but
view
this
as
a
Brexit
moment
where
most
believed
it
was
a
good
idea
yet
soon
realized
it
was
not.
And
you
did
not
even
get
a
vote!

As
to
comments
on
rates,
real
estate
is
not
a
public
utility.
It
is
a
business
like
others
where
owners
set
charges
in
a
free
market,
with
public
choice
and
competition
defining
price
elasticity.
Fortunately,
brokerages
will
still
set
their
own
fees
like
any
other
professional
service,
maintaining
a
wide
range
of
offerings
from
discount
to
premium
services
with
fees
to
match.

The
good
news
is
that
we
have
prepared
extensively
for
these
changes,
implementing
standards
and
processes
to
ensure
buyers
and
sellers
remain
well-represented
and
achieve
their
real
estate
objectives.
We
are
ready.
This
month,
the
class
action
attorneys
may
be
off
to
select
their
next
yacht,
but
our
team
will
show
up
for
duty
focused
on
their
customers’
needs
and
best
interests,
just
as
before.


Budge
Huskey
is
the
Chief
Executive
Officer
at
Premier
Sotheby’s
International
Realty.


This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.


To
contact
the
editor
responsible
for
this
piece:




[email protected]

 

Leave a Reply

Your email address will not be published.