You can download the proposed Settlement Agreement between the National Association of Realtors (NAR) and class action antitrust lawsuit plaintiffs here:
Click here to download PDF
Note: this settlement agreement is “proposed” because it still needs court approval. The legal types I know believe approval will happen with little, if any, modification, and will take, “a few months.”
What’s going on here? This is all ass-backwards – why has no one pointed out that:
1. Sellers don’t pay the commission, Buyers pay it, it’s baked into the price. They finance it with their mortgage. Was this never mentioned in the courtroom?
2. What’s REALLY happening is that Sellers will now get to keep 2-3% ish more of the sale proceeds. Who thinks Sellers, especially in this market, are now going to drop their prices 2-3%? DM me, I’ve got a bridge over some swampland and there’s gold at the end of the rainbow I have to sell you.
3. Buyers, on the other hand, will perceive paying an agent as an added expense, at least until lenders start making it part of the mortgage – and I can only imagine the rules they might dream up for that! Buyers already think they can “get a better deal” if they buy through the listing agent. If we haven’t been able to convince them of that fact before, why do we think we’re going to be more successful after this Agreement takes effect?
Have you guessed that I am primarily a Buyers’ Agent? By choice!
The Result? Buyers will now, more than ever, attempt to contact listing agents so they can skip paying a buyer-agent commission. Listing Agents – you know, the ones who have a contract with the Seller that says they’ll do their best to get the seller whatever it is that the Seller wants, will now be writing purchase documents (after providing a disclosure of no representation, one hopes). But the Buyers won’t process that fact – they probably will have no idea that the nice listing agent has no interest whatsoever in anything other than getting a contract that’s best for the Seller.
I had an inspection today on a home that had recently done $17k worth of sewer updates. Buyers asked if they should have a sewer scope to check the condition of the line. I suggested that the peace of mind having it done would be worth a few hundred dollars. The listing agent thought it was a waste of money. You know what’s coming. We found out that the replacement pipe only went across about half of the yard and the 70 year old clay pipe between the point where the updates ended and the street connection had collapsed. I will venture that, had I not been there to ask, and had I not responded based on several years of experience, they would have listened to the Listing Agent and skipped the scope. She wasn’t wrong about the work that was done, and didn’t know about the work that wasn’t done. I’m just glad I was able to offer my advice, and that they took it. A little $10,000 oops, averted.
I suggest that once this new regime takes effect all listings must include a SIMPLE disclosure outlining agency and dual agency, and disclosing that the listing agent works ONLY for the seller, or as a DUAL AGENT (don’t get me started on how a listing agent suddenly forgets everything that the seller has shared with them up to the time they sign the Buyer on as a Client too and become a Dual Agent, thereby achieving the Holy Grail of collecting BOTH COMMISSIONS. Oh wait, not any more, at least that disaster will cease to be) and that a Buyer should consider independent representation by an agent of their own.
Also, where did the nonsense about Buyer agents not showing properties offering lower commissions come from? Showing any property that fits the Buyer’s criteria or that the Buyer requests to see is the BUYER AGENT’S FIDUCIARY DUTY. As much as I prefer to be paid more, the amount of commission offered to the buyers’ agent for the purchase of a particular property is absolutely irrelevant to what I show MY CLIENT. CLIENT. And I am a FIDUCIARY. That’s our J-O-B. Getting the highest possible commission is not any part of the job. It can’t be! At least, not legally.
OK, end of rant. As you have surmised, I do not consider this agreement to have solved the stated problem (sellers paying too much commission) and created a bunch of new ones. Maybe there were litigators behind the curtain pulling the strings to get to this outcome. I predict that this new Caveat Emptor environment will benefit them most of all.