If you’re realtor, a soon-to-be buyer, or seller, you might have heard about the $418 million settlement by the NAR. But do you know what how it happened and what this settlement means? No, then listen carefully.

So a bunch of sellers in Missouri sold their homes using a realtor.

After selling their house, they questioned, “why am I paying for the buyer’s agent if they didn’t work on my behalf? They negotiated against me and I still paid the buyer’s agent their non-negotiable commission.” What’s the reason for that?

With research, these home sellers believed one specific rule violated anti-trust laws, so they decided to sue the NAR & the four largest national real estate broker, Anywhere Real Estate, Berkshire Hathaway HomeServices of America, RE/MAX, and Keller Williams Realty

That rule… is the Adversary Commission Rule.

The rule has three main aspects:

1. As the listing agent, you must disclose commission split on the MLS.
2. If you choose not to, the MLS will not publish your listing.
3. As the buyer’s agent, you cannot submit an offer contingent on the listing agent modifying the commission.

Failure to comply could result in denial of liability insurance, fines, suspension, and termination of MLS rights and privileges.

What is the MLS?

• MLS is short for Multiple Listing Service. As an agent, you want to list your home on the MLS because it syncs with other real estate websites like Zillow and Redfin, so it saves you time and provides maximum exposure.

Why do sellers hate this rule?

1. They have to pay the buyer’s agent.
2. They have to pay the buyer’s agent, a highly inflated commission, when the role has diminished.
3. Both the buyer & seller’s agent receives a flat percentage whether the home sold for $200k or $1 million, especially when the amount of work done is the same or slightly more.
4. The reasons:
   1. You have to offer a 2.5% to 3% commission or the buyer’s agent will steer their buyer to other properties that will.
   2. You have to pay the buyer’s agent because most buyers are cash-strapped and can’t afford to pay their agent.
   3. Doing both will result in more buyers, more offers, and increase your sale price.

Keep in mind, sellers have always been able to sell their home without a realtor and broker compensation has always been negotiable.

Instead of fighting to keep the rule, NAR settled. The settlement will…

1. Require the NAR to pay $418 million, over four years.
2. An agent is no longer required to provide broker compensation in order to list on the MLS
   1. That can still be negotiated off-MLS.
3. Starting in July, buyer and realtor will need to enter a written agreement, so they’re aware what services and value will be provided, and for how much.

Questions to ask if you’re a buyer’s agent:

• How will I get paid? How much will it be? Maybe the listing agents are still able to negotiate & advertise commission splits off-MLS, maybe not. Do I start billing by the hour? 
• How do I get a written agreement signed? What is the verbiage my broker is planning on using and how does that compare to other brokerages?
• How do I appeal to more sellers?
• Is it worth buying leads anymore?

Questions to ask if you’re a buyer:

• What are my costs? I have the money for my down payment and closing costs. Can I afford to pay my realtor, if it comes down to it?
• Have I interviewed enough realtors, to sign their agreement? What questions should I ask?
• What are the pros and cons of using the seller’s agent, who is working on the seller’s behalf?

Questions to ask if you’re a seller:

• With less closing costs, should I lower my listing price or keep it the same?
• Should I offer any types of incentives to the buyer to stimulate interest and generate higher offers?
• I’m seeing more agent solicitations. Do I take the lowest commission or the best service?

Questions to ask if you’re a seller’s agent:

• Other agents are offering to list a home at 1% or less. Should I lower my commission to compete?
• The seller is asking to cut my commission regardless of the service I provide, do I take it or lose the business?
• After I sell a home, I have also helped some of my sellers buy their next house. How will I adapt to the landscape of little to no commission on that end? Will referral fees be a thing anymore?

MortgageHows says. Get to adapting. Change your craft if you have to. Slowly, but surely, the market is going to shift. How fast? Up or down? No se.