National Association of Realtors Settlement – What it Means
Before you’re ready to buy a home, you’d be wise to learn about the landmark court settlement concerning the National Association of Realtors (NAR). In particular, find out how it may affect you and your homebuying process, which is already a complex task. When dealing with a real estate agent, or a third party to the sale, it’s tricky to figure out what the settlement means for you.
For one thing, the changes in real estate transactions will take time to play out. Additionally, the change you experience depends on where you live. Each state sets its own laws surrounding real estate commissions and transactions. Local agents may or may not find themselves playing by new rules.
According to the NC REALTORS®, North Carolina is a state that already has transparent rules in place. Statewide, licensed agents regularly use open, upfront negotiations for fee structures. Still, NC was one of the states involved in the class-action lawsuit. You can always get trusted advice on working with real estate agents and financing your new home from Zachery Adam at GoPrime Mortgage in West Asheville.
What Is the National Association of Realtors?
The NAR is a trade union, one of the largest in the country. Currently, it claims more than 1.5 million members, all real estate professionals. It. Only NAR members can legally use the trademarked REALTOR® name. But the NAR includes people who work in all aspects of the commercial and residential real estate industry. To qualify for membership, individuals acting on behalf of a real estate firm’s principals must be:
- Certified or licensed sole proprietors
- Partners involved in a qualified partnership
- Majority shareholders or officers of a corporation
- Office managers or branch office managers
Members may include managers of invested business entities, bankers or builders. Regardless of the job description, all NAR professionals must agree to operate under the standards of the nationwide trade union. Membership is revoked if they don’t.
How Are Real Estate Agents Governed by the NAR and the NC Real Estate Commission?
When real estate agents choose to join the NAR, they must hold active licenses from the NC Real Estate Commission (NCREC). The NAR and the NCREC have separate purposes in the industry. The NAR is a nationwide trade organization with state chapters, whereas the NCREC is a state government agency located in Raleigh. NC REALTORS® is the state chapter of the NAR, with headquarters in Greensboro. Membership involves:
- You don’t need to join this trade union to operate as a real estate agent, but if you don’t, you can’t call yourself a REALTOR®.
- The NCREC licenses real estate agents statewide and makes sure they abide by the state’s License Law and Commission rules.
- The primary mission of the NCREC is to protect the public interest when it comes to real estate transactions.
- Real estate agents must hold an active state license to do business in North Carolina.
According to Nick Hinton, the member agents of the Land of the Sky Association of REALTORS® in WNC already follow the new guidelines in 2024. He proudly asserts that in their practices, “buyers and sellers complete agency agreements that specifically state the plan for agent compensation, which again is and always has been completely negotiable.”
What Is the Class-Action Lawsuit Settlement with the NAR?
Home sellers filed multiple lawsuits over commission rates and policies in a number of states. The sellers claimed the National Association of Realtors used a commission structure that violated antitrust laws. The settlement states that the NAR, a nationwide organization, will pay claimants $418 million in damages over four years. Another result of the settlement is that the trade group agrees to alter certain organization guidelines, including:
- A seller’s agent may not set the compensation rate for a buyer’s agent.
- Broker compensation must not be listed on the Multiple Listing Service (MLS).
- Agents are no longer required to subscribe to MLS to receive compensation for their services.
- NAR members are required to use written agreements between buyer and agent.
These conditions from the settlement were declared to be “fair, reasonable and adequate” by the judge overseeing the lawsuit. Now all NAR members throughout the country must operate under these rules.
What Are the Effects of the Ruling?
Some housing experts believe the settlement could substantially break up the established business model, bringing down the cost of commissions nationwide. A spokesperson for the NAR stated they were happy with the settlement, saying it “preserves consumer choice and protects our members to the greatest extent possible.”
The bottom line is a mixed bag of opinions. Only time will tell how the outcome truly plays itself out in the industry. The myriad of opinions to date include:
- Many in the real estate field just aren’t sure how homebuying and selling will be affected.
- Some believe it will reduce real estate agent commissions considerably.
- Lower commissions could potentially save home sellers and buyers thousands of dollars.
- The ruling could also force some agents to quit their profession.
- Others believe the settlement will drive the sale prices up to compensate for the lower negotiated rates.
What Should I Know about Working with a Real Estate Agent under the Sales Commission Rules?
There are several big takeaways to remember when you’re preparing to work with a real estate agent today. These factors include:
- Work only with real estate agents who hold an active license in the state.
- Require a written contract with your agent, which includes an agreed-upon rate for the commission.
- Remember that all sales commissions are negotiable.
That last item is the key guideline to bear in mind — all sales commissions are negotiable. Don’t let any broker claim that the fee is set and fixed. Once you negotiate a commission rate, get it in writing.
When you’re ready to jump into buying real estate, work with a strong team in the field. In Western North Carolina, that includes Zachery Adam GoPrime Mortgage in West Asheville. Contact this experienced loan officer to outline the financing options for your next home. At the same time, he can guide you to choose the best-suited real estate agent in the area for you and your needs.
Keywords: National Association of Realtors, NAR, real estate agent(s), sales commission
Sources:
https://bulletins.ncrec.gov/nar-settlement/
https://www.wncbusiness.com/2024/03/31/486368/wnc-realtors-respond-to-nar-settlement
https://www.cnn.com/2024/04/24/homes/nar-settlement-broker-commissions-approval/index.html
