2024 NAR Lawsuit
WHAT IS IT?
The National Association of REALTORS® announced a settlement agreement that would resolve litigation brought on behalf of home sellers related to broker commissions. In an effort to increase transparency in the market, new rules went into effect Aug. 17 2024. However, the settlement is subject to final court approval. The final approval hearing is scheduled to take place on Nov. 26, 2024.
WHY DID IT HAPPEN?
The biggest reason the lawsuits were brought to court was around transparency. In other markets around the country, there were agents implementing less-than-moral practices around commissions and who paid them. The verdict and the pending changes will hopefully address something that hasn't necessarily been an issue in our TN market.
WHAT DID IT REALLY CHANGE?
Functionally, not that much. In Tennessee, clients already had the option to negotiate realtor commissions and payments. However, the rules will ensure that every agent has this conversation with every client. In addition, commissions will now not be posted on the MLS.
DOES THIS MEAN 6% COMMISSIONS ARE GONE?
Commissions have always been negotiable in TN. NAR does not set commissions and there is no required "industry standard" for what someone gets paid in a TN real estate transaction. We have seen for years (and will continue to see) offers of commission that are higher or lower, depending on what each client is willing to pay to get the deal done. Our company charges a commission which is different from many companies we know, and it will continue to be between the buyer/seller and agent whether they agree to pay it.
ARE BUYER’S AGENTS GOING AWAY?
I hope not. We believe that buyer's agents serve a much needed purpose in the market; every buyer deserves trusted representation of their own. A listing agent has a fiduciary responsibility to the seller, so their priority is their seller. Buyers also need someone to look out for the best interests. Here is everything our buyer’s agents offer our clients. We strongly feel that buyer's agents deserve to be paid for their role in the transaction and will advise our sellers to compensate them accordingly.
WILL THIS CHANGE HOW BUYER’S AGENTS ARE PAID?
No. Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to: fixed-fee commission paid directly by consumers, concession from the seller, portion of the listing broker’s compensation.
WILL THIS CHANGE HOW LISTING AGENTS ARE PAID?
No. Compensation will continue to be negotiable and should always be negotiated between agents and the consumers they represent, as NAR’s policy has required for decades.
WILL WH PROPERTIES CHANGE HOW THEY WORK?
Our core business will not change. We will have a few extra disclosures and new technical systems to implement, but our day-to-day business will not change. The biggest thing to come out of the lawsuit was that buyer representation agreements must be signed prior to showing someone a home (which we have been doing for years) and the posted commissions had to come off the MLS.
Our team loves sharing how we bring value to each of our clients! We are happy to walk through all your questions and share the benefits of working with our full-service team of industry experts.
WHAT DOES IT MEAN TO ME?
In the midst of the changing real estate landscape, the role of a trusted real estate advisor becomes even more crucial. Have open conversations with any real estate professional you are considering working with. Have reasonable expectations about commissions. And be critical of information on the lawsuit that does not come from an industry expert. No matter if you work with us or not, we are always happy to share information and answer questions. (A more informed public benefits everyone!)