{"id":11136,"date":"2024-03-23T21:31:54","date_gmt":"2024-03-23T21:31:54","guid":{"rendered":"https:\/\/imsfund.com\/?p=11136"},"modified":"2024-03-23T21:31:54","modified_gmt":"2024-03-23T21:31:54","slug":"what-the-nar-settlement-means-for-real-estate-investors-according-to-sources-in-the-industry","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2024\/03\/23\/what-the-nar-settlement-means-for-real-estate-investors-according-to-sources-in-the-industry\/","title":{"rendered":"What the NAR Settlement Means for Real Estate Investors, According to Sources in the Industry"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div id=\"post-content\" :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/p>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">The National Association of Realtors (NAR)\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/national-association-of-realtors-to-pay-418-million-and-remove-commission-standards-as-part-of-settlement\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">agreed to a settlement<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0last week that will eliminate its rules on sales commissions. The deal, if approved by the federal court, is likely to shake up the real estate market and could potentially decrease housing prices across the country.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Anthony Panebianco, a real estate attorney at Davis Malm Attorneys, told BiggerPockets that the settlement is unsurprising, as a judgment would have likely led to the NAR\u2019s bankruptcy.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cThe elimination of the mandatory cooperative compensation model was predicted before this settlement and now is guaranteed,\u201d he added.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The NAR agreed to pay $418 million in damages and implement new rules by July that will change\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-do-realtors-get-paid\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">how real estate brokers are compensated<\/span><\/a><span data-preserver-spaces=\"true\">. One rule would prohibit brokers from offering compensation on the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-the-mls\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">multiple listing service<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0(MLS), which critics say led to brokers pushing more expensive properties on buyers. Another rule would require buyer-brokers to enter into a written agreement with their buyers.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cIt has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,\u201d Nykia Wright, interim CEO of NAR, said in a\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/newsroom\/nar-reaches-agreement-to-resolve-nationwide-claims-brought-by-home-sellers\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">statement<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">An End to the Traditional Commission Model?\u00a0<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The change to NAR rules essentially means the end of the standard 6% commission rate for brokers, and commissions are expected to be cut\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/edition.cnn.com\/2024\/03\/15\/economy\/nar-realtor-commissions-settlement\/index.html\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">by as much as half<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In turn, this could open opportunities for alternative selling models. These could include an increase in models that already exist, such as flat fees and discount brokerages, or even completely new models, Nick Narodny, founder and CEO at real estate startup Aalto, told BiggerPockets.<\/span><span data-preserver-spaces=\"true\">\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cThey could be everything from subscription to flat just giving consumers more of a power of choice and the representation of buying,\u201d he said.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">With all the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nytimes.com\/2023\/12\/27\/realestate\/national-association-realtors-real-estate.html\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">current issues facing the NAR<\/span><\/a><span data-preserver-spaces=\"true\">, Panebianco said there would be traction if other groups were to try to step in and offer other models.<\/span><span data-preserver-spaces=\"true\">\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cNow would be a good time if an entity was so inclined to come up and say we\u2019re different than the NAR, and we will lobby on your behalf and be able to better predict what the future holds,\u201d he explained.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Some brokers feel the news could improve the industry, as less experienced brokers are likely to leave. And the decoupling will also mean more transparency in an often complicated commission system.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cReal estate investors will benefit from only the savviest agents remaining in the industry,\u201d Michael Martirena, founder of the Ivan and Mike Team with Compass in Miami, told BiggerPockets.<\/span><span data-preserver-spaces=\"true\">\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Martirena said this will lead to a \u201ccollective leveling-up in terms of education, information, and client service,\u201d as agents can help clients with no hidden costs. \u201cThe transparency will benefit investors as much as consumers,\u201d he added.\u00a0<\/span><\/p>\n<div class=\"justify-center \" x-data=\"{ IabAdad_block_: popAd(['r720x90'], '1') }\" :class=\"IabAdad_block_.linkURL ? 'flex pt-8' : 'hidden'\">\n<a x-show=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.linkURL\" x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/what-the-nar-settlement-means-for-real-estate-investors', IabAdad_block_.sponsor, IabAdad_block_.title, IabAdad_block_.id, 'blockAdClicked', 'blockAd', 'postContent')\" target=\"_blank\" x-init=\"&#10;      analytics.track('blockAdLoaded', {&#10;        referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-the-nar-settlement-means-for-real-estate-investors',&#10;        sponsor: IabAdad_block_.sponsor,&#10;        ad_title: IabAdad_block_.title,&#10;        ad_page_location: 'postContent'&#10;      })&#10;    \" x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/what-the-nar-settlement-means-for-real-estate-investors', IabAdad_block_.sponsor, IabAdad_block_.title, IabAdad_block_.id, 'blockAdViewed', 'blockAd', 'postContent')\" rel=\"noopener\"><\/p>\n<div class=\" hidden sm:block\">\n<img class=\"m-0\" :src=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.r720x90\" :alt=\"IabAdad_block_.r720x90Alt\"\/>\n<\/div>\n<div class=\"block sm:hidden\">\n<img class=\"m-0\" :src=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.r320x50\" :alt=\"IabAdad_block_.r320x50Alt\"\/>\n<\/div>\n<p><\/a>\n<\/div>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What This All Means for Real Estate Investors\u00a0<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The NAR\u2019s settlement isn\u2019t the end of the compensation debate. While the NAR rules apply to just agency members, not all databases require membership. Other real estate companies, such as RE\/MAX and Redfin, have gotten rid of requirements for agents to be part of the NAR in response to numerous lawsuits.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The Department of Justice (DOJ) is still continuing its investigation into the NAR, including its MLS, which it has questioned for stifling competition and potentially going against antitrust laws. In a statement of interest related to the commission lawsuit, the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/assets.ctfassets.net\/hzfwsdcegxo2\/56drkRjZIViIpa68dtgFqt\/c9182f20c0d4092e335526f90ca174fc\/DOJ_latest_response.pdf\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">DOJ advocated<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0for an end to cooperative compensation.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Narodny said he doesn\u2019t see the DOJ allowing the settlement to stand. \u201cThey want commissions to be decoupled, not have the rules be changed,\u201d he said. \u201cI think we\u2019ll see true change by this summer, and I think commission will be decoupled. This means buyers have to pay their own way, and potentially investors have to pay fees out-of-pocket.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It\u2019s widely believed that the changes will also help bring down the costs of financing or even overall home prices, which could be welcome news, as the market has been beset by record-high prices over the last few years. Some buyers may even opt to forgo an agent completely.<\/span><span data-preserver-spaces=\"true\">\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Brokers are likely to get paid somehow, even if the price structure changes. While the elimination of buyer\u2019s broker fees should be seen in the purchase price, \u201cI\u2019m skeptical of that being a reality,\u201d said Panebianco. \u201cThe market sets the price, rather than the machinations of how the industry conducts a deal.\u201d<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts\u00a0<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Still, industry experts are hopeful that in the long run, the NAR settlement will ultimately be a win for the real estate market.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cWith the ability for buyers and investors to now favorably negotiate with their broker on commission fees as a result of the NAR settlement, we are likely to see an increase in the volume of deals, which has been generally on a decline for the past few years,\u201d said Panebianco.<\/span><\/p>\n<div id=\"visibility-group-block_64dd561cede13\" class=\"visibility-group  hidden\">\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 lg:w-1\/2 \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Agent in Minutes<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Match with an investor-friendly agent who can help you find, analyze, and close your next deal.<\/p>\n<p><\/main>\n<\/div>\n<div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/bpimg.biggerpockets.com\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" alt=\"find an investment-friendly real estate agent\" title=\"What the NAR Settlement Means for Real Estate Investors, According to Sources in the Industry 2\"\/>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-group__inner-container\">\n<div class=\"wp-block-group__inner-container\">\n<div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n<p><\/main>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/what-the-nar-settlement-means-for-real-estate-investors\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article The National Association of Realtors (NAR)\u00a0agreed to a settlement\u00a0last week that will eliminate its rules on sales commissions. The deal, if approved by the federal court, is likely to shake up the real estate market and could potentially decrease housing prices across the country. Anthony Panebianco, a real estate attorney at Davis [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":11137,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/real-estate-1-1-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-11136","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11136","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=11136"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11136\/revisions"}],"predecessor-version":[{"id":11138,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11136\/revisions\/11138"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/11137"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=11136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=11136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=11136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}