Today I want to talk about the NAR lawsuit, which is called National Association of Realtors lawsuit. How it started, what are the changes happened as a result, and what does it mean exactly to you as a seller and buyer?
The lawsuit started in the state of Missouri. In summary, the sellers were saying there was not enough proper disclosures of how commissions were paid, and the sellers thought it was not fair for the seller to pay the buyer’s agent’s fee. They never talked about why that buyer came with an agent. That’s the buyer who brought the money to buy. And they already knew the total commission they were paying, which was already included in that. But this happened. So as a result of the class action lawsuit, there has been some big changes in our industry, and this is going to affect the buyers, the buyer’s agents, and ultimately, the seller.
So the big changes has happened before on our Multiple Listing Services (MLS, that’s where you see list of properties for sale). We always advertise how much we were giving to the buyer’s agent’s commission. So the buyer’s agent already knew and they would talk to the buyer. So the buyer didn’t have to worry about that. But now as a result, the buyer has to pay the buyer’s agent’s compensation if the seller is not paying.
So if you are a seller, you’re meeting with your agent, you are going to negotiate your fee on the seller side, on the listing side, and you also have to be ready to have the conversation say in order to bring the most number of buyers who can afford my house, how much are you willing to pay to the buyer’s agent’s fee? And I can guarantee you, no seller is going to lower the price. If a neighbor has sold for certain price, they want the same or higher for their house. So they’re not going to say because I’m not paying the buyer’s agent’s fee, I’m going to reduce my price. So the commission is already built into the price for you.
As a buyer, you need to start interviewing an agent of your choice. Go call two or three of your favorite agents and see who is the most one that you want to work with. Because if the seller, during negotiation, if the seller says, “I am not paying the buyer’s broker fee”, you may have to pay it. So it’s going to be a negotiation thing. Just like when you make an offer, you negotiate closing cost credit, sometimes you negotiate termite inspection, things like that. So this would be part of that. So as a buyer, you need to make sure you know the financial and you have to set some money aside just in case if the seller’s agent doesn’t offer. Then the money flow is different. It used to come from the two brokerage. Now the money is going to come, the seller is going to pay the buyer directly, the buyer is going to pay the buyer’s agent, or the seller will give it directly to the buyer’s broker.
It really depends on every state. So this is for California as of now. So this is a big change. If you have any questions about this, please feel free to give me a call because I know there has been a lot of confusion, there’s a lot of negative news on the media. Please don’t read every bad news and talk to your agent to see exactly what’s happening. Thank you so much for watching. If I can help you with any of your real estate needs, feel free to ask. Thank you so much.
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
