I Don't Have to Pay Commissions Anymore?!

The National Association of Realtors agreed to a $418 million settlement last week in an antitrust lawsuit where a federal jury found the organization and several large real-estate brokerages had conspired to artificially inflate agent commissions on the sale and purchase of real estate.

In essence, the sellers who created this class action lawsuit believed that NAR and several large brokerages across US were "price fixing".… forcing sellers to pay 3% to the listing agent, and 3% to the buyers agent. Sellers feel they should only be required to pay the commission to the listing agent. Commissions are ALWAYS NEGOTIABLE, and always have been (CA is ahead of the ball on this) However, the jury found favor with the sellers; creating new rules that will go into effect July 2024 Nationwide.

Rule Changes:

1. Buyer Representation Agreements Required.

2. Offers of Cooperative Compensation Cannot Be Made On the MLS.

3. Offers of Cooperative Compensation May Be Made Off the MLS.

4. Brokers Can Publish Offers of Cooperative Compensation for Their Own Listings on Their Own Websites. Agents Must Make Commission Disclosures

How is it all gonna go down in July after all the dust settles?

There are way too many possibilities to discuss for this small presentation, but here are a few thoughts I have, as well as potential problems we will run into. It will be the wild west for a the back half of 2024! NO ONE KNOWS what will actually go down, however I have some projections!

1. Business as usual, but the commissions are offered as a seller credit listed on a private website. The sellers realize that they need buyers agents to bring the buyer.

2. Agents will have to negotiate their commission with their offer.

This creates tension between the buyer and the buyers agent. What if the seller is offering 1% to the buyers agent, but the buyer broker agreement states they will be paid 2.5%? Does the buyer agent simply take less money? Or does the buyer have to come up with an additional $10,000 in closing costs? What if the buyer doesn't have that extra cash?

3. Buyers will represent themselves (My guess: New companies will pop up helping write offers to send to sellers). That one is pretty obvious what would happen. Many people don't have the slightest clue what to investigate/who to trust for a sound investment. This will lead to many lawsuits.

4. Buyers will go directly to seller for dual representation: Many agents won't do a dual representation (illegal in many states already) because it is the number one way Realtors get sued. How do you serve two masters?

Closing thoughts: I think ultimately there will be a "testing period" over the next year, and the majority of people will settle in to 1 of these 4 options as a majority, while the rest of the options will be outliers.