What The New NAR Rules Mean To You

Changes To Real Estate Commissions

You may have heard in the news a settlement the National Association of Realtors has proposed. I will try to provide some bullet points of what the proposal states and what does it mean for buyers and sellers moving forward


First a disclaimer. No agreement or settlement has been made. A judge still needs to sign off on the deal. The Dept. of Justice has already said they don't think the agreement go far enough to protect the consumer. Nothing has been settled. The news that came out is simply a proposal from the NAR


Second disclaimer is that I have been selling homes in the Valley since 2001. I have never charge a 5-6% percentage. I always provided full service on a flat fee. My opinions and perception of the real estate fee structure is much different that the majority of my collogues

How Did We Get Here?


It's pretty simple. Home Sellers thought Realtors charged too much to sell a home. I personally agree with them. The Sellers biggest complaint was "Why am I paying for the Buyer's agent?"


Technically they are not. The MLS and the "co-broker" commission was designed as a tool to help Listing Agents market a home to a broader audience of buyers. It was a system that allowed agents to say to other agents "Hey, I have a new listing. Help me find a buyer and I will share my commission with you. So, yes in the end the Seller is paying for the Buyer's agent, the agent that is working against the Seller


That's like if someone gets a divorce, you need to pay legal fees of your ex-spouse. Not fun.


In November of 2023 in Missouri the NAR and some major real estate brokerages lost a class action lawsuit to the amount of $1.8 billion. Give or take a few bucks. With that, the NAR changed a few rules about commissions. Previously, Realtors were required to offer compensation (co-broke) to place a home in the MLS. This requirement was removed. Nothing really changed


After the ruling other states lawyered up including Arizona. So what did the NAR do?

What Did The NAR Agree To?


First off, the NAR is "Proposing" to pay a $418 million fine over 4 years. Think my membership fees will go up?


Who gets the money? I don't know. I'm guessing lawyers.


NAR also proposed that no further lawsuits can be filed in other states. Sounds like a sweet deal. Huh.


If a Realtor is working with a buyer and show homes listed on the MLS, the Realtor and a buyer need to sign a Buyer- Broker agreement. The intent is good as a discussion will be had of what to expect from your Realtor and what services they provide. I see some potential issues with this as the Realtor compensation is agreed upon on this form. Some sellers may be willing to pay it or a portion of it or none at all. This leaves the buyer to pay any additional amount. Also there is no opt-out for the buyer. These agreements can be months long. What happens if the Realtor is not preforming?


The biggest misunderstanding that the public and the media is getting wrong is that the 5-6% commissions have been eliminated. Shockingly, major news outlets are reporting information that is not correct.


The proposal says that by mid-July Realtors can no longer advertise a cooperating commission in the MLS. That's it. Doesn't say a Seller cannot pay it. Doesn't say Realtor's can't offer it in a different location. It simply says you cannot advertise it in the MLS. So what has really changed?

What's The Future For Realtor Fees?


Of course nobody knows. The proposal has yet to be approved. I think other stipulations will be added. I can tell you one thing after reading comments on social media. People do not like real estate agents. Like, don't like us. It's an industry that 87% fail. So running into a bad agent is not uncommon. I can also say I have worked with some amazing agents that put their clients interest before their own and are great at their job.


What is the reaction on the Realtor side? From what I've seen is 87% panic. Guess which ones are all in a frenzy? I get it. It's their livelihood. There is a lot of uncertainty within the industry.


Another misperception is that this will lower the cost of homes. It will not. Never have I ever with the many homes I've listed have I priced the home to cover Realtor fees. Lowering commissions does not lower the value. It allows the seller to net more equity


Bottom line, there will still be real estate agents, there will still be options of what commissions a seller or buyer pay. Transparency is going to be the big win for consumer. As for me, as a Realtor that always thought fees were too high. I'm not disappointed  the way the industry is going. 

I Think The Industry Is Going To Be Better.


If you read this far, Thank you. I promise I will leave a section below to leave a comment and let me know how many typos I made on this page.


First off I want to say is I believe in a free market. If someone wants to sell a home for sale by owner, pay a flat fee, 6%, or sell directly to an investor they should have that ability. Think of it like this. Do I know how to do my taxes? Sure but I still hire an account. I like I have that option. That is what my brokerage is. An option.


I'm a firm believer that most Realtors charge too much. Most Realtors think I charge too little. The common line is "You get what you pay for." My response is you don't get what you overpay for. My fee structure is designed on a cost/profit basis. Not by charging what the person in the next office is charging. Regardless if they've been in the business for 2 years or 20.


Realtor fees have stayed the same for many years all while technology has made it much easier, less expensive, and time consuming for agents. When I started many years ago, I had to search the MLS and look for homes for my clients to see. Now clients contact me and say I want to look at this or that one. Buyers have access to the product through the internet. To market a home for sale, I used to have to spend a large amount of money to the Arizona Republic. Social media is much cheaper and a better reach. If I needed to get a signature, that required a face to face meeting. I interrupted many family dinners back in the day just to get a signature. That's why I've been able to sell my client's homes, fast, for top dollar, and save thousands. Hope this helped.

Have a comment of question? Reach out and I will do my best answer any questions

Mike Dingman - Broker/Owner


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