The recent settlement by the National Association of Realtors (NAR) is tectonic in its implications for both consumers and brokers alike in the real estate sector. This development stems from an anti-trust lawsuit filed by the Department of Justice (DOJ) and is bound to breathe some transformative adjustments into the industry.
1. Enhanced Transparency
At the heart of the settlement lies the promise of enhanced transparency. The NAR offered multiple concessions, enabling consumers to relish efficient, accountable, and transparent real estate transactions. Beforehand, brokers could hide their commission costs from consumers. For the first time, brokers are expected to divulge their commissions to clients. This disclosure will empower consumers to compare and contrast the prices of multiple properties and brokers, incurring better-informed decisions.
2. No steering away
A major transformation from the settlement is the prohibition on the practice of ‘steering’. Previously, brokers could steer their clients away from properties or other brokers based on their commissions. However, NAR’s new policies ban such practices, ensuring brokers will no longer have the liberty to guide consumers towards properties that reap the most commissions rather than addressing the consumer’s needs and financial considerations.
3. Competition and success premiums
The settlement also breeds a healthy competition between brokers and can subsequently raise the quality of services offered. Brokers can no longer undermine their competition by denigrating their commission rates. Such maligning practices can damage healthy competition by persuading customers to transact with brokers who request higher commissions. Now, brokers’ expected success will rest more on their service quality than their commission rates.
4. Consumer-friendly MLS
Arguably, one of the biggest beneficiaries of the settlement are the independent, tech-forward real estate firms. For these firms, Multiple Listing Services (MLS) were previously out of reach due to NAR’s strict rules favoring traditional brokerages. However, the settlement-led revisions to NAR’s MLS policies would extend their usage to more contemporary, tech-based firms.
5. Seeking consumer consent
Another critical aspect of the NAR settlement is that it requires explicit consumer consent before a broker can represent both the seller and buyer in a transaction. This is a significant step in mitigating conflicts of interest and gives consumers enhanced power to gauge if such an arrangement suits their needs.
In summary, for consumers, the settlement embodies increased clarity, empowerment, choice, and affordability. It compels brokers to be more transparent about their commissions, eliminates the practice of steering, and promotes fair competition based on service quality. In turn, brokers will need to adapt by improving their service quality, being accountable, and continually gaining their customers’ trust. For tech-forward real estate firms, the settlement with the NAR can open doors to MLS and enable them to compete effectively with traditional brokerages.
