CLEVELAND — In a recent settlement between the National Association of Realtors and home seller plaintiffs from various class action lawsuits, the NAR agreed to ban offers to compensate the buyer’s agent on multiple listing services, also known as MLS.
Plaintiffs argued the practice often led to inflated commissions and home prices. And while the new rule bans sellers’ agents from offering to compensate buyers’ agents through the MLS, CEO of the Akron-Cleveland Association of Realtors, Mike Valerino, said it does not stop sellers from paying buyers agents if they make that arrangement separately.
“The sellers brokers will still be able to make offers of compensation, they must be off MLS,” said Valerino.
The NAR will also now require the buyer’s agents to enter into a written agreement with all clients, outlining fees and services before moving forward with any work.
The agreement would even have to be signed before going to look at properties with an agent. Valerino believes this new rule will create more transparency between buyers and brokers overall.
“It'll be an adjustment; people aren't used to signing something right up front before they start their home search,” Valerino added. “There may be some hesitation there, but it, again, it's an opportunity for the realtor to articulate their value and the services that they're going to provide for consumers.”
Case Western Reserve University Economics Professor Jonathan Ernest said he believes these NAR changes could save both future homebuyers and sellers money. This might be because buyer services can now be offered at bundled prices.
“We might see a lot of agents that kind of specialize in offering maybe a flat rate rather than a percentage or competing in a way.” said Ernest. “We could see changes in the quality of what of what's being offered by agents. So, we could see that maybe you can choose from a menu of the things that you want your agents to do, but they might receive a higher or lower commission.”
Ernest is optimistic these changes may help balance the current housing market, but Valerino said there are still too many unknowns at the moment to predict as the NAR is still digesting the new rules.
“Hopefully we'll see a little bit of a decrease in the overall amount of commissions and an overall decrease in the amount of home prices which have really risen pretty quickly over the last several years,” Ernest said.
Valerino added, “I think there are a lot of people waiting on the sidelines who are ready to sell but they're nervous about buying at this point. So, I think we're going see a lot of those folks come, come into the market once we're getting more inventory.”
