NASHVILLE, Tenn. (WTVF) — A historic settlement could shake up homebuying.
On March 15, the National Association of Realtors agreed to pay $418 million to settle lawsuits claiming people were forced to pay artificially inflated commissions. This all went to court after consumer groups claimed agents steered buyers to properties with larger compensation offers or higher price tags to get a larger payout.
Under the settlement terms, NAR agreed to get rid of a rule that requires a home seller to specify the size of the commission they'll pay the buyer's agent.
So, what does this mean for local consumers?
"There will be no longer be a unilateral offer of compensation to a buyer broker on the MLS," explained Kevin Wilson, President of Greater Nashville Realtors.
Wilson has been in the real estate industry in Tennessee for 16 years. He's represented buyers and sellers.
"Commissions have always been negotiable and will remain negotiable between brokers and clients," Wilson said.
In Tennessee, buyers are already required to sign a buyer representation agreement before an agent starts working with them. The contract addresses buyer agent commissions among other things.
While the big settlement means sellers might save on commissions, the buyer could now make agent compensation part of the negotiation. Therefore, it's likely there will be longer conversations at all stages of the game.
"Buyers come into the office and sit down with me in much of the same way a seller would in a listing presentation. We do a thorough a buyer consultation where we explain the value we bring to the transaction, set expectations for the buyer, and, in that agreement, there is on page one a part where we talk about compensation and how much the buyer's agent will be paid and by whom," Wilson said.
This could cause some real estate agents to leave the business. It is too soon to tell how many.
"In 2020 — when we had the pandemic — I thought this would be catastrophic to our membership. It ended up being the opposite. When we saw interest rates hit 8% I thought perhaps we'll see a 10% decrease in membership. We're actually seeing an increase, so I hesitate to say what this might do to our membership going forward," said Wilson.
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