No “horror stories” from officers during the first weekend of changes to the NAR settlements

The milestone date of August 17, 2024 has passed, and the real estate industry is still moving along despite the changes in business practices imposed by the National Association of Real Estate Agents (NAR) Settlement Agreement for Commission Cases is now being implemented nationwide.

In the Greater Boston area, Linda O’Koniewski, the broker-owner of Leading real estatedescribed the first few days of the changes in business practice as ‘boring’. But even though O’Koniewski and her agents have been preparing for these changes for months, she said the date didn’t come without some hesitation.

“I won’t tell you there wasn’t fear,” O’Koniewski said. “When we got to the end of the day on Friday we were all waiting to see if it was going to be a big event, but it wasn’t. Not that individual officers are having a hard time or encountering issues, but I haven’t seen or heard any horror stories or anything horrible.

According to real estate professionals, the biggest adjustments they had to make this week were getting buyers to sign buyer representation agreements and explaining to sellers that while they don’t have to offer buyer agent compensation, they will most likely see the most potential buyers asking for help when paying their agent.

“The biggest difference is that the new format and commission structure must be fully and carefully explained to sellers,” says Rachael Dotson, an agent with the Rhode Island-based company. Residential properties Ltd. “Many are interested in the potential savings that the new commission structure provides. Yet none of them want to jeopardize sales by scaring off buyers who may have to forego representation or who can’t afford to pay commissions to their agent out of their own pockets.

“Most sellers see the value in closing their deal and are open to discussions about some participation in the buyer’s agent fees.”

On the buying side, agents say they are pleased that buyer representation agreements are now mandatory.

“I do like that we now have to have a buyer representation agreement to show all the homes. We can get into a lot of trouble if we show a house without one,” said Mandy Nichols, an agent with Dallas-Fort Worth-based Brixstone real estate. “In the past, some people would use real estate agents to show their homes, then have someone else do the paperwork and buy the house for them, which was horrible.

“I know quite a few officers who were hurt. It’s nice to know that when you show a property, they have to use you to buy the house, unless you had them sign, you were just showing the property and not representing it.”

But getting buyers to sign these agreements hasn’t exactly been smooth sailing for some agents.

“Presenting these agreements becomes the dividing line between major agents and non-major agents. It levels the playing field,” said Jason Posnick, the sales manager at Lamacchia Real Estate.

Posnick said one of his company’s agents met with a buyer last weekend who had previously met with an agent from another company and was unhappy that the agent asked them to sign a buyer representation agreement. The Lamacchia Realty agent was ultimately able to arrange a meeting with the buyer after presenting two different agreements – a showing agreement and a more formal buyer representation agreement – ​​which showed the consumer that he had options and explained why he was being asked to sign an agreement. agreement.

In addition to dealing with consumers, agents also have to deal with other agents, some of whom may not be as well prepared as others.

“One of my agents called me on Friday and said we’ve done such a good job preparing that they’re at the point where they feel like the changes aren’t a problem, but that might be a bit of a problem. a short-term disadvantage because it seems like the rest of our market has no idea what they’re doing,” said Brad Twiss, the broker-owner of Portland, Oregon-based Neighbors Real Estate.

Another wrinkle is that not all agents, brokers or sellers treat buyer broker compensation offers the same. While some companies – including eXp Real EstateLamacchia Real Estate and NextHome – are not offering co-op compensation for their listings, other agents like Lindsay Pettinelli still plan to offer it if their seller agrees.

“The fact that we are not allowed to disclose buyer agent compensation in the MLS does not appear to be beneficial to the buyer,” said Pettinelli, an agent with the Providence, Rhode Island-based company. Churchill & Banks. “There are many buyers who don’t have the money to pay their agent’s commission out of pocket, along with the down payment and closing costs; they rely on the list price including compensation for their agent.

“If an agent’s fee isn’t offered as part of a home’s list price, I think it’s valuable for a buyer to know that up front. Why wouldn’t we make that information public in MLS? How does that protect buyers?”

Pettinelli uses contracts with her sellers that detail the total commission she will charge and how much she will pay another agent for bringing a qualified buyer into the transaction. She also noted that she will advertise co-op compensation offers on her social media channels and alongside listings on her brokerage website.

While O’Koniewski acknowledges that some agents may follow a similar route to Pettinelli, she has told her agents to view concessions to vendors as “completely irrelevant.”

“It doesn’t matter,” O’Koniewski said. “If buyer’s agents have a purchase agreement for a certain amount, then that’s what they should get. They can’t make more money if the seller is generous, so I don’t know why they even ask what the seller has to offer. I think this is the missing piece of the puzzle for many officers right now.”

That complicates matters for O’Koniewski and her agents MLS PINone of the many listing services her company uses is still showing offers of buyer agent compensation on the MLS because it did not opt ​​for NAR’s settlement.

“It’s causing a lot of commotion, and I have to admit that our agents are a little disappointed that we’re not doing it, but I feel like by putting compensation into the MLS, that’s like Kryptonite for agents and brokers, right? now. It’s a target on your back, but there are, I think, some big brokers here who choose to live dangerous lives,” O’Koniewski said.

Twiss attributes agents’ and brokers’ concerns about the removal of buyer agent compensation offers from the MLS to the fear that once removed from the MLS, sellers will no longer be willing to assist with buyer agent compensation.

“I don’t think that’s the case,” Twiss said. “Our agents have had conversations with sellers to expect buyers to ask for help with their agent fees, and I don’t think this has been a major problem.”

Across the country in Rhode Island, Dotson also said sellers so far appear willing to accept offers asking for help with buyer agency costs.

“The changes are still very new and most sellers appear willing to participate at some level because they understand the importance of buyers receiving guidance and representation to get to the closing table,” Dotson said.

While agents may differ on how exactly they are dealing with the changes in business practices, they all agree that it is too early to tell exactly how their operations and markets will be affected.

“Like TRID, it will be a while before we see how this will impact the market, and for a few months it will be just chaos,” said Brian Huskey, the Montana-based company’s associate broker. ERA US real estate.

“We’re fielding so many questions from consumers who saw things on the news this weekend, and agents who have had a ton of training but are still figuring out how to deal with these changes in real time. It’s just the Wild West again.”