Utah Home Central Blog Information about how to sell and buy real estate at discounted prices and various other topics.

Selling a Home

The NAR Lawsuit - What it means for Sellers and Buyers

Introduction: The National Association of Realtors (NAR) has long been a central figure in the real estate industry, advocating for the interests of real estate agents, brokers, and consumers. However, recent legal actions against the NAR have brought attention to supposed anti-competitive practices within the industry. Understanding the implications of these lawsuits is important for sellers and buyers looking to buy and sell homes.

Background of the Lawsuit: In November 2022, the U.S. Department of Justice (DOJ) filed a lawsuit against the NAR, alleging anticompetitive behavior related to the organization's rules surrounding sales commissions. Specifically, the lawsuit accused brokerages of inflating sales commissions based on NAR rules.

Impact on Sellers
Starting in mid-July of 2024, home sellers will no longer have to decide upfront what, if any, they will be willing to pay a buyer's agent. Right now, to list your home on the MLS, you have to advertise what the buyer's agent will be paid upfront if they bring you a buyer. However, starting in July, this will not be the case. The buyer's agent will now have to negotiate their commission as part of the offer. If the buyer's agent isn't able to negotiate the full commission with the seller, the buyer will most likely have to make up the difference. It's very likely listing agents will still ask their sellers what they are willing to pay a buyer's agent if the agent brings them a buyer. However, that will not be advertised on the MLS and can be negotiated.

For example - Let's say an agent and a buyer sign a Buyer Broker agreement and the agreed-upon commission is 3%. When the agent puts in an offer, they will try and negotiate the full 3% from the seller. If all the agent can negotiate is 2%, then the buyer will have to pay the additional 1%. If the agent can't negotiate any of the commission, then the buyer would have to pay the full 3%, which the buyer may not be able to pay.

This means that the commission the seller will be required to pay will most likely be less than it has been in the past. I am assuming that most of your traditional brokerages, as listing agents, will still require 3%-6% to sell a house. Of course, Utah Home Central will continue to list homes for far less than that.

Impact on Buyers
The impact to buyers is less certain. I have to believe that most buyers will not want to be committed to paying an uncertain commission or any commission at all. First-time home buyers may not have the funds to pay a commission. It stands to reason that many buyers will now try to find homes on their own, rather than use an agent. This may work fine for those who have purchased numerous homes in the past and are familiar with the process, the laws, the contracts, and know what "potholes" to look out for, but for most buyers this could have unfortunate consequences.

It is still uncertain how all this will play out, but Utah Home Central is still committed to helping our clients get the best possible service while saving them money at the same time. If you have further questions, please feel free to call 801-414-5790.