Realtors in wait-and-see mode in aftermath of national settlement

Just more than month after the National Association of Realtors announced it had settled lawsuits affecting how sales commissions are set, local Realtors and the public are still trying to figure out exactly what the changes will mean for home sales.

This uncertainty hasn’t stopped many from outside the industry from pontificating on its effect, arguing that the settlement will hurt lower-income homebuyers, transform the industry and forever change how much Realtors charge for services. 

The reality, however, is that it’s too soon really to know what the settlement means and saying much beyond that is speculation.

Even the state’s premier industry group, Florida Realtors, are working to understand how the settlement may — or may not — affect the industry. “Florida Realtors leaders and attorneys are reviewing and analyzing the detailed and complex proposed settlement, and that’s still in process,” says Marla Martin, the senior media relations and communications manager for the organization.

The settlement stems from multiple lawsuits by homebuyers filed alleging the rules governing houses placed for sale on the Multiple Listing Services favored those showing higher commissions, which caused buyer’s agents to avoid homes with lower commission.

NAR agreed to pay $418 million over four years and to change listing rules prohibiting offers for broker compensation on the MLS. The court must approve the settlement. 

Just like Florida Realtors, some area real estate agencies and their agents are taking a wait-and-see approach.

About a half-dozen residential agents and firms across the region contacted for this story shared that sentiment, holding off on commenting until they get a better grip on exactly what it all means.

“As a matter of company policy,” we are unable to discuss matters of litigation," Naples-based John R. Wood Christie’s International Real Estate President Corey McCloskey writes in an email. 

image courtesy of Premier Sotheby’s International Realty

The biggest public misconception about the settlement, say some brokers, revolves around the commissions real estate agents can charge when selling a house.

The popular thought is agents will now be restricted in how much of a commission they can charge, with one national newspaper running a headline reading: Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits.

But here’s the thing: commissions have always been negotiable.

While there is a standard 6% commission on a sale, it is not mandatory that a seller agree to it. In fact, when a deal is close to being closed it is not uncommon for the fee to be negotiated down.

Plus, it’s important to note, the national association doesn’t set commissions. What the settlement does, NAR says, is it “requires only that listing brokers communicate an offer of compensation.”

“That offer can be any amount, including zero,” the association says in a statement, adding “NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. Commissions remain negotiable, as they have been.”

Others in the industry say the settlement beings clarity to what could be a confusing process. 

Robert Milligan, who owns Preferred SHORE Real Estate, which has offices in Sarasota, Tampa, and St. Petersburg, says while it too soon to tell what the impact will be “there are absolutely benefits.”

Courtesy image

“I’ve always been a proponent of the buyer-broker agreement so there’s more clarity and transparency,” Milligan says. “I think that’s a great enhancement to the process that it’s now going to be customary.”

If the industry were to thin out, that would also not be an entirely bad thing, says Milligan. The number of Realtors in Sarasota and Manatee counties grew from 5,500 or 6,000 before the pandemic to over 9,000 after COVID, he says.

“If 20 to 30% [of Realtors] left, that wouldn’t be a total anomaly given the huge influx during post-COVD times,” Milligan says.

“I think that it’s going to be difficult for Realtors who are a little less experienced or who are inept at doing their job to be able to cause customers to consciously choose to work with them.

“Whereas in the past you could buy ads on some of the big real estate platforms and kind of spontaneously get connected with somebody, and it wasn’t based on any merit of whether you could do the job or not...the future is going to be, you really do have to stand on your skills and demonstrate value and a commitment for people to work with you.”

Elizabeth King contributed to this story.