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Apr. 7—The National Association of Realtors has agreed to make some policy changes in order to settle multiple class-action lawsuits brought on behalf of home sellers across the United States, in addition to paying $418 million over four years.

However, that which has brought an end to litigation has stirred up questions and considerable uncertainty in an industry already dealing with the effects of low inventory and interest rate increases.

"Ultimately, continuing to litigate would have hurt members and their small businesses," NAR interim CEO Kykia Wright said in a statement. "While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one-fifth of the American economy, and NAR."

What has stirred speculation are several mandated changes.

As part of the settlement agreement the NAR will be implementing several new rules pertaining to how its members and Multiple Listing Services (MLS) participants conduct their business.

The MLS is a private offer of cooperation and compensation by listing brokers to other real estate brokers that's been around for ages.

"We can no longer advertise a cooperating broker's commission on the MLS," Kristine Crook of St. Clair Shores, a realtor with Epique Realty, said referring to one of the changes.

This would mean offers of compensation could not be communicated via an MLS, but they could continue to be an option consumers could pursue off-MLS through negotiation and consultation with realtors.

Technically, the NAR, has not set commissions though most housing transactions have in practice cost 6%.

"Commissions have always been negotiable," Crook said. "It's all part of the process in buying and selling a home."

This has been the case mostly out of consideration for the buyer, who has to come up with the money for the house along with other costs including the down payment, appraisal, inspection, taxes in advance per Michigan law and other closing costs. If a buyer has to pay a commission on a house, on top of all of this, chances are they won't have the money to buy it. It's for this reason commissions have always been negotiated between the agents representing both parties.

Preserving cooperative compensation as a longstanding option for consumers looking to buy or sell a home, as long as such offers of compensation occur off the MLS, was among the conditions the NAR insisted on.

Another rule the NAR did approve requires MLS participants working with buyers to do a formal buyer's consultation to determine the buyer's means of purchase and enter into a written agreement with their buyer before opening any doors. This adds paperwork to a stack that already exists, but it's really not something new as the NAR has always encouraged its members to use written agreements to help consumers understand exactly what services and values they provide, and for how much.

Crook also sees it as a positive change as it will add more transparency and understanding in regards to the value of a buyer's agent.

It also creates a distinct difference between those who act professionally and ethically, as opposed to those who do not, said Crook.

One of the problems that may arise from the new rules in the settlement — which is still subject to court approval — is the potential for third party syndicate sites (not including the MLS) to force buyer's into signing an exclusive buyer's agency contract with that company in order to see a house.

"Many third party syndicate sites are also brokerages," Crook said, adding it's also important for consumers to understand that real estate commissions are not the cause of the rise in home values or lack of affordable housing.

"The limited inventory of homes for sale restricts the options available to buyers, leading to more intense competition," said Jeanette Schneider, president of RE/MAX of Southeastern Michigan. "As long as this dynamic continues, we anticipate upward pressure on prices."

Pending court approval both rules are expected to go into effect by mid-July.

"Agents currently in or looking to enter the industry must ensure they align themselves with a brokerage that provides the training, tools and support necessary to navigate these changes,' Schneider said. "This will be vital to their success moving forward. Agents who view real estate as a hobby or side business are more likely to leave the industry, leaving consumers able to work with committed, professional agents."

As for the future Crook believes there will be a need for adjustments but it's not something realtors haven't done before and in the end the fundamentals remain: Buyers and sellers will continue to have many choices when deciding to buy or sell a home.

"We are smart enough and passionate enough to keep advocating for our clients," Crook said, be it a buyer or a seller. "We will work with them to see results."

(c)2024 The Macomb Daily, Mount Clemens, Mich. Distributed by Tribune Content Agency, LLC