5 common misconceptions perpetuated by the mainstream media following the NAR settlement.

Inspired by Inman's article "Let's debunk 7 mainstream media falsehoods, post-NAR settlement", this piece draws from their insights on the potential impact of the NAR settlement on buyers, sellers and agents."

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The National Association of Realtors recently reached a settlement with plaintiffs in the Sitzer | Burnett case, pending court approval. This case revolves around the common practice of sellers hiring agents to represent them and offering compensation to buyer's agents. However, media coverage of the settlement has often been misinformed, lacking a deep understanding of the real estate industry as well as misconceptions.

1.- The settlement mandates real estate brokers to decrease their compensation.

Inaccurate! The agreement doesn't enforce any guidelines or limitations on Realtors concerning their charges or offerings. Realtor rates have traditionally been open to negotiation, and despite potential collaboration, they uphold autonomy and competitiveness. Real estate representation differs across markets, providing varying degrees of service and proficiency. Cross-country fee comparisons lack validity due to diverse employment frameworks for real estate practitioners, unlike the prevalent commission-based system in the U.S.

The agreement will forbid sellers from providing a commission to an agent representing the buyer.

2.- The agreement will forbid sellers from providing a commission to an agent representing the buyer.

Inaccurate! The decision of whether to compensate a buyer's agent remains entirely at the discretion of the seller, and there are no alterations to the available choices. The primary objective is the successful sale of the property, and providing substantial incentives to buyer's agents to showcase and sell the home is deemed the most effective approach to accomplish the objective.

3.- The agreement will now alleviate sellers from bearing any financial responsibility for buyer agent fees.

Inaccurate! While sellers have the option to refrain from paying compensation to buyer agents, this doesn't guarantee they can evade financial implications. Buyers can include a contingency in their offers, mandating that sellers cover the costs, or they may seek alternative concessions, such as assistance with closing costs equivalent to the amount they're paying their own representative.

4.- The agreement aims to reduce real estate costs, restoring affordability to homeownership.

Inaccurate! In the realm of real estate, the fundamental determinants of value lie in the interplay of supply and demand, rather than being solely influenced by Realtors. While commissions constitute a portion of transaction expenses, there are also other factors to consider such as title fees, closing fees, mortgage-related costs, property taxes, and association fees. The core reason behind the increasing unaffordability of homeownership is primarily attributed to the substantial surge in home values within our market over recent years.

5.- The agreement will lead to substantial compensation for real estate consumers who felt disadvantaged in their transactions due to Realtors' actions in recent years.

Inaccurate! The settlement amount appears substantial, but when divided among potentially eligible consumers, it averages to approximately $10 per person, contingent upon the number of sellers filing claims. The primary beneficiaries are the class-action attorneys seeking over $80 million in legal fees.

The brokerage industry has consistently adjusted to effectively serve buyers and sellers in real estate transactions during shifts in the landscape. Undoubtedly, it will continue to do so. In the meantime, distinguishing between reality and fiction should be an anticipated aspect for all as they formulate their own judgments.

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