Navigating the New NAR Settlement: A Win for Sellers

The real estate landscape is evolving, and the recent settlement by the National Association of Realtors (NAR) brings significant changes that sellers can leverage to their advantage. Traditionally, sellers and listing brokerages would share part of the listing commission with buyer's agents to encourage them to show the property. However, the new rule now requires buyer's agents to have a signed agreement with their buyers, specifying the commission the buyer will pay their agent.

To understand this better, let's look at how car dealerships manage incentives. In a seller’s market, where demand is high, dealerships often don't offer any incentives and may even add dealer fees to increase their profit margins. Conversely, in a buyer’s market, they roll out a variety of incentives such as discounts, attractive financing options, and other perks to attract buyers. Sellers need to adopt a similar mindset when it comes to concessions in real estate.

Let’s take a look at a hypothetical example for real estate. Traditionally, sellers and their listing agents agree to a total commission, with a portion to be split with the buyer’s agent. For simplicity, let’s say the total commission is 6%, with 3% going to the listing brokerage and 3% offered to the buyer’s brokerage. However, this setup often occurs without knowing the specifics of what the buyer’s agent charges their clients, the services they provide, or the agreements they have in place. For instance, while you and your listing broker might agree to share a 3% commission with the buyer’s agent, the buyer's agent might have agreed to work for just 2%. This means you’ve effectively offered 1% more than necessary, giving away part of the proceeds.

With the new NAR settlement, sellers have a chance to rethink this approach. Instead of disclosing the "full" amount of the shared commission upfront, you can state that you'll consider all offers and concessions and let buyers include their buyer’s agent’s professional service fee in their offers. This shift allows you to evaluate every part of an offer, ensuring you choose the one that best aligns with your financial goals.

However, it’s crucial to factor in current market conditions. In a competitive market, you may still want to offer a "guarantee" of some commission to buyer's agents to incentivize them to prioritize your home over others. This doesn’t mean showing your full hand, but rather offering a baseline commission that ensures your property is actively shown to potential buyers. By striking a balance between withholding unnecessary concessions and offering enough incentive, you can ensure your home stands out in the market.

Here's how you can benefit:

1. Fair Evaluation: By asking buyers to include their agent’s fee in their offer, you can better assess the total value of each offer, rather than overcommitting on commission.
2. Flexibility: This approach gives you more control and flexibility in negotiations, allowing you to focus on offers that align with your priorities.
3. Transparency: Buyers and their agents are upfront about their agreements, fostering a more transparent transaction process.

Think of it as setting up a marketplace where every buyer can present their best package, including what they’re willing to pay their agent. This way, you’re not just handing out a generous commission without knowing the details, but rather making a more informed decision based on the complete picture.

By embracing these changes, sellers can maximize their returns and navigate the selling process with greater confidence and clarity. The new rule isn’t just a regulatory update—it’s an opportunity to optimize your selling strategy and ensure every penny counts. Just like car dealerships adjust their incentives based on market conditions, you too can adjust your concessions to avoid giving away unnecessary proceeds and make the most out of your sale.

"Seller is open to negotiating buyer concessions based on the strength and terms of submitted offers" will become the norm.