In a recent development that paves the way for potential changes in the American real estate market, the National Association of Realtors (NAR) has reached a settlement to resolve nationwide litigation concerning commission rules for U.S. real estate agents. The $418 million settlement, along with the practice changes it will bring, has sparked speculation about the future of real estate agents. However, according to Tim Hur, NAR's 2024 REALTOR Party Community Engagement Liaison and a seasoned real estate professional with 15 years of experience, this settlement does not mean real estate agents are at risk of becoming obsolete.

The settlement agreement will introduce several changes in the industry. One significant change is that offers of compensation will no longer be shared on multiple listing services (MLSs), the databases that display real estate brokers the properties available for sale. Additionally, MLS participants will be required to enter into written agreements with buyers. It is important to note that this settlement does not impact the ability for commissions to be negotiable between buyers, sellers, and their brokers.

The litigation primarily revolved around the "cooperative compensation" rule, which mandated that selling brokers specify an offer of compensation to buyers' brokers on each listing. While the settlement prohibits such offers from occurring on an MLS, it does not eliminate cooperative compensation as an option for consumers. Buyers and sellers will still have the flexibility to choose how to compensate their brokers, including fixed fees or concessions on sales prices. Hur emphasizes that cooperative compensation remains essential, particularly for lower and middle-income homebuyers who may struggle with saving for down payments.

Hur highlights the enduring value of real estate agents in the market. Despite the rise of electronic research and purchasing options, nine out of ten homebuyers continue to work with agents or brokers. Realtors provide invaluable knowledge about local markets and neighborhoods, offering access to comprehensive information about available homes. They assist buyers in establishing realistic budgets and exploring various financing options, including programs that aid with down payments. Moreover, agents offer insights into property values, taxes, regulations, and zoning laws, ensuring a thorough due diligence process. They connect buyers and sellers with other professionals, such as lawyers, lenders, contractors, and inspectors, crucial for a successful transaction.

Real estate professionals also showcase their expertise during the negotiation stage, ensuring their clients submit competitive bids or hold out for the true value of their homes. At the settlement table, agents guide their clients through the significant financial transaction of purchasing a home. Furthermore, even post-sale, real estate agents continue to support their clients, providing ongoing assistance and guidance in homeownership.

While the proposed settlement agreement and associated practice changes will bring alterations to the industry, it does not diminish the value that real estate agents provide. Their specialized knowledge, diligence, and commitment to their clients' best interests remain unchanged. Millions of individuals will continue to rely on agents to help them achieve their dream of homeownership.

Tim Hur, NAR's 2024 REALTOR Party Community Engagement Liaison and managing broker for Point Honors and Associates, REALTORS in Metro Atlanta, underscores the enduring necessity of real estate professionals in the market. With their specialized expertise and unwavering commitment, real estate agents will continue to be reliable partners for millions of Americans seeking to realize the American dream of homeownership.