By Jing Pan
April 4, 2024
View source version HERE
Navigating the real estate market can feel overwhelming, especially in a climate marked by elevated interest rates and persistently high property values.
Navigating the real estate market can feel overwhelming, especially in a climate marked by elevated interest rates and persistently high property values. Real estate veteran Katrina Campins believes that recent legal developments involving the National Association of Realtors (NAR) do little to alleviate these concerns.
“Homeownership is poised to become even more challenging in an already tough market as a result of this. The repercussions of this lawsuit are numerous and significant,” she told Fox Business.
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In a significant turn of events for the real estate industry, the NAR reached a proposed $418 million settlement agreement in a class-action antitrust lawsuit. The lawsuit, brought on by a group of home sellers, accused the NAR and major brokerages of colluding to artificially inflate commission rates, challenging long-standing practices within the U.S. real estate market.
If approved, a major change resulting from the settlement would be the elimination of the NAR's requirement for brokers listing homes on its Multiple Listing Services (MLS) to also list compensation rates for buyer’s agents. Additionally, MLS would remove fields indicating broker compensation. This change effectively decentralizes negotiations for compensation, shifting them outside of the MLS platform and into direct negotiations between home sellers, brokers and agents.
A change in the landscape
The proposed settlement is expected to reshape how real estate transactions are conducted, potentially leading to more competitive commission rates and giving buyers and sellers greater flexibility and control over transaction costs. For buyers, this could mean navigating a more complex landscape where agent services and costs become more varied and negotiable. Sellers might benefit from the ability to negotiate commission structures more freely, potentially reducing the cost of selling a home.
Campins is concerned about the settlement, cautioning those who view the changes as a victory against alleged exploitation by agents.
“The progression to the current state originated from individuals actually seeking increased representation in home buying,” she explained.
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In particular, Campins sees the situation becoming more difficult for the buyer.
“So, now what's going to happen is, basically, buyers are going to go directly to the listing agent, right? And think about all the misrepresentation that's going to occur at that point in time and then think about all of the kickbacks that are going to be given, all the bonuses,” she said.
Good for the housing market?
Campins also warned about the potential for listing agents to pit buyers against each other in order to drive up property prices for the benefit of sellers.
She is not in favor of that prospect, stating: “I think this is extremely unfortunate and while people think that it's going to be good for the housing market, I completely disagree.”
As part of the proposed settlement, the NAR also agreed to require agents working with buyers to enter into a written agreement with them. This measure is designed to ensure that buyers are fully informed about the service fees their agent will charge, right from the start.
Campins noted that while she isn't opposed to the idea of a buyer's agent using a representation form, she anticipates that most buyers would be reluctant to sign such a document due to an unwillingness to directly pay for their agent.
“Homeownership, in my opinion, just got hit again because of this lawsuit,” she remarked.
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