Q: My partner and I went to an open house last Sunday, and the agent asked us to sign an “Open House Visitor Non-Agency Disclosure and Sign-In Form” with her. She said it was required now and we had to do it. What is going on?
A: Since the National Association of Realtors’ (NAR) settlement with the Department of Justice (DOJ) in 2024, there have been major and highly significant changes in the way Realtors conduct their business. Most buyers and sellers are only vaguely aware of this settlement, what it means, and how it affects them. The settlement is esoteric, not sexy, and somewhat difficult to grasp. Realtors are still grappling with how to implement the changes, how to stay compliant, and, most importantly, how to explain them to their clients and the public.
NAR has been an active association for more than 115 years. For all these years, there was a stable business model for commissions and how money was earned. An agent negotiated with the seller on the money required to sell the property. The agent signed a listing agreement with the seller, agreeing to a commission as some percentage of the selling price, usually x-y percent. The agent agreed to split the commission with the buyer’s agent.
The DOJ has had their eyes on real estate commissions for some time. They felt Realtors had artificial commission inflation and that commissions help to drive the high cost of housing. The public felt that buyer’s agent services were “free” because the seller paid the commission. The DOJ wanted buyers to have a voice in how much their agent was being paid.
In Missouri, a class-action lawsuit was filed against the NAR and several real estate offices. The plaintiffs alleged that major brokerages colluded to maintain high commissions. In October 2023, the jury found NAR, Keller Williams, and Home Services of America liable and awarded $1.78 billion in damages to the plaintiffs. This verdict stunned the real estate world. NAR was forced to settle and agreed to pay $418 million over four years.
So, what has changed and what’s the same now? Buyers are now in control of how much they are willing to pay for their agent’s services. The buyer’s agent is required to have a signed buyer/broker listing agreement with their clients that agrees to a percentage that their agent will be paid. The buyer’s agent then negotiates with the seller when they bring an offer. The buyer’s agent will request a “concession” from the seller crediting the buyers their agent’s fee for bringing a purchaser to the property. The seller and the buyer’s agent negotiate how much this fee will be.
Now, the buyers have to make a decision. They have a contract with their agent to pay them x percent and there may be a gap between what the seller will pay and what their contract says. They can make up the price difference, they can walk away from the property, or the buyer’s agent can agree to accept a lower fee.
It’s a stable housing market right now; it’s not on fire, but it’s not declining. We will have to see what happens when the market is on fire again and sellers are getting multiple offers. The fee that a buyer’s agent requests will be another factor that sellers have to weigh. Stay tuned for updates.
Marsha Gray has worked in Santa Barbara real estate for more than 25 years. She has expanded her knowledge into all aspects of the real estate market. At Allyn & Associates, she serves her clients’ real estate and finance needs. To read more of Marsha’s Q&A articles, visit marshagraysbhomes.com. Contact Marsha at (805) 252-7093 or marshagraysb@gmail.com. DRE# 012102130; NMLS #1982164.
