Maine brokers talk about how National Association of Realtors might change home-buying here

Last week’s announcement that the National Association of Realtors will pay $418 million to settle lawsuits related to real estate commissions shook the industry with the sheer scope of the agreement. 

The ruling is expected to change how brokers charge fees and may in some cases reduce fees paid by sellers.

Traditionally, a commission fee of 5% to 6% is paid by the seller, with the brokers for the buyer and the seller splitting the commission. 

Class-action lawsuits challenged that structure, saying it put an unfair burden on consumers. 

“For far too long, home sellers have faced a system recognized by many as blatantly unfair. Individual sellers often feel powerless to negotiate a better deal for themselves given the risk that offering lower commissions will cause brokers to steer buyers to other properties. This class action and settlement provide justice for our clients and will require important changes that help future home sellers,” the plaintiffs’ attorney, Robert A. Braun, a partner in Cohen Milstein’s Washington, D.C., office, said in a March 15 press release.

But the question about brokers fees remains a hot topic. 

The National Association of Realtors, which represents 200,000 Realtors, said in a statement this week that the association “does not set commissions — they are negotiable. The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation. That offer can be any amount, including zero.”

Impact in Maine

Maine brokers Mainebiz contacted contend that the ruling may have less of an impact here than in other parts of the country.

File Photo / Tim Greenway

Dava Davin, founder and CEO of Portside Real Estate Group

Dava Davin, owner of Portside Real Estate Group, which has seven offices from Brunswick south to Portsmouth, N.H., said Maine already had a range of safeguards in place to protect home buyers.

“Regarding the proposed NAR settlement, home sellers and buyers here in Maine won’t see much of a change,” Davin told Mainebiz. “Practices such as required buyer brokerage agreements, negotiable commissions and transparent disclosure of commission rates by buyer agents have been the norm in Maine for some time now.

“While we will see a few form updates and some behind-the-scenes adjustments for Realtors, I don’t anticipate any impact on housing prices or sellers’ net proceeds.” 

Brit Vitalius, owner of Portland-based Vitalius Real Estate, which specializes in multifamily homes, said there has been some confusion in the past week about the outcome.

Courtesy photo

Brit Vitalius, Vitalius Real Estate

“Sellers are going to start asking us, ‘So now I don’t have to pay the buyer agent, right?’ And we’ll have to explain that it was always baked into the price. If the buyer fee isn’t paid out of the proceeds, then the buyer will need to bring the down payment —20%? — in cash PLUS the fee to their agent,” Vitalius told Mainebiz in an email.

“That’s not better for anyone, so it’s unlikely that will be the answer.”

“I don’t think that the effects will be significant other than some confusion in the marketplace with buyers and sellers,” Vitalius added.

“The national media hype around the issue borders on sensationalism. Buyer agents and seller agents aren’t going to start working for free or or 1% any more than your plumber is going to drop his rates. The explanation and logistics of getting paid might start to shift but it will all settle out.”

The fine print

Tom Landry, owner of Benchmark Real Estate in Portland, said he expects the national settlement to have “repercussions in Maine,” adding that “the way agents conduct business and how they get paid will change.”

Courtesy / Benchmark Real Estate

Tom Landry

“That said, in Maine, with its consumer-centric real estate policies and procedures the changes will be limited in scope and nearly indiscernible to buyers and sellers,” Landry told Mainebiz.

A few key takeaways noted by Landry:

  • Agreements must be in writing for Multiple Listing Service participants acting for buyers. Interpretation: buyer-brokers and buyers need to sign an agreement that outlines their relationship, their joint responsibilities and obligations and how the buyer broker will be compensated. How this relates to Maine: this agreement is already in existence and required.
  • Compensation offers moved off MLS. Interpretation: Listing agents can not enter on MLS the amount of commission a buyer broker will earn when that agent’s client purchases a property.  This does not mean the listing agent and seller cannot offer a buyer broker commission or that the seller can not offer to pay a buyer’s closing costs. How this relates to Maine: Listing agents will need to discuss compensation strategies for themselves and eventual buyer brokers with sellers but keep this outside of MLS.
  • Buyer-brokers / buyers: These parties will need to spend more time on the existing document. This too might be modified by the Maine Association of Realtors ensuring that buyers understand that a seller might not offer compensation, out of the closing, for their buyer broker. In this instance the buyer will be more likely to compensate their agent in another manner.

“We believe and hope the changes will be more form over function,” Landry added. “The current system of highly qualified and fairly compensated, seller and buyer brokers working to each help their clients has served Maine consumers for over 100 years.

“Any significant changes to this current business model that in any way negatively affects consumers would be tragic. Buying and selling real property is one of life’s most important, impactful and complicated endeavors. Having professional Realtors who are licensed, regulated and equitable paid will ensure consumers are cared for.”

The new rules are expected to take effect by late summer.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.

    Input this code: captcha