Table of Contents
- What Is the NAR Settlement?
- How to Prepare for the NAR Settlement Changes
- Let AgentUp Help You Prepare for the Coming Changes
Disclaimer: This article is not intended to provide legal or professional advice. You should discuss all legal and professional issues with your managing broker, local real estate board, and/or an attorney.
The NAR Settlement has caught many industry experts and watchers off guard.
Significant changes likely will occur in how agents contract and are compensated by their clients. It would be wise to prepare for these changes now.
This article will explore how the NAR settlement will likely affect real estate agents and how best to prepare your business.
However, let’s first understand what the NAR settlement is.
What Is the NAR Settlement?
The National Association of Realtors (NAR) is the real estate industry’s principal trade and professional organization, boasting a membership of over 1.5 million individuals.
Its primary mission includes promoting, regulating, and analyzing real estate market trends nationally.
In the autumn of 2023, an antitrust lawsuit (Burnett v. National Association of Realtors et al.) highlighted how real estate commissions are negotiated and structured. The lawsuit claims the current practice is a form of price-fixing, a violation of antitrust laws.
Last October, the jury ruled in favor of the plaintiffs, finding NAR and several major brokerages guilty of price-fixing and colluding to inflate seller commissions.
The litigation’s primary focus is NAR’s cooperative compensation rule, which encourages home sellers to offer “cooperative compensation” to buyer’s agents. Sellers commonly included the buyer’s agent’s commission as part of the overall sale to attract potential buyers.
These compensation terms are typically listed on the Multiple Listing Service (MLS), a nationwide network of regional databases brokers and agents use to share information about property sales.
On March 19, 2024, NAR announced a settlement to resolve the litigation regarding broker commissions paid by home sellers.
As part of the settlement, NAR agreed to pay $418 million over approximately four years and implement changes to how commissions are structured and negotiated. Additionally, commission and compensation details will no longer be disclosed on the MLS.
What will the settlement mean in practical terms? To comply with the settlement, agents will now most likely have to excel at the following:
- Developing sharper negotiation skills
- Finding new ways to structure and secure compensation
- Offering a robust defense of the value they bring
- Bringing clarity to increasingly complex compensation discussions
- Enhancing all their marketing efforts to stay competitive
Now that we have a better idea of the settlement and the possible changes ahead, let’s consider ways you can prepare.
How to Prepare for the NAR Settlement Changes
The NAR settlement will mean many changes, even some we aren’t yet considering.
Every agent should begin preparing for the following changes based on what we know and what appears likely.
1. Be Able to Explain the Value of Your Services
Nearly all sales agents can explain to sellers the value of their services. This is what agents are trained to do.
A skilled real estate agent is an invaluable asset to a seller, offering expertise, guidance, and support throughout the selling process, including the following:
- A keen understanding of the local market dynamics
- Accurate pricing statistics
- Proven marketing strategies
- Handling all the paperwork
- Skilled negotiation experience
Ultimately, the expertise and support provided by a real estate agent empower sellers to make informed decisions and achieve successful outcomes in selling their property.
But what about buyers? Since buyers usually don’t pay agents directly, many agents are not experienced in explaining the value they bring to the buyer in detail.
Given the expected changes required by the NAR settlement, agents will now need to be able to explain their worth to buyers, too.
2. Stand out Among the Crowd
Agents have always had to learn to differentiate their services and experiences. This is nothing new.
However, the NAR settlement’s likely changes will intensify the market’s competitiveness for agents.
Many buyers may opt to start their home search without an agent. Some buyers may even attempt the purchase without an agent to save money on commissions.
It’s not hard to imagine how the NAR settlement may mean fewer buyers to work with and even downward pressure on commissions.
This means every agent must be at the top of their game, engage in frequent marketing, and use the latest technology and tools when selling a listing or promoting their services.
So, in practical terms, what can an agent do to stand out? The answer will likely include improving their digital marketing.
3. Ramp up Your Digital Marketing
One of the likely side effects of the NAR settlement is an expected growth in all aspects of digital marketing within the real estate sector.
With the potential changes to compensation structures, prospective buyers are likely to increasingly rely on online platforms to narrow down their choices before scheduling physical property viewings.
Further, as the industry adjusts to the settlement terms, there may be a temporary decline in demand for buyer agents, stemming from the perception that buyers will now be responsible for compensating their agents directly.
Consequently, real estate agents must elevate their marketing tactics to appeal to potential clients. This underscores the importance of professional real estate photography and employing all the available digital marketing tools.
High-quality visual representation will become a crucial tool in capturing buyers’ and future sellers’ attention by effectively showcasing properties in the digital realm.
What sort of digital marketing tools are we talking about? Well, consider how using the following in all your marketing would help you get an edge over the competition:
- Real estate photo editing – make your listing photos stand out
- Transaction coordination services – free up time to secure more clients
- Real estate assistants – double your marketing efforts using an assistant
- Virtual staging – attract buyers by showing them the listing’s potential
- Virtual tours – offer immersive, interactive property experiences
- Single property websites – market a listing without distractions
- Custom house portraits – a closing gift your clients will remember
By leveraging advanced marketing media tools, agents can provide their clients with a comprehensive digital marketing experience that speeds sales at higher prices despite the competition.
Using all of the above on every listing would give an agent an advantage over others who neglect to use the latest marketing tactics.
4. Stay Calm, but Don’t Just Carry On as Usual
Change happens constantly, and it can take time to adjust to new realities. The real estate industry has weathered changes before, so there’s no reason to panic or overreact.
However, the NAR settlement will likely mean agents who continue doing business as usual might get left behind.
Here are a few things agents will need to focus on improving and devise new ways and strategies for:
- Explaining and demonstrating their value to buyers
- Helping buyers understand new commission structures
- Embracing the full range of digital marketing tools
- Finding ways to differentiate their services and skills
While we don’t know the specific changes ahead, what seems inevitable is that business as usual won’t work anymore.
The good news is that you are not alone in all of this. You’ve got a business partner who is ready to help.
Let AgentUp Help You Prepare for the Coming Changes
The ramifications of the NAR settlement will likely extend beyond the current legal resolution.
Agents will need to distinguish themselves by delivering exceptional services and marketing offerings, effectively demonstrating their value in every transaction, and rationalizing their commissions to both buyers and sellers.
AgentUp is here to help you excel among the competition and impress your clients by improving your marketing strategies and sales initiatives.
AgentUp has the digital tools you’ll need to succeed in the evolving market ahead. Take a look at the high-quality marketing services and solutions we offer at extremely affordable prices:
- Real estate photo editing
- Transaction coordination services
- Real estate assistants
- Virtual staging
- Virtual tours
- Single property websites
- Custom house portraits
So, explore how AgentUp can become your real estate marketing partner and prepare for the changes ahead.
Sign up for a free AgentUp account and check out all we offer to grow your business while complying with the coming changes.
Thank you for reading this article. We hope it helped you better understand how the NAR settlement will affect real estate agents and how to prepare. If you found this post valuable, you might also want to check out these other valuable resources:
