NAR Settlement Could Change the Buyer Process

Planning to buy a house this year? 

The recent National Association of Realtors, or NAR, settlement has had buyers and sellers shifting in their seats. What looks like “lower housing costs” ahead, could be a trajectory for emptying the pockets of buyers. 

Without having true representation, buying your dream home could become a real nightmare. Here’s what you need to know before you begin the buying process and what to expect from the effects of the NAR settlement. 

The 411 on the NAR Settlement (April 2024 Edition)

As of April 2024, the NAR settlement will prohibit putting offers of compensation between Seller and Buyer Agents on MLS. This will now require buyers to negotiate their Agent’s commission fees directly and have a written contract before viewing any homes on the market. These practice changes are set to go into effect August 17, 2024.

This new implementation has seen an uprise in buyers crossing out the buyer representation part in their contracts before fully understanding the effects this could have on their real estate experience.  

How Does This Change the Process for Buyers?

Since offers of compensation will no longer be communicated on MLS, buyers will have to discuss and come up with a written agreement with an Agent outside of the MLS. Due to this, we will likely see buyers skipping this step and opting-out of having to secure representation. It also has made for more confusion in the contract writing process overall.

On top of this, sellers may still offer a percentage or a standard credit for Buyer Agency compensation. A buyer may or may not choose to use the credit to cover representation, which would leave them where they started -  navigating and negotiating the purchase of their home on their own. 

Buyers Beware - Low Costs Do Not Equal the Best Deal

Although the latest headlines showcase the possible upsides to these changes, it is completely diverting buyers from the flip side of the conversation and ramifications.

The likelihood of lower housing costs, while a possible outcome, is not something you can rely on to buy a house without knowing all of the ramifications. It’s like buying a candy bar at the best price before knowing it’s produced using the ingredients that you’re highly allergic to - not worth the pain and suffering that comes from that.

Do Buyers Really Need Representation?

Buying a house requires more than just looking over the price of a house and signing on the dotted line. What might look like a better deal on paper could cost you much more in the long run. Your protection as a buyer is paramount.

A Buyer’s Agent protects your interests and helps negotiate a fair and equitable agreement for the property. When you opt to have representation from a Buyer’s Agent, you’ll be reaping the benefits of things like:

Avoiding Long-Term Financial Effects

Without having representation, many buyers are walking into transactions and choosing the option that looks like the smallest amount on paper, while actually putting at risk hundreds of thousands of dollars.

If, for example, a property is listed for $1M and the buyer forgoes representation (and the cost of representation), the seller will still expect the $1M contract price and will ultimately net more money from the buyer in the end, making them responsible for the commission offer as well.

What most first-time buyers don’t know is that working with a Buyer’s Agent requires no additional cost to them in the majority of cases. In fact, a Buyer’s Agent can ultimately save you money by being able to help you negotiate with the seller and Seller’s Agent to work toward obtaining the lowest price and best terms for you.

Having Confidence in Your Buying Experience

Much like having an attorney to represent you in court, having a Buyer’s Agent during your home-buying process can not only bring expertise to the table, but can also help you feel secure and ease your mind in case you run into any contractual problems along the way. 

Buyer Agents can also support you by: 

• Helping you refine your search and find other properties not listed on MLS
• Facilitating a home inspection that has your interests in mind
• Spotting any red flags when looking at properties and in contracts
• Supporting with closing process and other legal paperwork
• Providing the most up-to-date information for the real estate industry

DMV Market Remains Firm Amidst Settlement

With all of this fog clouding the perception for buyers, the DMV continues to remain steadfast. Maryland and other surrounding regions utilize Buyer Agency - and always have - with the value of protecting people throughout the process. 

At DRG, we’re committed to holding the line of integrity and transparency for the real estate profession and the people we serve. 

As a buyer, you shouldn’t be expected to know how to approach all of these new settlement changes, but you can avoid the frustration they may cause and still negotiate an amazing deal. As one of the top rated agencies in Bethesda, DRG is committed to providing you with all the information and advice needed to create an offer strategy Sellers won’t be able to refuse. 

Have more questions or are interested in the most up-to-date information? Call or email us for real time updates and how it impacts you.