From Your Wisconsin & Illinois Mastermind, REALTORS®

How purchasing a home or property is expected to change on August 17, 2024

As you may or may not know, the way a Buyer purchases a property is most likely going to change.  A class-action lawsuit was brought against The National Association of Realtors (NAR) (Joshua Sitzer, et al v. The National Association of Realtors, et al.) with the case being opened on October 8, 2019.  This case alleged that NAR conspired to require home sellers to pay brokers representing the buyers of their homes’ commission, and that commission amounts were inflated as compared to comparable markets in other countries.  In truth, sellers have never, ever been required to pay the Buyer’s Broker commission nor have commissions been a set standard amount, this would constitute price fixing and in violation of antitrust regulations.  Moreover, each seller and broker representing the seller have always been able to (and have) set their own commission amount.  Selling commissions have ALWAYS been (and still are) negotiatble.

On October 31, 2023 the jury awarded the Plaintiffs in this case a $1.8 billion dollar settlement, which was later negotiated down to $418 million dollars, and changes as to how purchasing property will change come mid-August, 2024.  In addition to the settlement (to which its assumed that the plaintiff’s attorney’s will likely clear 33% of that amount, or an estimated $137,940,000.00) that leaves an approximate amount of a settlement check for an estimated 21 million Americans who may be part of the settlement class of about $13.00. That’s right, thirteen dollars. “Homeowners will get a cup of coffee, and lawyers will get millions” per Rob Hahn; Source: The Orange County Register, published March 24, 2024. (https://www.ocregister.com/2024/03/25/sold-a-home-recently-heres-what-youll-get-from-the-418-million-realtor-settlement/)

What this means going forward to you, the Buyer:

• Effective August 17, 2024 and forward (unless more changes come about), you, the Buyer will be required to sign a Buyer Agency Agreement (sometimes also known as a Buyer Broker Agreement) before a REALTOR (any realtor, and every realtor everywhere) will be able to show you any properties that you’re interested in purchasing.

• This Buyer Agency agreement will spell out the terms, conditions, and cost to you for your realtor’s services. The settlement agreement between the plaintiffs and defendant, and the Department of Justice are, in essence stipulating that the Buyer pay for their own services in a purchase transaction (decoupling commissions).  This is not to say that the seller cannot offer or the buyer cannot ask the seller to pay their buyer’s agent commission, but, don’t count on it as the way it has been in the past.  Be prepared to pay your own agent for their professional assistance, representation, negotiations, and fiduciary duties toward you, the prospective client.

• Your realtor representing you, the Buyer, will need to obtain from the broker representing the seller how much, if any the seller will be willing to contribute toward the buyer’s agent success fee. In the past, this amount was indicated in the Multiple Listing Service (MLS) on the MLS information sheet what amount would be offered as a cooperating broker’s commission.  This is no longer allowed per the settlement.  This is supposed to enhance transparency in negotiations, although, in reality it may not seem so.

Be sure that you meet with the real estate agent, or realtor of your choice (or Mastermind, REALTORS® agent of your choice, we’re happy to help) so that you can determine for yourself what the right path is for you in the purchase of your new property.