Since a $1.8 billion dollar class action lawsuit involving the National Association of Realtors was filed in a Missouri federal court in 2019, media reports about real estate have filled national headlines and even more so since NAR proposed a settlement earlier this year. Concerns and questions from local consumers have been on the rise, and they want to know what this will mean for our local real estate market.

The Meridian-based Realtor association, East Mississippi REALTORS, is acting quickly to put local concerns to rest by informing the public of vital details, breaking down what practices are changing, and what this could mean for consumers. Various news stories previously released contain misleading details or inaccuracies. EMR aims to not only clear up misconceptions but explain the facts.

The lawsuit alleged that some Realtors had not disclosed pertinent details to clients involving compensation and how the brokerage firms were being paid. Locally, there have never been such complaints and the lawsuit did not name any local real estate professionals. However, all local Realtors are members of the National Association of REALTORS and, in an effort to protect all of its members, NAR proposed a settlement in the spring of 2024.

As part of the settlement, our local buyers and sellers can expect to see immediate changes implemented in local real estate practices.

For sellers, you can expect a listing brokerage to offer you multiple options when discussing the listing of your property. You will also see more comprehensive forms used throughout the transaction. Sellers should remember that real estate professionals do charge a fee for their services.

Real estate fees and commission rates are not “law” nor are they “industry standards” as many news reports have previously claimed. Individually, real estate brokers set their own rates or fees as they deem fair for the services their company provides. Compensation fees and rates are and always have been negotiable between the parties.

Offers of compensation by sellers to buyer representatives have taken center stage in most discussions surrounding the lawsuit. One definite change to be aware of is that your listing brokerage will not be permitted to offer a buyer’s agency compensation through the Multiple Listing Service. Nevertheless, sellers can still offer buyer agency compensation by other means and there are systems in place to do so outside of the MLS. Sellers are urged to have a full discussion of the pros and cons of offering buyer agency compensation with their agent in order to make an informed decision.

Sellers should keep in mind that in July of 2024, NAR published statistics showing that 89% of home buyers used the services of a real estate professional for their purchase so making a reasonable offer of compensation for a buyer agent can certainly make your property much more appealing and attractive to your consumer.

It is also fairly common for local buyers to request seller concessions incorporated into their purchase, which could mean they ask for assistance from the seller with closing costs and/or paying their buyer agent fees. Recent data from East Mississippi REALTORS’ MLS suggest that, so far for 2024, just over 43% of home buyers in Lauderdale County, including the city of Meridian, had some form of seller concession upon closing their purchase.

Local buyers will also see significant changes in real estate practices. Most buyers can expect to be offered a buyer consultation explaining the new procedures, buyer agent professional fees/rates, including how the agent will be compensated, as well as other options a buyer may have.

Buyers should also be aware that real estate professionals do charge a fee for their services. Such rates or fees are set independently by brokers based on what they consider is reasonable for the services the company provides to its clients and these fees are still negotiable between the parties.

One notable change for buyers is that they must now enter into a written buyer agency agreement prior to viewing properties. This mandated change became effective on Aug. 17 as part of the proposed NAR settlement.

For the most part, buyer agency agreements have not been a common practice and will be new for local buyers. However, having this agreement on the front end will be beneficial to all parties as the duties and responsibilities of each party will be clearly outlined plus it enhances the level of transparency and creates a foundation of trust between the buyer and their agent.

Consumers are asked to keep in mind that these changes are mandated as part of the NAR proposed settlement and may be subject to change over time, but our local Realtors are staying well informed and educated on the very latest developments.

EMR strongly recommends that anyone who is in the market to buy or sell a property reach out to a local Realtor as real estate transactions are vastly complex and the need for professional guidance is crucial. If you would like more information or have additional questions, please contact a local real estate broker for assistance.