NAR Settlement Impacts OBX Real Estate

If you follow real estate then you are probably aware of the lawsuit that the National Association of Realtors’ (NAR), settled this spring.  Most local Realtors were disappointed with the settlement and the media coverage.  In many ways, news articles mislead the public about how we conduct our business and how it would impact the Outer Banks real estate industry. This post is not to explain the details of the settlement. If you are looking for that click here. The purpose of this post is to share my thoughts on how the NAR Settlement impacts OBX real estate and how I conduct my business.

Required Written Agency Agreements

It’s going to be harder to show buyers property. One aspect of the settlement requires that agents and buyers sign an agency agreement in writing prior to showing houses. In the past, most Outer Banks Realtors showed homes with just a verbal agency agreement. What buyer wants to sign an agreement with an agent before they get to know them? The North Carolina Real Estate Commission does not care if that agreement is in writing prior to showing houses. The NAR settlement does. Agents are going to have to get better at convincing buyers to quickly sign an agreement.

Buyer Agent Compensation Information

The NAR settlement also prohibits listing agents from putting buyer agent compensation in the multiple listing service, (MLS).  For as long as I can remember, listing agents collected the fee for selling the property and then shared that fee with the buyer agent. That shared fee amount was a field inserted into the MLS.  That allowed buyer agents to easily find their compensation.

It makes sense for listing agents to offer compensation to the buyer agent. Buyers have a ton of acquisition costs. As a result, many buyers could not afford to pay their buyer agent. By having the listing agent pay the buyer agent out of their fee, the property is affordable for more buyers.

With this settlement, there is no guarantee that there is a buyer agent compensation. So how will a buyer’s agent find out if the listing agent will compensate them?  Also, what is that amount?  Not having that information at the buyer agent’s fingertips is frustrating and time consuming. Buyer agents would much rather be studying the information about the house and preparing to make the showing experience enjoyable for all. Tracking down this information could add hours to an agent’s appointment preparation time. Hopefully, the listing agent has that information readily available, and they are easy to reach.  However, that may not be the case.

Without this information readily available, a buyer’s agent must now immediately find it. It would be terrible for a buyer to fall in love with house only to find out they’ll have to pay their agent thousands of dollars to purchase it.  Talk about a bait and switch…nobody wants that!  For buyers, knowing the buyer agent compensation is as important as other material facts like the chance of a property flooding.

Summary

It’s too early to tell exactly how we overcome these unnecessary changes to the Outer Banks real estate business. If you are in the market to buy or planning on selling your property here, then we ask you for your patience while the Realtors in our area figure out the best way to handle these mandatory changes to our industry.  This is not the first time we’ve had to change the way we do business.  I remember in the early 1990’s when buyer agency was first offered by North Carolina Realtors.  It will take some additional time, but you can count on good local Realtors to figure out the most efficient way to continue to offer excellent service for their clients.