Oh this NAR settlement has people in a TISSY! I feel like so many outlets just want to make something newsworthy. Or social media worthy. Click-bait. There are large inaccuracies out there, even in articles from reputable news sources. So let me break down what is worth your time to know, in a very digestible way...
1. New York City real estate agents do not belong to NAR and are not formally affected by the changes being implemented. If you are buying or selling currently in Manhattan, you are business as usual. Of course all agents should be aware of what’s going on, but if you’re in NYC and don’t feel like reading further, don’t. Go pick out accent pillows, it’s a better use of your time.
2. Not much is changing nationally either. I know the headlines include phrases like, “game-changer” and “worst thing ever” (thanks CNN). But the two points people are excited about in all these news articles are not changes. The first is the fact that real estate agent commissions are now negotiable. The second is that the buyer’s agent commission does not need to be paid by the seller. Hate to break it to everyone: This has always been the case. In NYC and around the country.
3. The standard compensation to a good agent is 2.5%-3% of the purchase price. That has not and will not change. If you are one of the sad few who think you can navigate the purchase of what might be your largest asset on your own, and you don’t want much help, sure you can find an agent who will take less than that. You get what you pay for. But that also has always been true.
4. It is still standard that both agent commissions are fees paid by the seller. If you are a seller and do not want to pay the buyer agent fee, that is fine, but you will get a lower price for your house so the buyers can pay their agent. This too has always been true, we just now will have a more in-depth conversation about where all the fees come from and who pays them. When it comes down to it, we’re talking about the buyer’s budget. All the money is coming from the same place. Whether it’s part of the purchase price, or an agent commission, or we call it a “buyer closing credit” that then goes to their agent, it’s part of the same chunk of money that changes hands, and negotiating that has always been part of the process.
5. The actual changes to the purchase process will be transparency and time. All fees will be a conversation, which SHOULD have always been the case. Any good agent will welcome this change. We will also be required to have a buyers’ agent agreement signed before showing properties that includes the agreed-to commission. It doesn’t mean the seller won’t eventually pay that commission, but you will know what my commission will be at the very beginning of the process and if it doesn’t come from the seller’s side, it will come from the buyer’s side.
That last point is worth digesting for agents and buyers/sellers. You now cannot call an agent and say “I want to see this property in an hour,” before you’ve formally started working with an agent. For some reason, everyone is always in a rush. But getting your ducks in a row with your agent BEFOREHAND is better.
I, for one, am so thankful for this change. Let’s talk. Let me explain the process along
with the fees and how we negotiate them. Tell me what you want and don’t want, in the property and the process. Let’s get to know each other before either of us agree to work together because communication has to be there. The whole journey is so much nicer if it starts with a coffee and not rushing to see a property. So, I’m very sorry but the biggest change is that you will need to have a coffee date with me before we can work together. I KNOW! It’s torture.
So I hope that clears things up so you don't need to waste brain space on all the NAR headlines. But let’s have that coffee! We can talk real estate, or kids, or better yet, PLEASE tell me about any good theater you’ve experienced. I’ve seen a lot of disappointing plays lately. Help me break this cycle!! Reminder: I have my Jersey license now, so am available to talk moving to the burbs as well!
Happy home-hunting NY & NJ! Till next time!