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The World of Real Estate is Not Crashing...Read On For NAR Settlement Myths

Updated: May 5

As a contributor to our blog, I often find myself pondering topics that mirror the chaos of unexpected events, much like the toilet paper crisis of 2020. Well coming up with something that was Real Estate related wasn't so tough. The subject within the real estate realm that seems to embody this frenzy is the proposed settlement by the National Association of Realtors (NAR). This proposal has stirred up a storm of speculation and concern within the industry, with many fearing significant changes to the compensation structure for realtors. If implemented, some worry that buyers could find themselves navigating the market without the support they've come to rely on, and will be left out on their own to sink or swim against vicious represented sellers. It's Sea topic that's capturing attention and sparking heated discussions, reminiscent of the hysteria surrounding the scarcity of toilet paper not too long ago.

My aim is to shed light on this topic and dispel some of the myths that seem to be spreading like wildfire, fueled by sensational media coverage. It's my hope that by providing clarity, we can temper the fervor surrounding this issue and offer a more balanced perspective.


  • Agents are forced to reduce commissions

Commissions have always been subject to negotiation and will continue to be so. It's crucial for consumers to understand this fact. Whether a seller covers the buyer's agent commission or not, commission rates will differ based on various factors such as home price, location, agent expertise, marketing strategies, and services provided. To illustrate, consider the analogy of shopping at Nordstrom versus Walmart: while you may find the same product, you'll likely pay more at Nordstrom due to superior service, quality, and overall satisfaction.

  • Sellers will no longer have to pay buyers agents commissions

Let's be clear...sellers NEVER had to pay buyers agents commissions. This has always been fully negotiable and continues to be that way. Traditionally sellers have paid buyers agents commission as an expense of selling their home realizing that at the end of the day it brings more buyers through their door ultimately leading to more offers and a higher offer price.

  • Sellers are PROHIBITED from paying buyers agent commissions Another common misconception, often exaggerated by the media, relates to the NAR settlement. Contrary to some claims, the settlement does not prohibit sellers from paying or offering assistance with buyer agent commissions. Instead, the new rule stipulates that the specific amount a seller is willing to pay a buyer's agent cannot be publicly listed in the Multiple Listing Service (MLS). How these fees are handled depends on the buyer's lending situation. They might be allocated as a contribution towards the buyer's closing costs or included as a direct cost to the seller.

  • This settlement will ultimately lower housing prices significantly Let's examine this from the perspective of sellers. Imagine their home is valued at XX dollars. Regardless of the costs they incur during the selling process, the intrinsic value of their home remains unchanged. Even if sellers negotiate lower fees, the value of their property remains the same — it's still worth XX dollars. Just like sellers who opt for a "For Sale by Owner" approach to save on commissions, they don't typically lower their home's price to pass on savings to buyers. Instead, their aim is to increase their net proceeds. This scenario parallels that situation; it doesn't affect home values, as commissions have never been a determinant of value.

I hope that this has helped clarify some of the misconceptions that are flying around the world of real estate and seem to be the high point of conversations at every cocktail party I have attended in recent months.

Our motto at Boise's Best has always been and continues to be..."Do what is right at the end of the day". We know that if we treat our clients with the highest level of respect and maintain integrity throughout every transaction that everything else will fall neatly into place.

We value your support and your trust and look forward to continuing to serve you at the very highest level. If you would like to sit down and discuss your home buying or selling needs please click here and set up your personal consultation with the Leigh.

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