Real estate brokers must adhere to the terms of the National Association of Realtors' settlement by Saturday. | Jacob Tukker/Missouri Business Alert A sweeping settlement is changing the way Realtors conduct business. Effective Saturday, real estate brokers across the U.
S. must adhere to new regulations. Many Missouri Realtors are seeking a sense of normalcy in their industry after the turbulence of the settlement.
“It’s going to feel calmer than what we’re currently dealing with, which is a very unknown feeling,” said Derek Schriewer, the president of Missouri Realtors, which represents 26,000 Realtors in the state. Derek Schriewer In March, the National Association of Realtors, the United States’ largest residential real estate industry group, agreed to pay out $418 million over approximately four years to settle lawsuits alleging anticompetitive behavior in the real estate market. The group also agreed to make changes in the way Realtors can earn commissions and enter agreements with homebuyers.
As a part of the settlement, the NAR and affiliated organizations such as Missouri Realtors denied wrongdoing. The most significant of the changes is that buying and listing agents can no longer set commission offers on houses displayed on multiple listing services, which are housing databases accessible only to licensed agents. Brokers must also enter written agreements with buyers before touring a home.
Real estate consumer advocates believe the practices could help alleviate steering, or the practice of brokers guiding clients away from homes listed with low commission rates, rather than representing the clients’ best interests. This stifled competitive activity, said Doug Miller, an attorney and the executive director of the nonprofit Consumer Advocates in American Real Estate. “Now you’re going to have real competition,” Miller said.
“You’re gonna see big changes as competitors start competing on price and service. And that’s just a matter of time.” He said additional competition could force some Realtors out of the market.
“The best Realtors are going to stay in the business, the most qualified ones, because they have a volume of business, they’re going to charge less,” Miller said. “And they’re going to be doing more volume.” Miller said commissions could eventually come down to as low as about 1% to 2%, but it will take some time for “innovators,” like discount buyer brokers, to come through and shift the commissions market.
Some Realtors feel it will be harder to earn the same income in the same amount of time with the new regulations, Schriewer said. “I definitely think that there’s a sentiment that they’re concerned about it,” Schriewer said. “It’s not that (Realtors) think they’re going to lose money or anything like that.
I think it’s going to be more difficult to achieve the same income thresholds with the new settlement.” In his own practice, Schriewer said he has spent more time in talks with clients lately. Brian Toohey “I’ve found myself in the field negotiating quite a bit more, just myself and my own business practices since this settlement,” Schriewer said.
“So we’re just all curious what that feels like, you know, once Aug. 17 happens and conversations are definitely subtly different.” Brian Toohey, CEO of the Columbia Board of Realtors, said in late July that some Realtors inside his organization had changes to make before the deadline.
“We’re changing some different agreements,” Toohey said. “And some people might have to go in and amend some of their current agreements that they have with buyers.” Toohey and Schriewer both said there are new forms that Realtors are using to be compliant with the settlement moving forward.
Miller said there will be lots of upheaval in the near future. “We’re going to be in a very tumultuous period for the next year or so,” he said. “There’s no question.
”.
