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At Atomic Realty we have always embraced change and while we await the New Mexico Association of Realtor's attorney guidance on the subject, we would like to share the National Association of Realtor's viewpoint and communication to us regarding the lawsuit settlement and would also like to share how we believe the real estate industry will adapt and change. (Changes currently to go into effect July 2024.)
In our opinion the crux of the lawsuit and settlement was that the Sellers and the Buyers commissions will be "decoupled", meaning the Seller will pay their broker's commission and the Buyer will pay their broker's commission. But not really.
Key point - We believe Sellers will have to have a written listing contract with their LISTING BROKER and Buyers will be required to have a written Buyer's contract with their BUYER'S BROKER. Each contract may include how much each party is paying their respective broker and where the money is coming from.
We at Atomic Realty believe everyone deserves to earn a living from their work. Below is how we believe each broker gets paid.
Seller's Broker - In the case of the Seller, the seller will list their property with an agreed commission to be paid to listing broker by the Seller.at closing This is the same as in the past.
Key Point - As it stands now, when the settlement goes into effect, ATOMIC REALTY WILL LIST PROPERTY AT A 1.5% +$599 COMMISSION CHARGED TO THE SELLER AND PAID AT CLOSING FOR ATOMIC REALTY'S SERVICE.
Buyer's Broker - In the case of the Buyer, the Buyer will have a written Buyer's agreement with their buyer's broker with an agreed commission to be paid to buyer's broker at closing.
Key Point - As it stands now, when the settlement goes into effect, IF WORKING WITH A BUYER ATOMIC REALTY WILL WRITE A BUYER'S PURCHASE AGREEMENT WITH THE BUYER PAYING ATOMIC REALTY only 1.5%, PAID AT CLOSING.
*************WHERE WILL THE BUYER'S BROKER COMMISSION COME FROM? ***************
We believe that usually the money for any Buyer's broker will come to the Buyer’s Broker in one of three ways.
1) The client (Buyer) will pay the Buyer’s Broker a fixed fee or a percentage of the listing price commission to their broker at closing out of their personal funds for the Buyer Broker services. or,
2) In the purchase contract to the seller the Buyer will request a SELLER "concession" to be credited to the buyer at closing for the buyer to pay the buyer's broker. (We believe this will be the best but perhaps not the most common approach)
3) The Listing broker (meaning the Seller’ Broker ) will pay the Buyer’s broker a portion of the listing broker’s compensation. The Seller’s broker will charge the same amount to the seller as they did in the past and the listing broker will then pay part of that amount to the Buyer’s broker. While the names have changed as to who is paying whom, now the listing broker rather than the seller will be paying the buyer’s broker, but the money still comes from the seller. While we think this will be the most common way Buyer’s Brokers will get paid it really doesn’t address the “spirt” of the settlement. The reality is that in this scenario the seller is still paying for the Buyers Broker . We feel the spirt of the settlement was to have the Buyer negotiate their commission with their broker but it appears NAR has found a way around the sprit of the lawsuit.
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SELLERS - Why would you use Atomic Realty under these conditions. You would use Atomic Realty because we do a full service listings, full time Brokers for a sensible commission of only $599 + 1.5%, and ask the Buyers and their broker either request a seller concession to pay their broker or ask the Buyer to pay their own broker’s commission. We feel this will create the most competition as some buyer’s brokers will request less of a commission concessions than others netting the seller more money.
BUYERS-- Why would a Buyer use Atomic Realty under these conditions? Because once the settlement is in effect Atomic Realty will write purchase agreements for Buyers with only a 1.5% commission (Some others may charge 2-3%). If comparing what Atomic Realty charges to what other brokerages may charge Buyers we expect to cost less than some other brokerages.
If the buyer is paying commission "out of their pocket" for the same service the buyer may be paying Atomic Realty less money in commission than another Broker (we will charge only 1.5% to the buyer.
If in case where the our buyer's offer to purchase asks the seller asks for a Seller concession of only 1.5% (Our commission.) the seller may net more "money than other broker offers asking for a higher concession amount.
In the case where a Buyer’s broker asks the sellers broker to pay their commission the Seller will have to pay THEIR listing broker a higher commission to cover this amount. Their broker will offer a commission and this is what we will accept. This in essence is the way it has always been – While not in the spirt of the lawsuit, unfortunately we believe this is what the bulk of industry will move to.
Key Point - BUYERS- All other things being equal THE SELLER MAY BE MORE LIKELY TO ACCEPT OUR BUYER'S OFFER BECAUSE THE SELLER MAY NET MORE MONEY DUE TO OUR LOW 1.5% COMMISSION CONCESSION AMOUNT.
About lenders- Buyers need to be aware that depending upon the buyers loan, lenders have maximums on the amount of Seller concessions allowable , Please check with your lender on this.
Some version of the NAR settlement is said to go into effect in July 2024. Atomic Realty and other brokerages will likely await guidance from our state association and the NAR before determining how to go forward However, at this moment we believe this may be what the future holds.
Highlights NAR FAQs -3 -22-2024
Written agreements for MLS participants acting for buyers: While NAR has been advocating for the use of written agreements for years, in this settlement we have agreed to require MLS participants working with buyers to enter into written agreements with their buyers. This change will go into effect in mid-July 2024.
Compensation offers moved off the MLS: NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. Is it possible for offers of compensation to be conveyed through channels other than the MLS? • Yes. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).
We have received this communication from the National Association of Realtors (NAR)
Fellow members,
The Sitzer-Burnett verdict and the copycat cases filed across the country have raised questions about the way real estate professionals do their jobs and how consumers can hire and compensate us.
Since the litigation began, we have worked consistently to reach a resolution with the plaintiffs. In the months since the Sitzer-Burnett verdict, we redoubled those efforts.
We have always wanted to reduce the significant strain on our members and provide a path forward for the industry. That’s why today we announced a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The settlement is subject to court approval.
The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned Multiple Listing Services (MLSs), and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.
Throughout the settlement process, we engaged with a diverse range of members and considered their perspectives and interests while fighting to protect all industry players as best we could.
From the beginning of this litigation, we had two goals:
This proposed settlement achieves both of those goals. Here are the key terms:
I encourage you to watch this video from NAR Chief Legal Officer and Member Experience Officer Katie Johnson and me.
Additionally, there are materials available for members about today’s announcement at facts.realtor. You will need your NAR login credentials to access these materials. We will also continue to update competition.realtor with the latest information.
We know from our association’s 116-year history that REALTORS® are adaptable, and I’m confident that this agreement provides a path for us to move forward and continue our work to preserve, protect, and advance the right to real property for all.
Thank you for your continued dedication to consumers and to protecting property rights in America.
Regards,
Kevin
Settlement Factsheet
NAR and plaintiffs have reached a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned Multiple Listing Services (MLSs), and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. The settlement is subject to court approval.
Ultimately, we believe this was the best outcome we could achieve in the circumstances. The large settlements that other corporate defendants have already reached were important factors going into what NAR could achieve in this settlement.
Coverage of NAR’s Release
Implications for Members
Implications for Brokerages Owned by Members
Implications for NAR and other REALTOR® Associations
Implications for Association-Owned MLSs
Implications for Other MLSs
Practice Changes
We were able to retain the right of consumers to continue to have cooperative compensation as an option so long as they pursue it off-MLS through negotiation and consultation with real estate professionals.
NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. The change will go into effect in mid-July 2024.
Implications for members
Implications for home buyers and sellers
New rule about written agreements
Implications for members and home buyers and sellers
Other cases concerning the MLS cooperative compensation Model Rule
Next steps in settlement process
Court approval and opt outs
NAR operations
Why settling now makes sense
NAR explored settling throughout the litigation and also carefully considered the other legal options available to us. These included:
Ultimately, while NAR continues to believe that it is not liable for the home seller claims related to broker commissions and that we have strong arguments challenging the Sitzer-Burnett verdict, we decided to reach this settlement to put claims to rest for over one million NAR members and other parties who would be released under the agreement.
What’s next
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