Realtors can’t catch a break

Jim Porter

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – April 12, 2024

The boring 2020s haven’t been roaring like the 1920s for Realtors.

The pandemic, historically low levels of inventory, the frenzied market from June 2020 to December 2021, where multiple offers left buyers literally crying after being outbid on what they thought was their forever dream home, sellers that were seriously thinking about selling in 2020 to 2021 and moving up chickened out and jumped on the REFI bandwagon, and now have golden handcuffs with a 2.75% fixed-rate loan, 11 Fed rate hikes and no cuts in the past two years, and now this National Association of Realtors class action lawsuit and settlement is causing uncertainty for a lot of full-time career Realtors who work to support their families.

President Biden didn’t help the situation a couple weeks ago when he misspoke and stated, “this settlement will allow homeowners to negotiate commissions for the first time.” Real estate commissions have always been negotiable and listing agents have been splitting their negotiated seller-paid commission for years to incentivize brokers to bring their buyers to their listings.

Misinformation is all over the place, but the bottom line is that in this settlement the NAR has agreed to stop advertising any offer of compensation to agents through the MLS. The crazy part of this is that listing brokers can still negotiate and pay a portion of their compensation to the buyer’s broker and the seller can advertise a cash concession to the buyer for closing costs as an incentive to buy the house.

Brokers and real estate agents will now be motivated to have buyers sign buyer-broker agreements, which will protect them and require the buyer to pay a fixed-fee commission to the agent as compensation for helping them find the house, negotiate and represent them in the real estate transaction.

Compensation will continue to be negotiable and after 40 years of me hearing lawyers, judges, brokers and business-ethics professors talk about how Realtors can be challenged with a conflict of interest when they try to represent both the buyer and the seller, I would expect dual agency will become more common and potentially problematic for consumers and agents alike.

From a mortgage banker’s point of view, this settlement is flawed for first-time homebuyers with very little cash in the bank and for active-duty military and veterans, an even bigger problem, because in the VA guidelines the veteran is prohibited from paying real estate commissions. Real estate coach Mike Ferry says, “Don’t panic.”

Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.

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