Transparency in Real Estate
By now, everyone has heard or read about the proposed NAR settlement. There are stories and headlines everywhere, but what sits beyond those? More importantly, how can consumers act now to create a better experience and better results? Let’s dig in!
To be clear, proposed settlement hasn’t been approved, so nobody really knows how it will all shake out yet. However, I firmly believe that the industry is changing in ways that will raise the bar for professionals and benefit consumers. I’m here for it and proud that the Northwest MLS in Washington State has lead the industry.
the core issues - short and sweet
There are backstories and nuances that can take anyone far into the weeds. For the sake of simplicity, these are the very basics.
Buyers - Transparency and the buyers right to know what their real estate agent will be paid, to negotiate compensation directly with their agent, and to have options in compensation payment.
Sellers - The sellers right to negotiate compensation for their real estate agent, to deny offering compensation to the buyer’s agent, and to have more options in compensation payment.
how the NWMLS has improved transparency to date
For years, the NWMLS has worked to improve transparency in real estate.
2019 - NWMLS removed the requirement for a seller to offer compensation to the buyer’s agent.
2022 - NWMLS uncoupled the listing agent and buyer agent compensation. Sellers no longer negotiated one compensation that would be split between their agent and the buyer’s agent. They negotiated their agent’s compensation and the buyer agent’s compensation separately.
2022 - NWMLS updated multiple forms and included the amount of buyer agent compensation offered by the seller on page one of the purchase and sale agreement. This allowed buyers and buyer agents the ability to accept the offer compensation or negotiate separately for compensation in a different amount.
2022 - NWMLS began publicly publishing the amount of buyer agent compensation offered by the seller to provide buyers with greater transparency. This let buyers know up-front if their agents full fee would be covered in the purchase price.
2024 - NWMLS made buyer brokerage service agreements mandatory. This increases transparency and ensures that all buyers are aware of the term of their agreement, their agent’s compensation amount, and payment options and giving buyers the opportunity to negotiate compensation with their agent directly BEFORE they tour homes or become invested in working with an agent.
2024 - Washington State updated the informational pamphlet that all agents are required to give to consumers before engaging in services to make it clear. As a part of the update, the term “Dual Agency” was redefined as “Limited Dual Agency” to help clarify that agents representing both buyer and seller in the same transaction were only able to offer limited agency and could not offer loyalty to either party, making it easier for consumers to understand the risks of limited dual agency.
why some articles imply that EVERYTHING is changing
In part, because there will certainly be changes, and in part, because real estate is controlled by the state, so real estate operates differently from state to state. Most of the steps taken by NWMLS in Washington have not been adopted or applied elsewhere, so the proposal includes steps that are new to many. Change can cause anxiety, the DOJ can cause anxiety, but I believe that true professionals across the nation will come to see the evolution as largely positive for consumers and the industry.
how do consumers create real benefits now
More than ever, it’s important that consumers take ownership of their process. Any shakeup can add stress that creates additional challenges, so consumers need strong partners that will keep priorities on the consumer and work through issues with their personal emotions and ego in check. Not all professionals are created equally, and with a little preparation, consumers can separate dedicated pros from people unprepared, inexperienced, or in business for the wrong reasons.
When looking for a real estate professional, mortgage lender, home inspector, etc., consumers should invest time into selecting industry partners with experience, knowledge, skill, and backing. Here’s how to do that.
ask around
Ask for personal recommendations from friends, family members, and peers
Search Google for professionals in your area
once you identify local pros, research them online
Look over their professional social media pages
Check out their professional websites
Read their professional blog
Read their reviews on Google, Zillow, social media, etc.
Look for someone with a strong online presence, solid work history, good reviews, and detailed information about their experience and process. Narrow your options down to 2-3 choices.
interview your top choices, and don’t commit to one until you’ve interviewed them all
Ask about their fees and compensation
Ask questions about their experience and support
Ask them to talk you through their process
Have them explain how they focus on their client’s needs
Ask how they’ve handled difficult situations in the past
See how comfortable they are communicating and answering questions
In any given real estate transaction, there will be negotiations, difficult conversations, and sticky situations. If a professional can’t comfortably sit through an interview or answer questions about their work, think carefully about how you think they’ll be able to handle the tough parts of the job. For real estate agent interview tips and starter questions, check out my blog post, The Agent Interview.
what the future holds
Again, we really don’t know yet, but I believe it will be better for you, the consumer, and I’m all about that.