Seattle Homeowners: NAR Settlement Myths Debunked! What WA Buyers & Sellers Need to Know.

Introduction:

Recent headlines about the NAR settlement might have you wondering: "Do I have to pay my buyer's agent out of pocket now?" The answer, for Washington residents, Likely no - but Depends on who you hire… and how you set up your Buyer Broker Service Agreement. This isn't because of the NAR Settlement though - See why below

Why the Headlines Don't Apply Here:

The NAR settlement specifically addresses practices within MLS systems owned by the National Association of Realtors (NAR). Our local NWMLS is independent, not owned by NAR, and has always been transparent about buyer agent compensation, and sellers ability to negotiate home much compensation they'd set aside for a buyers agent.

Transparency in Washington Real Estate:

Washington State, along with NWMLS, has been ahead of the curve on buyer agent compensation. Here's what you need to know:

• Since 2019: NWMLS requires the amount of compensation offered to the buyer's agent to be published on every listing. Transparent.

• Since 2022: The NWMLS, which covers part of Washington State including Seattle, voluntarily pre-empted the lawsuit by allowing sellers to pay buyers' agents $0 back in 2022. At the time, everyone thought this would change the industry. It didn’t.

• Commissions (Compensation) are/ is Negotiable: Sellers can choose the amount they offer (or not offer anything at all).  The vast majority of listings still pay buyers' agents compensation. Currently, over 90% of listings still offer 2.5%-3% compensation. Some even 4% or more. So the settlement terms haven't changed anything here in Seattle for the NWMLS.
  
  There have been discount brokerages, and flat fee brokerages for decades. MLS4Owners - a flat fee brokerage house has been around since 2001. So, to say compensation hasn't been negotiable is egregious at best. Just like some brokers operate at a discount to 'win' your business, other agents and brokers have different standards of practice.

• Buyer Representation: As of 2024 Washington law requires a written agreement outlining compensation and scope of service when working with a buyer's agent before brokerage services can commence. Buyers Agents and their clients will outline their fee structure in that agreement. some agents may have their clients make up any small fee shortfall in that agreement. Others, like myself, will always work to negotiate the fees with the seller. You just have to know what you are signing. That said many brokers have used buyer agency agreements for years and it has long been advised to do so.

What This Means for You:

• Buyers: Have a Consultation. Your agent should outline their services and how they get paid. This means knowing up front if your agent expects you to pay any fee shortfall if the seller is choosing to limit compensation paid to a buyers broker. This way you know what to expect and have discussed their fee structure with you upfront.

• Sellers: Consider the value an experienced buyer's agent brings. They can guide negotiations, navigate challenges, and attract qualified buyers. A competitive offer is more likely to get accepted with a good buyer's agent representing the buyer.  When everyone is represented it limits liability on the listing brokers side.

At the end of the day, a buyer’s agent doesn’t have to work with a buyer, and a listing agent doesn’t have to work for a seller - it's a collaborative relationship. All parties involved need to be on the same page about the services provided and how they'll be compensated.

Potential Effects of Not Offering Buyer Agent Compensation:

• Buyer Negotiation: The buyer's agent may negotiate their compensation into the buyer's offer effecting the sellers bottom line. This can add complexity to reviewing offers and understanding a seller's net proceeds from the sale.

• Limited Buyer Pool: Offering no compensation might deter some qualified buyers because their agents may have outlined that they will not show homes that don’t offer compensation in their Buyer Broker Service Agreement with their buyers.

The Bottom Line:

The recent headlines likely won't impact Washington's real estate market.  NWMLS is not owned my NAR. The NWMLS and Washington State have long championed transparency and buyer and seller choice in compensation models.

Remember, when it comes to this NAR law suite settlement.

• The settlement hasn't been approved yet, so nothing is set in stone.

• Here in Seattle, our NWMLS is not owned by NAR, so the settlement wouldn't apply anyway.

• Compensation is and has been negotiable - different agents have different standards, but that doesn't mean that discount or flat fee brokerages haven't always existed.

• NWMLS is one of the most progressive and transparent MLS's in the nation. We've been ahead of the curve on this setting the standards that the rest of the nation is only catching up to.

That said, its business as usual.

Updated for clarity 03-20-2024 @9:14PM

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P.P.S. If anyone in your social or work circles is considering a move, just send an intro text or email with their best contact info, make sure everyone is CC’d and I’ll take care of the rest!   I promise to take great care of them, serve them well, make you look really good in the process. Plus help them get great results! Referrals are crucial to our business, and we genuinely value the opportunity to serve you and your network.

If you're making a move, reach out, and lets chat. Happy to brainstorm and come up with a solution that gets you a tangible and actionable plan that fits your unique situation.

Best,

Justin H Gazabat
Broker | PNW, Seattle, Ballard, East Side
Your Friendly Seattle Neighborhood Real Estate Professional.
www.JustinGazabat.com