NAR settlement effect | New business models?

I haven't seen any of these discussed or mentioned anywhere publically, but what kind of operational and business model changes do you think might we see as a result of the new buyer broker comp model?

1. MLSs/Associations will no longer mediate or arbitrate commission disputes since commissions will no longer be a contract between listing and buyer broker. They’ll be private contracts between an agent and their client. 

How much, resource-wise, does this free up for MLSs/Associations?

2. Brokerages will now need collection and enforcement mechanisms in place to collect payment from clients, until that line item can be added directly to the closing statement.

For those who are thinking of charging a retainer fee - the retainer fee would have to be written to the brokerage. I know some people charge a retainer and when the deal closes they rebate it to the client closing costs. It's not "extra" money.

I think retainer fees are a great idea. If they follow through with the deal, credit it at closing. If you can sell the client on buying a house, you can sell them on a $500 - $1500 retainer fee.

Anyone who actually understands business gets that this is a great thing. Not sure why our value proposition to anyone was that “we work for free” or “someone else pays for the service you’ll receive so please don’t worry how you treat me or my time”.

I think it should be a standard for all Realtors to retain a fee since some buyers just vanish and don’t even say “thank you for all the months you showed me homes”

I worked with a Broker who charged a retainer and he charged $500 up front, it was non-refundable and put it in the Buyers Agency contract. At closing he would "surprise" them by returning it and said they were always just so appreciative and happy.

If you don’t have a form like that for your Buyer Broker Agreement an Attorney can draw it up. If your state doesn’t allow it — ask for it anyway — but don’t accept it, just test them so you’ll know :)

Some people will say ANYTHING, but change real quick when they have to put up a little money.

3. Relo models will drastically change — maybe they'll go away entirely. Relocating employees who have been provided “free relocation services” by their company in the past will no longer be able to have this benefit.

Relo companies have traditionally taken around 25-35% out of the BA commission (which comes from the LA and is committed to by the seller upfront), which is a margin that buyers will no longer deem acceptable if it has to come out of the seller concession in the contract negotiation.

They’ll say “25% out of my seller concession for my free company benefit?”

4. Lending guidelines will be reviewed, and I suspect they’ll eventually allow for buy-side commissions to be rolled into mortgages.

5. Listing agents will staff up with licensed assistants as more early-stage buyers will attempt to go direct to listing agent for showings, not wanting to commit to a specific buyer’s agent at that point yet.

What are your thoughts?

Let me know.

Best,

Alexa

P.S. If you’re worried about the NAR settlement and having a hard time planning how to change your team’s approach, talk to our partner here who are doing an excellent job training their 10,000+ agents for this transition. Reserve your spot early in case they open up more slots.

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