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Consumer choice is paramount, particularly when it comes to determining the nature and cost of professional representation in a real estate transaction. It is deeply concerning that the Consumer Federation of America has taken a position on listing agreements and offers of compensation that would harm consumers by leaving them with less choice than ever before.
Form agreements serve as a positive foundation for real estate professionals to engage in clear and open conversations with consumers about the full range of choices when it comes to professional representation and compensation. Ahead of the August 17 practice change implementation date, NAR encourages associations and other form providers to address form updates early and educate real estate professionals to ensure they can confidently engage with consumers about what the practice changes and form agreements mean for consumers. To be clear, NAR opposes any attempts to circumvent the settlement: members and associations must implement the practice changes fully and in good faith, doing so with the goal of promoting consumer empowerment, consumer choice, and healthy competition.
Offers of compensation also remain an important option available to consumers. Under NAR's proposed settlement related to broker commissions, home sellers can continue to choose to offer compensation to the buyer's broker off-MLS. Offers of compensation help make homeownership and the benefits of professional representation more accessible to buyers, including first-time home buyers, increase homeownership opportunities for historically underserved groups, and benefit sellers by expanding the potential buyer pool.
The ability for listing brokers to make an offer compensation to a buyer broker has significant implications for buyers who struggle to come up with cash to make it to the closing table. CFA's proposal would put an additional strain on their finances, resulting in these buyers sitting out of the housing market or going through the biggest transaction of their lives without professional representation. CFA suggests the onus should be put on buyers to ask for compensation for their agent as part of their offer. Competing against multiple offers, cash buyers and investors, a first-time buyer or buyer lacking generational wealth will see such an offer move to the bottom of the pile. The CFA's other suggestion, that buyers bid up the home price in order to win a concession from seller, will have the perverse effect of driving up home prices in the midst of a housing shortage and historic affordability crisis.
Members and consumers are encouraged to visit facts.realtor for more information on the proposed settlement, including NAR's overviews of how buyers and sellers can prepare for how the settlement practice changes will impact their home buying and selling experiences.
The National Association of Realtors® is America’s largest trade association, representing 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics.
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