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Hi LivNY!,
Amidst the buzz, news, and perhaps some misconceptions surrounding the NAR (National Association of Realtors) settlement, we feel compelled to offer our perspective, drawing upon our collective 50+ years of experience in the New York City real estate arena.
As of today, there have been no changes here in New York City. It's business as usual, as it's still too early to gauge the full impact on our local market. It's worth noting that New York City brokers, unlike many across the country, are not affiliated with NAR but with REBNY (Real Estate Board of New York) nor do we use MLS. While changes may indeed be on the horizon, it's premature to predict what those changes might entail. Nevertheless, one thing remains certain: New York City is a sophisticated market, and experienced brokers like us are resilient and capable of navigating any shifts that may come our way.
Now, let's delve into the particulars...
The Sitzer-Burnett lawsuit, a class-action suit filed in Missouri federal court against NAR by a group of home sellers, has brought about two significant mandates for NAR members and MLS participants to conduct business.
1. NAR agreed to create a new MLS rule prohibiting offers of compensation on the MLS. This would mean that offers of compensation could not be communicated via an MLS, but they could continue to be an option consumers could pursue off-MLS through negotiation and consultation with real estate professionals.
- In simpler terms, compensation offers for the buyer's broker will no longer be publicly listed which can be very vague. However, they can negotiate their compensation on the side either before a showing, during negotiations or obtain compensation directly from the buyer. This change has stirred speculation about potential cost savings for sellers and a potential decrease in home prices. However, it's essential to clarify that home prices are primarily determined by comparable sales in the area, rather than commission rates, and ultimately determined by how much a buyer is willing to pay. Moreover, obscuring compensation details may impede cooperative brokerage efforts, limiting property exposure which ultimately hurts the seller. The more buyers view a seller's property, the better the chance of getting the most optimal price or potentially more buyer interest which will increase the price.
2. NAR also agreed to create a new rule requiring MLS participants working with buyers to enter into written agreements with their buyers before the buyer tours a home. NAR has long encouraged its members to use written agreements to help consumers understand exactly what services and value they provide, and for how much.
- In the past, the seller typically covered the commission for both the seller's and buyer's brokers. Buyers were NOT contractually obligated to work with any particular broker. However, with the introduction of agreements between brokers and buyers, the landscape may shift. Now, buyers may find themselves responsible for paying commissions, leading some to consider bypassing representation altogether. This shift poses significant risks as navigating the New York City property market, with its substantial price tags, can be perilous without expert guidance. Experienced NYC brokers possess intimate knowledge of market intricacies, building dynamics, coop board protocols, and the complex board processes. Moreover, their extensive network of local vendors and contacts is invaluable in securing the best deals and avoiding potential pitfalls. In this evolving environment, their advice is indispensable for ensuring successful real estate transactions.
In essence, we find ourselves in a familiar landscape of uncertainty. However, our confidence in the resilience of New York City brokers remains unwavering. Just as the industry once speculated about the demise of brokers with the advent of StreetEasy, our market has proven its adaptability time and again. What sets us apart is the diverse array of property types and unique nuances exclusive to New York City. As such, while these mandates may suit other markets, our city's sophistication demands a nuanced approach.
As always, we will keep you updated on any new progress on this matter and stand ready to guide you through any changes and uncertainties that lie ahead.
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