The National Association of REALTORSⓇ (NAR) is one of the largest trade associations in the U.S. with over 1,500,000 members. NAR supports and empowers real estate professionals and advocates for personal property rights. While brokers/agents do not need to join NAR, those that do abide by a Code of Ethics and have access to much more education and tools to best support our clients. Each state has its own association, like the Colorado Association of REALTORSⓇ (CAR) in Colorado, as each state has different real estate regulations and customs. Furthermore, there are local associations, in our case the Durango Area Association of REALTORSⓇ (DAAR), providing area-specific broker services and support.
What is the Nation Association of REALTORSⓇ Lawsuit?
Recently, real estate compensation has been making news headlines, stemming from a case in Illinois. The plaintiff claimed they were not informed that broker compensation is negotiable. This case evolved into a class action suit and the settlement - currently pending final approval - requires NAR to pay $418,000,000 to sellers who join the suit, along with implementing several practice changes. These changes were initiated on August 17, 2024. The most significant shift is that buyers are now responsible for their broker’s compensation. Buyers can request that the seller cover this upon successful closing as part of contract negotiations. While many sellers may still agree to pay the buyer’s broker, if they decline or will not pay the full amount as agreed to by the buyer and their broker, the buyer will be responsible for covering the difference.
How Does this Affect La Plata County Real Estate?
Fortunately, Colorado is ahead of many states when it comes to real estate contracts, so we had far fewer changes to implement. The buying and selling process will remain largely the same, with the primary shift focusing on how buyers negotiate their broker’s compensation within the offer. As local real estate professionals, we continue to provide top-tier service for both buyers and sellers, and we’ve had great success negotiating seller paid compensation.
Buying
When purchasing real estate, the first crucial step is understanding your budget. For first time homebuyers, saving for a down payment, closing costs, and future mortgage payments can feel overwhelming. Adding in broker compensation may be a challenge, especially with VA or FHA loans, where covering extra costs may not be feasible. Having a real estate agent guide you through the process is essential - we don’t want you to navigate this alone. In some cases the broker may agree to accept less than the agreed upon amount, but never more.
Selling
Sellers have the option to include compensation for the buyer’s agent, and this has always been negotiable. We encourage our clients to offer compensation, as many buyers are ruling out properties that don’t cover this fee because they don’t have the extra funds. This is all evaluated as part of contract negotiations and we outline all the known fees for the sale to ensure our sellers still meet their net proceed goals while honoring the request for payment.
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Navigating these changes in real estate compensation may seem complex; however, we have not yet seen a large impact on our local market. With the right support, both buyers and sellers can make informed decisions that align with their financial goals. Whether you are buying or selling, our team is here to offer expert advice and ensure a smooth and successful transition, delivering the best possible outcome in today’s ever evolving market. Keeping our clients' needs in the forefront is always our duty and responsibility. Please contact Max Hutcheson or Deven Meininger for more information and learn how we can help you on your real estate journey.
