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recent New York Times podcast, "The Daily," made a fundamental error in its analysis of real estate commissions following the National Association of REALTORS (NAR) settlement. The podcast suggested that agents are working around the settlement to preserve a standard commission structure and even claimed that sellers can no longer offer compensation to buyer's agents. However, this assertion is factually incorrect.
The NAR settlement does not prohibit sellers from offering compensation; it simply changes how and where that compensation can be communicated. Prior to the agreement, listing brokers were required to post their commission offers in the multiple listing service (MLS), which was effectively a marketing tool visible to everyone. The settlement stripped away this MLS requirement but allows compensation to be conveyed off-MLS.
The podcast's narrative obscures a simpler truth: most consumers value having an experienced professional guide them through complex transactions, and agents bring expertise that commands a fee. Sellers offer compensation because they recognize the importance of attracting qualified buyers and ensuring smooth transactions. There is no nefarious collusion; just market participants making rational choices.
Moreover, the Times reporting fails to account for shifting consumer behavior under this new regime. With commission discussions decoupled from MLS listings, buyers and sellers are engaging earlier with clear conversations about fees. This upfront clarity helps prevent unpleasant surprises at closing.
The article also glosses over other market dynamics that influence commission levels, such as inventory shortages, fluctuating mortgage rates, regional competition among brokerages, and evolving technology platforms. These variations reflect the interplay of supply, demand, and local competitive pressures – not some grand conspiracy to undermine regulatory reform.
The persistence of cooperative commission offers is evidence that the value of real estate agents is recognized in the market. Commission fees represent a recognition of the tailored expertise that agents provide: market analysis, pricing strategy, transaction coordination, contract drafting, vendor referrals, and advocacy in the face of unforeseen challenges.
With greater transparency comes greater responsibility. Brokerages and individual agents must familiarize themselves with the settlement's provisions, including the need for written buyer agreements, and ensure every compensation discussion is documented according to new protocols. This elevates the profession by emphasizing clear communication and ethical standards.
The Times' portrayal of commission offers as an illicit workaround is both inaccurate and myopic. The NAR settlement did not outlaw seller-funded commissions; it simply redefined how those commissions may be communicated. We're seeing agents and clients continuing to find mutual value in professional representation – within a framework designed to enhance transparency and consumer choice.
