What the NAR Settlement Means for You as a Buyer Agent

In this article, Greg Harrelson explains to us exactly how our activities should change as a response to the NAR settlement.

So if you don't feel like reading the entire court case, we've got you covered.

And if you want Greg to coach you live on this + all things real estate, join his private community for Real Geeks users at RGMastery.com

Now, we won't be covering the legal aspects of this lawsuit in this post. You can discuss that with a lawyer, if you want. 

What Greg wants us to focus on is our own work as realtors, and what we should change to ensure this settlement doesn't impact our conversions or revenue.

Because here's the thing – right now, there's a LOT of doom and gloom on social media.

There's also a lot of panic. We're seeing hundreds of agents working with buyers who are all of a sudden thinking of making a switch and becoming listing agents.

So let's calm down and think about this for a second:

What has actually changed for us since the NAR lawsuit?

NAR agreed in the settlement that they'll no longer share what compensation will be between a listing agent and a buyer agent or a buyer and a seller.

In other words, whereas before we were able to put a co-broke commission in a deal, now we cannot.

The other thing that's changing is that we now have to get the buyer agency agreement signed before we start touring properties. But really, we needed to get this document signed anyway, so it's not like we're adding anything new.

Is this really that big of a change?

A field in the MLS is going away, so yes, you might need to call someone to figure out what the compensation agreements are.

But in many cases, you won't even need to call an agent to figure this out.

Say you're working with a buyer and you have a Buyer Agency Agreement, and a Compensation Agreement already signed with your buyer agent.

If the Compensation Agreement says that you're going to request for the seller to pay for that, and it becomes a negotiable term once you write an offer… then, as long as you've got your own Compensation Agreement, it doesn't matter what the compensation offered is.

Even if there's no compensation being offered, you're not going to avoid showing the property. You'll already have your Compensation Agreement established with your buyer, and you'll still show the property.

The only thing that's changed is that you need to have that Compensation Agreement signed with the Buyer Agency Agreement.

How does that make buyer agents stop to exist? Spoiler alert: it doesn't.

"This is why we need to be careful that we don't get sucked into the social media doom and gloom", says Greg. 

He then shares with us some food for thought: 

If we look at some of the biggest producers in America, whether they're leaders of large teams or they're huge corporations, you'll notice that none of them are being pessimistic about the NAR situation. 

The people who are spreading negativity and worry about this subject tend to be those who are not really seeing amazing numbers in real estate anyway, regardless of the settlement. They're maybe doing one or two transactions a year, and they're most likely not full time realtors.

They're the people who are the least in touch with the reality of real estate right now. So why would you listen to them?

The true influencers, those doing hundreds of transactions… they're not saying a lot about the NAR settlement. Because there isn't a lot to say.

Are Realtors Crying Wolf?

As Greg explained above, not much is changing for us, really.

A button's going to go away in the MLS, and we need to protect ourselves with a Compensation Agreement… that's it. 

And yet… agents are going crazy.

"[They're saying] buyer agents won't be able to make any money! I don't even know how that conversation comes about," shares Greg

Another fear is that all the buyers will now go to listing agents.

This theory has several flaws. 

First, listing agents wouldn't even be able to process that amount of buyers, even with multiple assistants.

But second, the real issue – which is not in this court case – is this: can the listing agent really honor their fiduciary duties to both parties?

Even in states where dual agency is allowed, one person is always getting the short end of the stick. How long do we really think this could go on for?

Making sure that everybody is being fairly represented in dual agency is very hard, and it would mean going back in time. This is why listing agents and buying agents are separate roles. 

"Can you imagine the amount of lawsuits that will start happening if everyone goes to the same agent now? And the confusion on who represents who?" Greg adds.

The #1 Thing Buyer Agents Should Be Doing Right Now

We've seen how the NAR settlement will affect the way we conduct our activities, but how will it affect conversions for realtors (if at all)?

This is what Greg has to say about it:

"You know how important Speed to Lead is? Well, it will never be more important than now."

Why? Because the first person who talks to the lead will be the first person who shows properties to that lead.

The first person who shows properties to that lead will be the first person who has a signed Buyer Agency Agreement.

And after you get that agreement signed, (before touring the first property!)... no other agent can get that client.

So, for those of you thinking they need to become listing agents all of a sudden…

…you now are.

But you're listing buyers rather than properties.

One of the benefits of being a listing agent is that you have a contract with a client that guarantees you payment for a certain period of time. If they sell to their own buyer, they still have to pay you. If they sell with another agent, they still have to pay you.

That's the beautiful thing about being a listing agent. But now that they'll be a requirement of getting a Buyer Agency Agreement signed on day 1 based on the NAR settlement, buyer agents will also enjoy this benefit. 

Here's another way to look at it:

You know how sometimes you'll talk to a buyer, you'll show them some properties, and then they turn around, go back to their home state and stop talking to you? And then two months go by, you contact them, and they ended up buying with a different agent?

Yeah, that's going to happen a lot less now.

Because they're under contract with you from Day 1. You now have them listed.

How the Real Estate Tables Have Turned

This is what the top producers are thinking about right now. 

Instead of freaking out and thinking they need to switch their entire operations and become listing agents, they're thinking about the adjustments they need to make to put themselves (and their clients!) in the best positions to win.

This whole settlement can leave buyer agents in a better place than they were before.

Before, buyer agents were frustrated about leads going on multiple realtor websites, but now, the tables have turned.

From the get go, the agent will ask the buyer whether they've signed a Buyer Agency Agreement contract with another agent, and if they have, they won't be able to show them any properties.

So leads will think twice before they commit to a realtor. And the one who calls them right away will look much better than the one who waits two days to send out an email.

This also means we need to demonstrate value right away. But this is a good thing, because the realtors who will survive in this new environment are the ones who will show the lead the most attention, the fastest responses, and the best value. 

This will turn us into better agents. And that's what you're working towards, anyway.

Closing Thoughts

Unless something changes, the stipulations from the settlement will be mandated starting in July.

This gives you enough time to prepare for the new environment of real estate.

And in Greg's eyes (and our eyes in the Real Geeks team), this new environment can only be a good thing.

To summarize:

• The people panicking about the NAR settlement are mostly part-time realtors and small producers
• The main change of the NAR settlement is that buyer agents will need to have a Buyer Agency Agreement and a Compensation Agreement signed right away, before they start touring properties
• This means that they'll get paid similarly to listing agents, because the buyers will be under contract
• This means that buyers will not hop from website to website, and they won't switch realtors in the middle of the buying process. Instead, they'll pick a realtor and stick with them
• This means that the agent who contacts them first and offers them the most value will be the one getting that client, and the process will move much faster

Call us optimists, but we can't see how this is all a bad thing.

If you want to be coached live by Greg Harrelson himself on this, plus all other aspects of the real estate practice, join his private coaching community for Real Geeks users, www.RGMastery.com, for less than $200/month.