NAR Rule But Don't Panic!

New NAR Rule May Change the Real Estate Market But Don’t Panic!

For the record, this article represents my own opinion and by no means reflects NAR, Realtors, PropertyOnion, or any other real estate organization. This is my personal view of current events and a positive way to look at a controversial ruling.

Yes, the recent news seems like a shocking result that is shaking up the real estate industry, specifically its agents. Word of the industry changing to buyer commission rates is all over the internet and social media, and some have even found humor through memes. 

The fact that we now have to ask for a buyer’s exclusivity with a statement of “and by the way if they don’t pay commission, you will,” is driving many agents crazy, but here is a positive outlook and why there is no need to panic.

Up to now, the buyers’ agent commission has always been understood as a fee that falls on the seller to pay. 

Clearing the Crowd

Like every change, a learning curve will mean an adjustment period for agents. Many agents will adapt, and many more will quit. 

But as we know, and constantly complain about, there are too many part-time agents out there. So, it’s not a bad idea to clean up the industry and allow real professionals to represent buyers and sellers.

Also, it’s important to keep in mind for those of you investing without an agent, things are about to get interesting. With commission payment becoming the buyers’ responsibility, this will introduce a new competitive drive in the marketplace which could lead to lower rates. 

Who stands to benefit the most?

If you’re a savvy investor, the answer is you. 

Whoever would have been paying the commission on the seller’s end of things six months ago, now stands to save thousands of dollars (if not more).

For those savvy investors out there, you may notice more buyers opting to find properties on their own. 

Why Buyers Paying Commission Isn’t New

Buyer’s agreements always existed, though not in this precise context. Up to now, the buyers’ agent commission has always been understood as a fee that falls on the seller to pay. 

However, if you look at other markets, such as off-market and commercial properties (which are much bigger in size and price), many advertise upfront that the buyer is required to pay the buyer’s agent. In fact, it’s so commonplace it’s practically expected.

Weeding Out the Worst

Another positive result of these new rules is the simplification of workloads. As professional real estate agents, we expose ourselves to all types of buyers. Some are serious, but others we know will waste our time. 

What’s worse is they may work with multiple Realtors. So, some commitment on their part wouldn’t hurt. In fact, I’d hazard to say it would be very beneficial.

For those savvy investors out there, you may notice more buyers opting to find properties on their own. 

They’ll want to avoid paying commission to a buyer’s agent, though this could work to their detriment.

Often, if there is a seller’s agent, that agent will simply get a share of the commission that the buyers thought they were saving by not hiring an agent. In worst-case scenarios, they don’t have anyone representing their best interest in negotiations and protecting them from costly mistakes. 

That’s not to say all buyers are walking in utterly naive to each prospective sale. On the contrary, they might be self-educated in order to represent themselves. 

There’s no way to predict precisely what will happen with this turn in the industry, but if we go off of the pre-existing markets that operate within this commission structure, it’s not the end of the world.

Remember in a buyers’ market, the buyer has the upper hand. 

Not a Revolutionary Change

On a similar note, the perception that it will cost more for the buyer now that they will pay a buyer’s agent commission is wrong. The offers will reflect that new fee obligation. Buyers will take it into consideration when calculating what they are going to need to pay at closing.

While buyers will take this into account, including you if you’re investing, many industry experts speculate there may be a fluctuation in commission rates. 

If you happen to be operating as an investor without an agent and are looking to purchase a property, you just gained a competitive edge. 

In the event you handle your entire side of the sale without an agent, there’s no need to pay any buyer agent cost. You are your own advocate.

If buyer agent commissions were previously holding you back, they are now just a part of regular business. 

Exciting New Opportunities in the Market

Now if there was ever a good time for such a bad rule, it is while we are in a buyers’ market.

Sellers are more motivated now with their properties staying an average of 60-90 days or more on the market. Some may even be willing to pay the buyer agent commission as an incentive. 

Remember in a buyers’ market, the buyer has the upper hand. 

That remains true even now. As I said earlier, if they need to pay a commission, that will be reflected in the offers they make. After all, those payments are all made at closing, and they may not need to spend a penny out of their pocket. 

As you can see, there are a few positive outcomes for such a rule, and adapting to it will depend on how you embrace this new industry standard and make it work for you.

Now, as a Foreclosure Professor, I can say that if you master the foreclosure process, you never have to worry about this ruling since commissions or fees were always paid by the buyer.

While it may seem like the industry is being turned on its head, this could be an unexpected opportunity for investors. With the standards being the same as in commercial, foreclosure, and other off-market real estate, now may be the time to explore cross-market potential for your investment holdings. 

If buyer agent commissions were previously holding you back, they are now just a part of regular business. 

It’s a good time to reconsider your investment niche and how to make this new industry change benefit your portfolio.

It may be nearly halfway through the year, but these new changes make it as good a time as ever to reassess your 2024 investing goals

Gabe Chocron

Licensed Realtor – CAM licensed.

Commercial Realtor – Property Manager

Foreclosure Professor

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Gabriel Chocron

Gabriel Chocron

Gabriel Chocron is a 20+ year seasoned real estate investor in county foreclosure and tax deed auctions. He teaches our students as the "Foreclosure Professor" at the PropertyOnion Academy. He is also a licensed Realtor, CAM licensed, Commercial Realtor and Property Manager.

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