The sky, it doth not falleth. – Someone, probably, circa 2024.

You may or may not have heard that significant changes came to the real estate industry nationwide in the last week. I wrote about this in March (holy cow, the last time I wrote was in March!), and as I reread that, I can sense the uncertainty and confusion that was running through my head at the time. Now that I’ve had the benefit of months of study, I’m far less uncertain, far less confused, and more assured than ever that this is a good thing for all involved.

• Sellers and sellers agents cannot directly determine what a buyer agent is compensated;
• A buyer agent has to have a buyer broker agreement signed before opening a door;
• We can’t talk about Bruno compensation within MLS.

So now what? What’s it mean?

I’ll look a lot more sage with the benefit of hindsight, so my answer in 18 months might be a little different than it is today, but I don’t think it will by much. Going forward, here’s what’s likely to change:

• An agent won’t be able to see in MLS what a seller is offering in terms of concessions or compensation;
• If a buyer is working with an inexperienced real estate agent, they may find it difficult to buy without significant cash reserves to pay their agent;
• There is no standard “set” commission (and to the talking heads, there never was);
• No, this is not going to lower home prices.

On that last point I’m not being flippant, it’s just the nature of supply and demand here in the New River Valley real estate market. We continue to have an under supply of homes across most price points, and while some of that supply has improved as our local universities have brought more housing back online, the demand has not quite eased. The New River Valley is still a great place to live!

But back to the issue at hand. As a home seller, you may read news of this settlement and think “great, I don’t have to pay another agent other than my own.” Technically that’s always been the case, although it’s generally been an accepted practice across most markets in the United States that a listing firm and a buyer firm “cooperate” with each other when it comes to the distribution of any compensation. It makes sense – a listing agent takes a listing where the seller sets the fee that will be paid, and then the buyer agent sources the buyer, brings the offer, and shepherds the transaction to the finish line. While the steps in a sale haven’t changed, the methods and disclosure of how the parties pay their respective listing and buyer agents has changed.

And what of buyers? Truthfully, while the spirit of the settlement is to provide a transparent marketplace, I’d suggest that it actually does the opposite for buyers. There’s nothing to prevent a buyer from going directly to a listing agent to see a home and creating a single-agent dual agency situation, and there never was – although we feel so strongly against dual agency at Nest that we’ve built an entire brokerage around avoiding it. But buyers, and in particular the ones who may not have the cash reserves to put down significant down payments along with closing costs, may be unnecessarily priced out if they find themselves in a multiple offer situation.

I often think of a pendulum, swinging from one extreme to another. While it may initially swing wildly from one side to another, it eventually settles into a steady and predictable rhythm. And that’s what will happen here. There may be opportunities for new business models that we just don’t yet foresee, but homes will still need to be sold, and buyers will still want to buy them.

At Nest, we’ve been discussing these potential changes for every bit of a year or more. We didn’t always know what the outcome was likely to be, but we knew things were going to change, and I know that every Nest agent is prepared and capable of navigating the waters ahead for their clients. Unfortunately, not everyone seems to be quite so ready, and ultimately that hurts everyone.

Want to talk more? Let’s chat about it.