There has been some buzz about the National Association of Realtors® (NAR) settling the Sitzer-Burnett class action lawsuit. This whole ordeal led to quite a bit of misinformation swirling around in the media. We dove into several different interviews and articles to learn more about what this settlement really means, especially for folks here in the Denver Metro Area. One of the interviews we like the most is the 9 News interview. We feel they did a decent job with balancing the story, which you can check out here.
Now, let's unpack what all this means for the Denver real estate scene.
Essentially, a group of sellers got together and filed a class-action lawsuit, claiming that various real estate brokerages, along with NAR, were fixing prices on sales commissions in real estate deals. It's worth noting that the settlement still needs court approval, which could take a few months.
The truth is, buyers and sellers have always had options when it comes to how they want to handle real estate transactions. Whether it's going the For Sale by Owner (FSBO) route, working with limited-service companies, or going full-service with brokers, there have always been choices, and that will never change. It’s not a one size fits all type of business.
Now, what's in this settlement?
Key components include:
- Release of liability
- Moving compensation offers off the MLS
- Requiring written agreements for MLS participants acting for buyers
- Settlement payment
- The National Association of Realtors (NAR) steadfastly maintains its denial of any wrongdoing.
- Changes set to kick in around mid-July 2024
But how does removing compensation offers from the MLS affect buying and selling homes?
This entails the removal of any collaborative agreements formerly cataloged within the MLS system. However, rest assured, sellers will not abruptly cease offering commissions to buyer agents, nor will buyers inevitably bear the burden of their broker's fees. While it remains premature to forecast the precise repercussions of this settlement on the industry, significant transformations are anticipated to unfold gradually over the course of several years. We believe sellers will still find it beneficial to offer a cooperative commission to brokers bringing in buyers. These buyers will have their own representatives to guide them through the process alongside the listing agent. And remember, buyers will always have the freedom to choose which homes they want to view.
Now, about those written representation agreements...
MLS members will need to have written agreements with their buyer's agents, clarifying how their agent gets paid. Thankfully, Colorado is already ahead of the game in this regard, with some of the most advanced contracts in the country and they have had them for decades.
As for timing, these changes are set to roll out around mid-July 2024. It's still early days, and we'll learn more about how this will affect our local market as time goes on, but we don't feel much will change in Colorado. One thing we do know will change is is you wont be able to just call up any Realtor to go show you a home. You will now be required to sign an agreement with a Realtor before ever getting into your car to go tour homes.
Will these developments affect how The Modglin Collection operates?
No, our approach has remained consistent since the inception of our business, and the concept of buyer representation agreements is familiar territory for us. We entered the real estate industry during a period characterized by short sales and foreclosures, times when banks or sellers typically did not cover commission costs. This necessitated our transparency with buyers about potential commission responsibilities and our commitment to endeavoring to negotiate commission payments with sellers or banks. This approach will continue to guide our operations.
Moreover, as brokers with expertise in commercial real estate, we are accustomed to the practice of commissions not being listed or promised in commercial MLS listings. This has prepared us well for engaging in and negotiating commission arrangements.
If you're in the Denver Metro Area and need assistance with property matters, feel free to reach out to us! We’re here to help and discuss this further if you have any other questions.
