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It’s been a year since the National Association of REALTORS® announced the Sitzer/Burnett settlement, which resulted in real estate practice changes that were implemented last August, and real estate agents and brokers are assessing the impact to their business. Some were concerned at the outset that the requirements to use written buyer agreements and communicate offers of compensation off the MLS may be difficult to adjust to. But in the time since, many have shared the value these rules bring to their client relationships.
“The major change from the settlement is that we had to get better at articulating our value,” says Bill Lublin, ABR, CRS, CEO of Century 21 Advantage Gold in Philadelphia. “And for customers, they’ve ended up getting better explanations of the [real estate] process.”
NAR has been sharing a series of Consumer Guides, updated weekly at facts.realtor, that members can share with their clients to explain the steps of the homebuying and selling process and how the practice changes impact the transaction. NAR’s legal team also has a special “Settlement Facts” video series to help members comply with the practice changes.
Now that the industry has settled into the changes, agents and brokers reflect on how their business has shifted.
More Committed Home Buyers
Amy Kong, ABR, CIPS, co-founder of Trust Real Estate in San Bruno, Calif., remembers a few years ago, when she wasn’t using written buyer agreements. Kong was working with a buyer who didn’t speak English; the buyer tapped a button on the Zillow website to view a home with another agent, not fully understanding what was happening.
The buyer ended up closing on a transaction with the other agent.
Kong says she realizes now that she was at a competitive disadvantage by not using written buyer agreements, which detail the services the agent will provide and how the agent will be compensated. “I had to learn the hard way. The [practice changes] give us the opportunity to sell our value [to the buyer], and then also find someone who is sincere in committing to us.”
Prior to the NAR settlement, more than a dozen states already required the use of written buyer agreements in real estate transactions. For real estate pros in other states, learning to negotiate written buyer agreements with clients is much like dealing with any real estate negotiation.
“Buyers are always hesitant to sign anything,” but they tend to be at ease after reviewing what the contract means, says Lublin, whose state of Pennsylvania required written buyer agreements prior to the practice changes. “It has forced us to learn how to better articulate our value and to raise it earlier in the transaction.”
Share NAR’s Consumer Guides covering written buyer agreements and negotiating written buyer agreements to prepare your clients for what to expect from your business relationship.
Reprioritizing Buyer Consultations
While most agents conduct formal listing presentations with home sellers, more brokerages are formalizing buyer presentation packages as well. For example, since the settlement, Kong’s office has added a one-hour consultation with buyers before touring homes together.
“We spell out all the work we will be doing for them, just like a restaurant menu,” she says. “We want them to understand that we do more than just open the door and write up a contract. Also, just like our listing presentations, we input the REALTOR® brand and include how we’re representing them by following the Code of Ethics—so they know we run our business in a very serious way.”
Nicola “Nick” Esposito, SRS, an agent with Gilsenan & Company in Ridgewood, N.J., says buyer consultations provide an opportunity to review the buyer rep agreement in detail and “stimulate conversations over what agency is and what my fiduciary duty is to them as their agent. A lot of times my clients will tell me they didn’t know about fiduciary or certain aspects of a transaction.”
One way to help clients understand everything you do for them is to share a handout on “179 Ways Agents Who Are REALTORS® Are Worth Every Penny of Their Compensation.”
Buyer consultations also are an opportunity to review expectations about your role as the agent and how the transaction will be conducted. “I want to make sure they know what my responsibilities are—and what theirs are—by having these upfront conversations,” says Dallison Veach, ABR, CRS, broker-owner of Veach Realty Group in Springfield, Va.
REALTOR® Value on Display
Agents and REALTOR® associations have seized the opportunity in the last year to address confusion about NAR’s settlement while also amplifying the value of what they do. Veach joined nearly 1,000 other NAR members who became part of NAR’s surrogate program, serving as resources to national and local media to explain the practice changes, market trends and the role of real estate professionals. Over the last year, surrogates have had thousands of media placements in print, online and on air, and they’ve generated even more social media posts on the topic.
“I welcomed the opportunity to take control of our narrative and counter the misconceptions and just plain wrong information spread in the media,” Veach says. She takes particular exception to media reports that misled the public to believe home values would drastically be impacted by agent commissions. (They haven’t.) “We’re getting better than we were before at talking about everything we do. But I do think, as an industry, we still have a lot more work to do to get across the added value we provide.”
And NAR’s new consumer advertising campaign, “Right by you,” aims to do just that.
The national campaign, which launched recently, dramatizes how agents protect inexperienced consumers and reinforces the essential role agents who are REALTORS® play in helping Americans achieve property ownership.
Upfront Compensation Discussions
Compensation has long been negotiable, so discussing it with clients should be a familiar practice. As a result of the settlement, offers of compensation, if made, can no longer be shared on the MLS. Instead, offers of compensation can be communicated only off-MLS. Share NAR’s Consumer Guide on offers of compensation to help your clients understand their options.
“It’s not that we weren’t having these conversations with clients before, but we weren’t having them from the outset,” Esposito says. “Now these conversations are getting encompassed into our value proposition, and the buyer knows what our duties are to them as our client. They better understand how we get paid and the different ways it can come from the buyer or seller.”
Veach says written buyer agreements are a communication avenue to have these upfront conversations with clients. While discussing her services, “from the get-go, we also talk about how I’m going to be paid, when and how we could even structure that into the offer,” Veach says.
Commissions Enter More Buyer, Seller Negotiations
The settlement has shifted negotiations slightly, with offers of compensation coming more into play, real estate pros say.
Leigh York, ABR, GRI, a broker-associate at Century 21 Judge Fite Co. in Fort Worth, Texas, presents the compensation options to her clients before they ever submit an offer on a property. Some buyers want York’s real estate fee to be structured into their written offer for a home; others ask her to negotiate compensation with the seller’s agent before submitting an offer. York has also had buyers opt to pay her fee out of their own pocket so they can focus on negotiating other items, such as the home price.
Veach has closed 35 transactions in the past year, and she says only once did a seller refuse to pay the fee for the buyer’s agent. However, in that same transaction, the seller agreed to a $15,000 price reduction on the home.
“My client was thrilled because they got a lower price on the home than they thought they would get,” Veach says, adding that it’s “an interesting phenomenon. We’re still in a seller’s market, and we still don’t have enough inventory—yet sellers are still paying the [buyer’s agent] fee. It speaks to the value we bring as agents.”
For smoother negotiations, share NAR’s one-page Consumer Guides on various aspects of the real estate transaction, including:
- Mortgages and financing
- Home inspections
- Appraisals
- Homeowners insurance
- Escrow and earnest money
- Property taxes
Value-Added Services and Training
Since the settlement, many agents, brokerages and REALTOR® associations have become ultra-focused on education. Training and preparation for the practice changes appears to have paid off: About 90% of nearly 300 agents surveyed last August, when the practice changes went into effect, said they felt “very well prepared” or “somewhat prepared,” according to the Real Brokerage August 2024 Agent Survey.
NAR’s Center for REALTOR® Development offered the Accredited Buyer’s Representative (ABR®) designation course at no cost to members in 2024, which more than 100,000 took advantage of. The course instructs agents on how to explain written buyer agreements, articulate their value and improve their working relationships with home buyers. At Kong’s brokerage, every agent took advantage of the ABR® course offering last year, and she urged them to promote the designation in their home buyer presentation package.
York appreciates how the settlement and subsequent training opportunities have served as an opportunity for agents “to re-read and re-familiarize ourselves with the contracts that we’re asking consumers to sign.”
The practice changes motivated Veach to explore learning more about loan and grant programs geared toward first-time and low-income home buyers because she was concerned that they would struggle to pay the buyer’s agent fee. “But my fear over that really hasn’t transpired,” Veach says. “I think we may have feared the sky was falling, but we’re still selling; it’s business as usual. Agents who have the training, who are good at what they do and who have strong relationships with their clients are finding positive changes.”
To help build trust with new clients from the start, share NAR’s Consumer Guides on 10 question to ask a buyer’s agent and 10 questions to ask a seller’s agent.
