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What You Need to Know About the NAR Settlement

Tuesday, May 7, 2024   /   by Nick Waldner

What You Need to Know About the NAR Settlement

The NAR settlement will affect your transaction and net profit.

Recently, there's been a lot of buzz around the NAR settlement and its potential impact on the real estate industry. Let's break it down.

First things first, contrary to some claims, President Biden's announcement that everyone will save $10,000 when buying real estate isn't accurate. The reality is that this settlement is poised to shake up how real estate commissions work.

In the past, when purchasing a property, buyers had to consider several hefty costs: the down payment, lender fees, title fees, and realtor fees. These fees often amounted to a substantial out-of-pocket expense for buyers. Sellers would sweeten the deal by offering to cover a portion of these costs to attract buyers, effectively reducing the buyer's cash burden.

However, this practice evolved into a system where the seller paid commissions on both the buying and selling side. This meant buyers could enter transactions with less cash upfront. But now, with the decoupling of commissions, things are shifting.

"This settlement is poised to shake up how real estate commissions work."

You might wonder, "Can I sell my house without offering a buyer's agent commission?" Absolutely, you can. In fact, you've always had this option. The rationale behind offering incentives to buyers, like covering their fees, is simple: it broadens your buyer pool. In today's competitive market, more buyers mean increased demand and potentially higher offers.

Consider this: if you attract 20 interested buyers instead of just five by offering incentives, you're likely to receive multiple competitive offers, ultimately driving up your sale price. The key takeaway here is to focus on your net profit.

For example, let's say you're selling your house for $500,000. If one buyer offers $500,000 with no incentives, and another offers $520,000 but needs $15,000 in assistance with costs, the latter deal nets you $505,000. In this scenario, offering an incentive results in a higher net profit.

Navigating these changes can be confusing, but remember, what matters most is maximizing your net profit. If you're curious about what you could potentially net from selling your property in this evolving market, feel free to reach out.

Understanding these shifts can empower you to make informed decisions when buying or selling real estate. The landscape is changing, and it's important to stay informed to capitalize on opportunities and maximize returns. If you have any questions, don’t hesitate to call or email me. I look forward to hearing from you.

  real estate