The recent National Association of REALTORS® (NAR) settlement has brought significant changes to the real estate industry, impacting both home buyers and sellers. In the wake of the settlement, the volume of information shared can make it hard to determine what’s fact versus fiction.
Tennessee REALTORS® (TNR), one of Tennessee’s largest and most influential trade associations, is shedding light on some of the most common points of confusion to help Tennesee homebuyers navigate these latest changes with confidence. Here’s what they have to say about buyer representation, commission structures, and the role of Realtors in this new landscape.
Myth #1: With the new settlement, the role of a Realtor is less important.
No, not true! The expertise of a Realtor is even more valuable in this new, more flexible market. As commission structures evolve and buyer agreements gain importance, realtors provide valuable assistance in interpreting and implementing these changes. For Tennessee buyers and sellers, navigating complex transactions requires local knowledge, negotiation skills, and industry insights.
For example, in the fast-paced real estate markets of Nashville, Chattanooga, and Memphis, understanding local pricing trends and strategic negotiation is essential. Realtors bring market knowledge and can help clients avoid costly mistakes by guiding them through each step of the process, from pricing to closing. Their negotiation skills and market strategy make the process smoother and can lead to significant savings for buyers and sellers.
Myth #2: Buyer representation agreements are not that important and primarily benefit agents.
No, that’s not accurate. The NAR settlement has made buyer representation agreements even more critical for buyers. These agreements clearly outline services, fees, and obligations for agents and clients. Traditionally, many buyers assumed that sellers would cover the commission for both listing and buying agents. Now, these agreements make sure buyers understand the services they’re receiving and what they may owe.
In Tennessee, this means homebuyers and sellers can now review and discuss specific services their Realtor will provide—such as in-depth market analysis, marketing support, or handling negotiations—and ensure these services align with their goals. This transparency fosters a clearer understanding of the value an agent brings, encouraging customized services based on individual client needs.
Myth #3: Commission rates in real estate are fixed and cannot be changed.
That’s a misconception. The NAR settlement emphasizes that commission rates are negotiable, providing opportunities for both buyers and sellers to discuss and agree on compensation. In Tennessee, agents and clients can work out commission structures that better suit their needs, creating a more balanced transaction.
Sellers now have the option to negotiate listing agent fees, potentially lowering their overall costs, while buyers have the freedom to adjust the fees they pay to their own agents. In practical terms, a Tennessee buyer might negotiate a fee structure that minimizes costs, allowing for better budget management during the transaction. This change opens up more options for fair compensation discussions and also promotes transparency in the fee structures agents use.
Myth #4: The cooperative compensation system has been eliminated with the NAR settlement.
That’s misleading. While the settlement introduces changes, it retains the cooperative compensation system, where sellers offer a commission to the buyer’s agent. However, the terms of this cooperation are now more transparent and open for negotiation. This system ensures that buyers receive representation without being solely responsible for paying their agents upfront, while sellers benefit from a wider pool of potential buyers.
In Tennessee, where the cooperative compensation system remains, buyers still have access to representation without bearing the entire financial burden upfront. This system also benefits sellers by increasing the number of qualified buyers who can afford professional representation. With the new flexibility in commission terms, agents and clients can now have open discussions about how compensation will be structured, making the process more transparent for everyone involved.
Myth #5: The changes from the NAR settlement are theoretical and don’t impact the real-world market.
Actually, that’s incorrect. These changes offer real benefits in Tennessee’s booming real estate markets, such as Nashville and Memphis. The newfound flexibility around buyer representation agreements and commission negotiations empowers buyers and sellers to make more tailored choices. For instance, a Nashville homebuyer might work closely with their Realtor to negotiate specific services. At the same time, a seller in Chattanooga may be able to adjust the listing agent fee based on local market conditions.
Realtors help clients leverage these changes in high-growth areas by understanding local market dynamics and advising on how to maximize each transaction. That means customized real estate services will become more of the norm, giving Tennessee buyers and sellers more control and options.
Myth #6: Buyers and sellers can easily handle the legal and contractual aspects of a real estate transaction without a Realtor.
That’s not true. Real estate transactions involve complex legal and contractual requirements that Realtors are trained to navigate. The NAR settlement does not change the regulatory and legal nature of buying or selling a home, but it does underscore the importance of understanding each detail, especially now that buyer agreements and commissions are more individualized.
For example, Realtors in Tennessee ensure that all legal documents comply with state regulations and help clients understand contingencies, inspection processes, and closing requirements. With more transparency around agreements and terms, Realtors are essential for helping clients interpret legal language and avoid pitfalls that could delay or derail a transaction. Their knowledge of local laws and transaction nuances can help ensure a smooth, compliant process.
More Transparency and Empowerment in Real Estate
The NAR settlement marks a meaningful shift in the real estate landscape, giving buyers and sellers more control and insight into their transactions. By emphasizing buyer representation agreements, negotiable commission structures, and the importance of the cooperative system, the settlement encourages more transparency in the process, empowering consumers to confidently take charge of their real estate journeys.
