Carolinas and Commissions

The entire real estate industry in the United States was flipped on its head last Friday when NAR (National Association of Realtors) settled a class action lawsuit to the tune of $418 million dollars.  

This anti-trust lawsuit has been ongoing and late last year multiple large brokerages and real estate holding companies settled for a combined 1.8 billion dollars.  Despite those settlements, NAR was the biggest target to fall  as the representative body of the entire industry.  While this is a landmark settlement it could have been much more significant as plaintiffs were pursuing $5.4 billion from the organization. There is still one large organization fighting this lawsuit; HomeServices of America, a unit of Warren Buffett's Berkshire Hathaway; the plaintiffs are seeking 4.7 billion from his organization.  

For this week: 
Carolina on My Mind: Unlike other states, both North Carolina and South Carolina have specific buyer and seller agreements that clearly outline compensation and who the responsible party is for those fees. 

  • In both NC and SC the agency agreements state it is the responsibility of the party being represented to compensate their agent, but this isn't the case or construct in other states.  One of the biggest changes coming from the settlement is that commissions will no longer be posted on the MLS.  This will require very clear discussions on the front-end with both sellers and buyers, and I personally believe these changes are positive for consumers and agents that operate transparently and professionally.  

True or False?:  The 6% commission on buying and selling a home is gone.   

  •  This a headline from CNN and was one of the first to hit the press upon the announcement of the NAR settlement. Not surprising the media wasted no time generating clickbait by adding fuel to assumptions and fanning flames of misinformation.  This is completely false because commissions have never been fixed at 6% and have always been negotiable.  Real estate commissions will no longer be visible on the MLS, but that doesn't mean they won't exist.  The settlement doesn't set a floor or ceiling on any fees, rates, commissions or however a firm or broker and a client choose to engage.  We will continue to see a free and open market, and very likely evolving service lines and business and fee models.

Winner-Winner Chicken Dinner: The Winners are the consumer!  They will experience an industry that has a low barrier to entry and traditionally adverse to change now forced to evolve with talent and services that elevate the client experience.

  • In Charlotte, NC the top 500 agents represented just over 85% of the transactions in 2023.  For every negative story or situation we've heard about there are plenty of positive results and outcomes, and in my experience there are extremely talented individuals that want to move the industry and the client experience forward.  There is an expectation that this settlement and the standard of requirements it carries will raise the bar and we'll see many mid and low level agents leave the industry.  I can tell you I have done many deals with sharp and professional agents and many with agents of a lower acumen...having the latter exit stage left will help everyone win. 

Fun Fact: The population in Mecklenburg County no longer holds the top spot as the largest county in NC.  Both counties have a population over 1.1M people, but Wake County which includes Raleigh and Cary now takes the top spot.  Wake’s total land area is 857 square miles, compared to Mecklenburg’s 546.

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