In the midst of recent lawsuits shaking up the real estate world, there's a whirlwind of myths and misinformation floating around, even in mainstream media. Some folks think it’s all about attacking how much real estate agents earn. Let’s set the record straight and dive into what these changes truly mean, separating fact from fiction.

Myth: It's All About Cutting Agents' Pay

The Big Misunderstanding: A lot of chatter suggests these lawsuits and rule changes aim to slash what agents make. That’s not the case. This isn’t about whether agents deserve their commissions. Like any profession, from lawyers to accountants, getting paid for one's work is expected and fair.

There are those, however, who believe agents get paid too much, and there have been articles spurring that suggest buyers and sellers will opt to hiring an attorney to help with their real estate transactions. An attorney is not likely to help with listing preparation, front the marketing expenses, or promote open houses or broker tours. Nor will they spend time calling exclusive contacts, fellow agents, and leads who might be interested in the property. For buyers, an attorney in most cases is not going to show homes, give area expertise, negotiate with sellers, schedule inspections, and so on.

The purchase and sale of real estate can be a very emotional journey encompassed by a large process that is difficult for most buyers and sellers to take on theirselves. Agents typically strive to ease these concerns and find solutions to challenges that can occur in a real estate transaction. These types of services cannot be replaced by an attorney or any other type of professional in the real estate space. Most experienced agents have run into situations where deals were done without an agent, and have seen how disastrous this can be to property owners and their families. Real estate can be the largest assets held by individuals, so the care and expertise in handling these transactions is crucial to the process.

The Reality: These lawsuits are focused on the National Association of Realtors® (NAR) policy, where buyer agent compensation is displayed on the MLS (Multiple Listing Service). Those involved in the lawsuits assume that agents are more likely to show homes with higher commissions offered, creating unfair competition. In retrospect, refusing to show a desirable property to a client based on commissions offered could be a career killer for any agent. If the compensation offered is less than agreed upon in the buyer representation agreement, agents will write the request for additional compensation into the offer or accept the lesser amount in negotiations.

Why the Confusion?

The confusion stems from a misunderstanding of how real estate transactions work. Commissions are a big part of these transactions, and changes in how they’re negotiated or displayed can sound like it's directly affecting agents' incomes. However, the heart of the issue is about the process and transparency of these transactions.

The Truth Behind the Changes

For Buyers and Sellers: The updates aim to give both buyers and sellers more control and clarity over the transaction process. By moving negotiations into private contracts, both parties can have open discussions about commissions without preset expectations.

Busting the Myths

• Myth: Agents will be forced to take a pay cut.
• Reality: Agents can still negotiate their commissions based on the value they provide.
• Myth: This will make real estate transactions more complicated.
• Reality: While there may be a learning curve, the goal is to make the details of agent compensation more straightforward and negotiated directly between the involved parties. The agent's work may be more detailed and require more time in negotiations.
• Myth: Buyers will now have to pay their agent’s commission directly.
• Reality: Buyers might see a change in how their agent’s fee is negotiated and included in the transaction, but this doesn’t necessarily mean they’ll be paying more out of pocket. It is not likely sellers will refuse to negotiate buyer agent compensation, as they rely heavily on buyer's agents to sell their properties.

Moving Forward

Real estate brokering is a long survived profession and a tradition in this country. If there were no value in it, it would not have survived this long - about 124 years now. It has survived The Depression, multiple regulation changes, The Great Recession, the advent of the Internet, i-buying, and now it is adapting to Artificial Intelligence. In addition to agents helping their local communities, they now have the capability of helping people around the world faster and more efficiently, yet with the refined expertise that can only be provided by a trained professional. Approximately 27 million people move each year in the United States alone.

Additionally, there is a new generation emerging that is more focused on the quality of life and personal endeavors. These folks do not desire to spend their own time handling the buying, selling, or transfer of real estate. These could be the largest purchases and assets in their lives and, even with all of the available information out there at their fingertips, numerous surveys show that they value the guidance of an expert.

As the real estate industry adapts to these changes, it’s important for everyone—agents, buyers, and sellers—to approach these developments with an open mind. Education and clear communication will be key in debunking myths and easing the transition into this new landscape.

Remember, the goal of these changes is to foster a more transparent, fair, and understandable real estate market. By cutting through the myths and misinformation, we can appreciate the true intent behind these lawsuits and rule changes, ensuring that all parties involved in a real estate transaction come away feeling informed and fairly treated.

Feel free to drop me a line at desiree.jones@exprealty.com if you are a buyer or seller concerned about these changes and want to learn more.