As a real estate broker in New Jersey for over 20 years, I’m frequently asked, “Hey Marc, how’s the market?” to which my recent reply is, “Overall good, but we do have low inventory with many buyers looking If you are interested in selling your house or know someone who is, they can probably get a good price.”

Over the past few weeks, the conversations have been a bit different because of the national attention about the proposed real estate settlement. I have been asked to explain what is happening in the real estate world.

The National Association of Realtors (NAR) along with many Multiple Listing Services (MLS) and big brokerages have been dealing with lawsuits brought by buyers that claimed real estate commission rates are too high and buyers do not have the ability to choose their agent’s compensation.

Last month, NAR announced a proposed settlement agreement in the Sitzer-Burnett case that (if accepted by the judge and the DOJ) would take effect in July 2024. The media outlets have reported that this outcome will render transacting real estate almost free of broker charges, protect consumers and make home ownership more affordable. Factually, the proposed settlement does none of that.

So, what does this all mean for real estate agents? For sellers? For buyers?

Since this is a proposed settlement and nothing is finalized yet, there will probably be some changes. However, this is what we know as of today:

The expected timeline for these changes will likely take effect mid-July 2024.

Just like a seller signs a listing agreement with a broker for representation, the buyers will be required to sign the equivalent—a Buyer Representation Agreement. Brokers will be required to have their agents get this document signed before they can show any houses to that buyer. This agreement has been in practice already but has not been required until now.

The MLS system will remove the field where it states the offer for cooperative compensation to the buyer’s broker. This does not mean that sellers can’t offer compensation, but that the commission fee can’t be displayed on the MLS. Sellers can offer concessions to the buyer in a public comment field on the MLS listing if the concessions are not conditioned on paying the buyer’s agent commission.

As a practical matter, even though it cannot be called cooperative compensation, the amount of a seller’s concession can match the amount the seller would offer as cooperative compensation as part of the contract negotiations.

Nothing in NAR’s settlement prohibits sellers or listing brokers from making offers of cooperative compensation to buyer brokers off the MLS (ex. by email, newsletter, calls, texts, etc.). Before listing brokers can offer compensation to buyer brokers, they must disclose and obtain seller approval for any offer in conspicuous language that stands out and is clearly visible.

Although MLSs are prohibited from publishing cooperative compensation offers, the proposed settlement allows brokerages and their agents to publish seller-approved cooperative compensation offers for their own listings only on their own websites.

Agents must disclose in listing agreements, buyer representation agreements and pre-closing disclosures that broker commissions are not set by law and are fully negotiable. NAR must require Realtor boards and MLSs to include these disclosures in any and all agreements they publish.

As a real estate professional for many years, I have volunteered to participate on many Realtor boards, the NJMLS and committees,both local and National. I have had the privilege of working with realtors who represent the public in what is likely their largest investment in their lifetime. I have seen most Realtors operate under an appropriate code of conduct—always going above and beyond to help their buyers and sellers make sure that everything is taken care of before, during and after the transaction.

Personally, I still get calls today (as many agents do) from past clients with random questions or advice on something related to their house or their community. It’s always a pleasure to hear from them and I am always happy to help. The brokerage community has always adapted to best represent buyers and sellers whenever there is a shift in the real estate market.

Over the coming weeks and months, this will all become clearer to the entire real estate community and to the consumers for whom we tirelessly advocate. In the coming weeks, I will write to address how these new rules will protect consumers, and if any of this will make homeownership more affordable.

It’s important that, when choosing an agent to work with, you choose one who is educated and up-to-date on the laws and best practices.

Our Links Team will always be available with the most up-to-date information and we welcome any of your questions. We are all here to provide the best services to the communities that we serve. Please feel free to contact any of us for more information on the above, and we look forward to advocating for you, as well as your friends’ and family’s real estate needs.

Marc Stein is a Realtor and the CEO of Links Residential, a top New Jersey real estate team brokered by EXP Realty. He is a coach, trainer, speaker and leader in the national real estate community. He can be reached at (201) 522-9733 and at [email protected].