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The National Association of Realtors is coming toward the end of a tumultuous year filled with buyer-broker commission lawsuits, sexual harassment allegations against former leadership, and a waning membership count as Realtors question the relevance of the 115-year-old organization.
On Thursday, NAR President Tracy Kasper addressed the potential fallout from buyer-broker commission lawsuits on CNBC’s “The Exchange,” including the risk of further disenfranchising already cost-burdened homebuyers and eroding the efficiency of the transaction process by pushing buyers toward portals.
Tracy Kasper | Credit: NAR
“Let’s talk about the [multiple listing service],” she said. “That is the vehicle by which all of us as brokers share information, which is good for the consumer. That way they don’t have to be disenfranchised. It’s not fragmented. They don’t have to go look here or go look there to see what’s there.”
“The MLS is also accurate. With a lot of those portals, you have them just grabbing data and trying to get the consumer to come to them,” she added. “But at the end of the day, our rules at NAR and with our MLS make sure that our data is accurate. We’re making sure that it’s transparent. We’re making sure that we have an efficient marketplace.”
Kasper said the widening information highway leads consumers to think they can “shotgun it” on their own; however, she said Realtors are still needed to help consumers wade through data and the unforeseen hurdles that can arise during a real estate transaction.
“It’s interesting because I hear that buyers don’t need a Realtor; they can find their home on the internet and they can go to the seller and they can get it,” she said. “But at the end of the day, even just that process of finding that home, I can walk in with them and I can say you qualify for your loan, but the house isn’t going to qualify for the loan.”
“The loans are particular and we can put that expertise to work for them before they go down a path of heartbreak,” she added. “They’ve paid for an appraisal just to find out that the house doesn’t qualify, right? So even with that one step, it’s important to have a Realtor.”
Kasper said the current real estate market is more complicated than ever, as homebuyers struggle with low inventory options, worsening affordability and topsy-turvy mortgage rates. Despite those headwinds, the NAR president and Berkshire Hathway HomeServices Silverhawk Realty broker-owner said she’s hopeful about the 2024 market.
“We are starting to feel [homebuyers] come back in,” she said of the uptick in mortgage applications as mortgage rates slide. “We’re tentative about that news, meaning we know that, while those buyers are coming in, the other thing we’re facing is that we still have a shortage of inventory.”
“We do not have enough houses to adequately take care of the demand that’s out there,” she added. “So we’re watching that [and] we’re going to be talking a lot to our sellers and helping them recognize opportunities in the market. Things should start churning again.”
Kasper said homebuilders hold the key to boosting inventory and pulling homebuyers off the sidelines with incentives, including the opportunity to buy down mortgage rates.
“So with regards to this market, kind of moving and churning, having that inventory come on [and] having the builders be successful [is] having the buyers now be successful,” she said. “We’re seeing such a normalization of the market, and it’s something that is very welcomed, to be honest. The market has only increased about 4 percent. Those are those single-digit increases we’ve been waiting for.”
Although the market is heading in the right direction now, Kasper said she fears that potential changes to the commission structure could stop market momentum as homebuyers begin weighing the cost of compensating a buyers’ agent.
“Look at our buyers. Our buyers are already, for the most part, struggling to come up with a downpayment,” she said. “They’re going to struggle to come up with closing costs in addition to that, and what we don’t want to see is the marginalization of those buyers … our first-time homebuyers, our first-generation homebuyers and even our middle and low-income buyers. We talked about our veteran buyers and we cannot disenfranchise them simply because they can’t out-of-pocket pay for professional representation.”
“What would happen if they come into the market on their own trying to navigate a complex situation and actually closing on the home?” she added. “And then what we also don’t want to see, and this would be the tragedy of all of it, is that those buyers just simply don’t come into the market.”
Kasper also reiterated the negotiable nature of the current commission structure and the benefit of a listing agent sharing a portion of their commission with a buyers’ agent.
“[Sellers] have had so many options in the market,” she said. “They’ve always had options in the market, whether it’s a flat fee, an hourly rate or even a percentage, and as we’ve talked with them and explained to them how we can help to bring more buyers into the market for them.”
The president noted the legal battle over commissions is far from over, and there hasn’t been an official change requiring homesellers and homebuyers to pay for their representation separately. In the meantime, she said NAR will continue to advocate for what’s best for consumers, including appealing the Sitzer|Burnett ruling.
“…We will continue to fight.”
