How the NAR legal settlement could impact local realtors, Asheville housing market

ASHEVILLE - Mired in legal battles over the real estate industry's commission structure, the National Association of Realtors announced last week that a new rule would prohibit the offer of broker compensation on home sales when listed through multiple listing services — a rule that some say would bolster consumer independence and shrink commissions for real estate agents.

Homebuyers and home sellers would instead pursue broker commission negotiation with real estate professionals, the result of a proposed $418 million settlement reported by USA TODAY March 15.

The offer of broker compensation is typically paid by the seller and split between the selling and buying agent, with a commission that lands usually around 5% to 6% of the final price. That broker compensation fee will no longer be included in the multiple listing service, or MLS.

The association does not set commission rates, NAR said in a March 19 news release, as they are negotiated between consumers and agents.

The settlement must get court approval, then if approved any changes would go into effect in mid-July, NAR said in a March 19 news release.

As for those in Asheville's real estate market, the rule shake-up has been met with some positive responses, while others suggest the new rule is not too much of a departure from the current market but might also impact the market in unforeseen ways.

Despite some "nervousness" in the agent community around the change, the Owner of Mosaic Community Lifestyle Realty Mike Figura feels the change may lead to better agents in the area, with transparency of broker commission being a "good thing for the public."

"What I think is gonna happen is that subpar agents, part-time agents and agents who don't really understand the business very well are going to have a hard time proving their value to buyers," Figura said.

A "good caliber" agent explains exactly what commission elements they are charging or asking for from homebuyers and sellers, a practice that some agents don't always provide with clarity, Figura said.

"That's what we should already be doing and is not necessarily happening across all firms and all agents in the market," Figura said. "Agents that aren't comfortable showing their value are going to have a hard time justifying it."

In a statement to local media, President of the Land of the Sky Association of Realtors Nick Hinton said the suggestion that the new rule would lead to the "slashing of commissions" would be misleading, as commissions "have always been negotiable."

"Broker compensation has always been decided between a real estate firm and its client, and that practice is not changing, either at the national or local level," Hinton said in a March 19 news release.

Hinton said North Carolina's laws have long been more in line with the rule change.

"North Carolina has had rules and practices in place for years that require disclosure of how representation in real estate transactions work, including language that clearly outlines how compensation works," Hinton said.

Work arounds and other possible other impacts

The change comes as home prices in the area have dramatically increased.

Buncombe County's median home sale price has increased by over 53% in the past few years, where 2023 ended with homes in the area settling at a median price of $485,000, according to reports compiled by the Asheville-based Mosaic Community Lifestyle Realty.

There was one worry among local realtors with regard to the settlement: How buyers might interact with listing agents.

Asheville Vice Mayor Sandra Kilgore, a real estate agent of 25 years, told the Citizen Times she thought some of the changes could be "good for the market at this time," but expressed concerns about the possible impacts it could have when buyers go directly to a listing agent instead of doing due diligence with a buying agent.

Kilgore said a few thousand dollars, especially with first-time homebuyers, often makes or breaks a deal.

Yet, she argued the fee to have a good buying agent could still be worth it, where these changes could pressure the market to utilize fewer buying agents in lower-to-middle-income transactions.

"They think they're saving $3,000, but they don't realize they don't have the knowledge to negotiate the price for the services or to make sure they get the things they need or are not being ripped off," Kilgore said of those going directly to listing agents. "They don't know that those things are more important than price sometimes."

Kilgore estimated that the number of agents could decrease as much as 50% as a result of the NAR settlement, with the remaining agents likely to be "more professional, more efficient agents."

"I think the more we improve the field of agents in the market, I think that's better for the consumer," Kilgore said.

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Will Hofmann is the Growth and Development Reporter for the Asheville Citizen Times, part of the USA Today Network. Got a tip? Email him at [email protected].

This article originally appeared on Asheville Citizen Times: Could the NAR legal settlement change Asheville's housing market?