I’m going to share my thoughts on the recent NAR Settlement and how it will likely affect homebuyers and sellers in Wisconsin, but I first need to clarify that my perspective does not represent Keller-Williams and I am not a legal professional. My insights stem from decades of working in the real estate business in Northeastern Wisconsin. My thoughts and opinions are my own.
Now that that’s out of the way, let’s talk about the settlement, Wisconsin’s existing Real Estate practices, the approach we use at Sandra Ranck Real Estate Collective, and the anticipated effects on homeowners, sellers, and buyers in Wisconsin.
What is the NAR Settlement?
The NAR settlement is a response to the Sitzer/Burnett trial in Missouri. Central to this settlement is the desire to clarify for all parties involved – sellers, buyers, and agents – who pays the commission and how it’s broken down.
As stated prior each state handles Real Estate and Real Estate transactions differently. Wisconsin is way ahead of the game and clearly states (in bold and in large font) who pays what commissions and that all commissions are negotiable.
Do All Agents Charge 6%?
Agent commissions have always been negotiable. Every single Real Estate Agent has their own type of business and service that they offer. There is a model for whatever you are looking for from full service to no service and everything in between. There is no such thing as a “Real Estate cartel” that controls the U.S. housing market. I have heard this term numerous times and shake my head. Home prices will likely not go down in response to the proposed changes (another huge misleading headline). Why? Because the market determines the pricing not, Real Estate Agents or their commissions. Whether a Seller decides to offer a buyer incentive or not the sale price of their home will not be higher or lower. It may in fact, raise home prices as an unintended consequence.
Don’t let the media scare you with misleading headlines and sensational stories. The Real Estate industry is complicated as there are SO many nuances and elements to it. It is so hyper-local and changes almost by the minute. Much of what is being discussed is already in place in many areas of the country.
As a home Buyer or Seller, you have and have always had plenty of options including selling on your own. For Sale by Owner (FISBO) numbers continue to decline. In 2023 7% of homes sold FISBO. Why the decline? The fast-paced market is not one in which most people can navigate to their advantage, the time element and the legal aspect.
The vast majority (93%) of Buyers/Sellers utilize agents because of their critical expertise and professional services. I could tell you countless stories where I saved (or made) my clients significantly more money than I earned in commission. Excellent Agents are worth their weight in gold because they can save you from making costly mistakes in the emotional, high-stakes world of home buying and selling. Some people lose sight of the real goal and try to save $10,000 and lose $100,000. Your home is most people’s most valuable asset. The majority of people understand putting that asset in the hands of a trusted advisor is a smart financial decision.
How Much Do Real Estate Agents Make?
Speaking of commissions, the average Real Estate Agent makes $46,014 a year (as of January 26, 2024) and the typical range is $44,951 to $58,528 annually. (Source: NAR)
Agents do not earn a penny until a home transaction is complete. In our office, our Buyer’s Agent puts in 80-100 hours of work for every Buyer, and our Seller’s Agents put in even more time – often, 100-120 hours have been invested before the house is even listed. This is not an absolute…Sometimes the time commitment is much more.
Most people have no idea of the reality of the Real Estate Agent world. I think all of this change and discussion is going to be healthy for the industry because now people will better understand what is involved. Which is A LOT.
How Wisconsin Handles Real Estate Transactions
Every state handles Real Estate transaction paperwork differently. Luckily for all of us, Wisconsin’s approach to Real Estate transactions has always been ahead of the curve!
Long before the discussions that led to the Sitzer/Bernett investigation, our state had implemented practices to establish greater clarity and transparency in agent commission payments within Real Estate transactions. This proactive stance means that, in many ways, Wisconsin’s real estate practices are already aligned with the changes being proposed on a national scale.
We will all adjust to the mandates that will come out in July but for the most part, we are way ahead of the changes. I am happy to be conducting Real Estate in Wisconsin!
How Sandra Ranck Real Estate Collective Handles Real Estate Transactions
Anticipating the shifts in the Real Estate landscape, Sandra Ranck Real Estate Collective made strategic changes five years ago. To ensure specialization and promote transparent representation, we delineated roles within our team: Some agents exclusively list homes, while others serve only buyers. We are the only Agency in our area that offers this level of dedicated representation. I could see this coming and wanted our clients to experience dedicated representation. It is important to me that they feel well taken care of and that assurance of only working for them is a big piece of that trust.
This clear division allows us to offer deep expertise and individual representation, instead of one Agent handling both buying and selling for clients. Did you know that the two leading causes for lawsuits against Sellers are unrepresented buyers and dual agency (same Agent for both Buyer and Seller)? I do. That was a big factor in that switch five years ago. It was bold then and brilliant today.
Impacts that Wisconsin Homebuyers and Sellers Will See
For the Wisconsin Real Estate market, the changes brought by the NAR settlement might not be as pronounced as in other states, given our existing standards for transparency.
However, the national shift toward eliminating MLS disclosures of Buyer Agent commissions, intended to prevent illegal steering, might introduce some complexities. This reduced transparency could potentially make the Real Estate process more challenging for first-time, lower-income buyers, and veterans. As I mentioned there will be many iterations of this process. Lending laws will likely adjust to help Buyers.
Buyers will now need to select their Agent and determine the compensation model they wish to pay. Very similar to what a Seller now does. Agents will also be able to negotiate what they are willing to work for. It is a two-way street. As in any industry, you will definitely get what you pay for.
Sellers will still be able to offer Buyer’s Agent compensation. This will become even more of an asset for Sellest to utilize in attracting the most amount of opportunity for their home.
Agents will not be able to list in the MLS what a Seller is willing to offer for compensation.
Still, Wisconsin’s proactive approach means that professional, well-educated, and highly skilled Agents are already well-equipped to navigate these changes, as they will continue to prioritize the interests and needs of every client on both sides of the Real Estate transaction.
I believe a lot of these changes will make the process more transparent and logical for the general public. I believe that the educated Agents with deep service options to offer their clients will continue to do a healthy robust business. We will likely see a decline in Agent count which is also not a bad thing. Being a successful professional Real Estate Agent is a serious full-time business, not a pastime.
Got Questions? Give Us a Call
While the NAR Settlement is certainly causing a lot of interest in our industry, our commitment to serving our communities and neighbors has not changed. We have always believed in the importance of transparency, expertise, and client-focused service – principles that will continue to guide our daily work.
Should you have any questions about how these changes might affect your Real Estate decisions, we encourage you to reach out to our office. Our team is here to empower you by offering clarity, support, and the high level of service you’ve come to expect from Sandra Ranck Real Estate Collective!
We have been here, we are here and we will be here for you. You can count on that!