Regulatory Analysts Weigh In on the Future

As the real estate brokerage industry lays out its plans, allied groups have a role to play in helping influence regulators on needed change.

In meetings, education sessions and hallways, the dominating conversation among attendees at the REALTORS® Legislative Meetings in Washington, D.C., is how to prepare for the practice changes that will take effect Aug. 17.

At the Regulatory Issues Forum on Monday, attendees had a chance to hear some outside perspective. A panel of experts in public policy and finance talked about whether any regulatory changes might result from the National Association of REALTORS®’ proposed settlement agreement, which would end litigation of claims brought on behalf of home sellers related to broker commissions, and they underscored the importance of being proactive.

“The industry needs to lay out a roadmap now,” said Ted Tozer, nonresident fellow at the Urban Institute’s Housing Finance Policy Center.

Acting now is what the Mortgage Bankers Association is doing, said Matt Jones, the group’s associate vice president for government housing finance. MBA and other trade associations have joined NAR in carrying that message forward to the Department of Veterans Affairs, whose current rules prohibit VA buyers from paying a real estate agent.

“[MBA has] stressed the vet should be able to pay out a reasonable commission that aligns with every other financing program,” Jones said. “This isn’t something the VA should wait until July to address. Otherwise, in a marketplace where buyers are expected to pay [the agent], they’ll lose the deal.”

Under the terms of the proposed settlement, buyer brokers will still be able to negotiate with listing brokers regarding compensation paid by the seller or offered through the listing broker. Buyers will negotiate buyer broker compensation and execute a written buyer agreement. The buyer may negotiate concessions or seller payment of buyer broker compensation as part of an offer to purchase. The problem with the VA rule is that it puts veteran buyers at a disadvantage when they’re competing against buyers who have the ability to pay their agent or have more flexibility on seller concessions.

The panel also discussed the educational push that’s needed around buyer brokerage.

Tozer recommended that “the industry put money into public service announcements about how important buyer brokers are,” so buyers don’t forgo representation. “Education is critical to home buyers,” he said.

At the real estate practitioner level, “buyer agents have to create a market for themselves,” Tozer said. “Buyer agents have to sell it, just like listing brokers [showed] sellers the need for a listing agent.”

There’s data to support your value proposition, noted Vanessa Perry, interim dean and professor of marketing, strategic management and public policy at George Washington University’s School of Business. She cited NAR’s “2023 Profile of Home Buyers and Sellers,” in which 82% of first-time buyers said an agent helped them understand the process and 49% said the agent helped them negotiate better sales contract terms.

“Make a marketing case for the value you bring to the table,” Tozer underscored. “And be an advocate for the buyer, even before they sign an agreement. Buyers will catch on.”

Source: REALTOR® Magazine