NAR Settlement: Hype vs. Reality

What does the NAR settlement actually mean for buyers, sellers, and real estate agents? In this episode of Ladies Who List, Chicago real estate agents Hayley Westhoff and Anna Theofanous break down the National Association of Realtors settlement and separate fact from media-driven headlines.

They explain how the new buyer broker agreement works, why buyers are still paying their agent’s commission just structured differently, and how sellers continue to net the best results by offering buyer compensation. This episode clarifies common misconceptions around commission changes, unrepresented buyers, and whether real estate agents are still necessary in today’s market.

You will hear real examples from active transactions, including how commissions are negotiated into offers, why seller pricing often reflects buyer agent compensation, and why fears of buyers skipping agents have not materialized. Hayley and Anna also discuss how increased transparency has added professionalism to the industry and why experienced agents remain essential for navigating negotiations and protecting client interests.

If you are confused about the NAR settlement, buyer agent agreements, or how commission changes impact your next real estate transaction, this episode delivers a clear and practical explanation of what has actually changed and what has not.

Transcript

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(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to our podcast, Ladies Who List. I am your host, Haley Westhoff, and sitting next to me is the one and only, my co-host, Ana Theofanis. Today, we're diving into what everybody thought was going to be the industry's doomsday, the NAR settlement. But surprise, the sky did not fall. So grab your Starbucks and let's get into it. The NAR settlement did feel like doomsday to us. We were prepping as if we were gonna be selling homes out of the back of our car, and honestly, it just has not been that big of a change at all. It just changed the way we do paperwork a little bit, changed the process a bit, but I don't know about you, I felt like it was really not a big change. I totally agree. It was like we were bracing for this massive tsunami that really never came. I think the biggest difference has just been this buyer-broker agreement, which, full disclosure, I was so nervous about that. In my mind, I was like, oh my gosh, I have to have this buyer sign this contract before I even meet them in person, which seemed totally crazy to me. But as this has gone on, I've realized that that's how business is done, typically. We engage someone for a service, they tell us their compensation, we sign something or agree to it, and that's just how the business world works. So it hasn't been much of a change through the buyer's eyes, in my experience. Yeah, no, it felt like we were asking somebody to marry us on the first date, but I think what buyers don't understand is that you can cancel this contract at any time. So if we meet and we don't vibe on either party, they can cancel. So I think that's the beauty of it. I totally agree. And it goes both ways, right? I mean, what if a buyer shows up and they have total halitosis? Or we, like you said, just don't vibe. It's a two-way street and we wanna both make sure that we feel good about it. So I know you and I, as agents, have the caveat in the contract that they can cancel, and so can we. Not saying all agents have that, but that is something that we do as a team. Exactly. And we always say in a showing, you should be showing value two to three things that we show in our buyer in every showing, right? So if we go and you're working with a walking lockbox, you do not have to be stuck with that agent. So that should give you peace of mind. Just like dating, sometimes there's a great man and a great woman and they just don't vibe and it's not the right fit. So it's the same thing with an agent and a buyer relationship. And you go out a couple times and you decide if it's a good fit and that the buyer finds value in you and that it's a good partnership. Exactly. And once they see how much work we're putting in, we're navigating offers, we're negotiating the rollercoaster deals, we're playing detective with the listing agents, then they're like, okay, they appreciate our value and they get it. Totally. And I'm curious if you've gotten pushback on compensation and commission. I personally have not. You know, once we explain our value and they understand all the things we do, because let's be honest, we know that buyers think that we just open doors and write offers, which once we explain that and they realize all the things we do, like you just discussed, they really haven't pushed back on the compensation part. I have found that to be the exact same way. And especially when we're having our consultation and we're explaining to them, the biggest myth in this whole thing is that they have to write a check for their buyer's agent. And that's just not the case. There's a lot of other options. I think buyers hear this and they imagine themselves driving to the ATM or the bank and taking out this massive amount of money. And that's just not actually what is going on. I think it's important for buyers to really understand what their options are. One of those options is if a seller, which we'll talk about, but the sellers are still offering that buyer compensation. If they're not, for whatever reason, the buyer has this great option, which is essentially inflating the purchase price and asking for a closing credit. Exactly. So let's just say we're making an offer on a million dollar house and we can just build in that credit. So 25,000 extra credited back at closing. And that's really what we've been doing all along. It's always been built into the offer. And so really you're just bringing 5,000 additional dollars to the closing table and you're paying for your agent's commission through your mortgage, which- Exactly. I think that's such an important message. Buyers have always been paying their buyer's agent's commission. Exactly. It's just getting funneled differently. I have a really great example of this that actually just happened to me a couple of weeks ago. So I have a buyer and they are looking for a townhome in Lincoln Park, Lakeview, around the price point of 800 to 950. And I did some digging and I found something that was off market. It was through the seller directly. So I called that seller and he conveyed to me that the list price was $900,000 and he was not paying a buyer agent commission. So I took my buyers to see this property. Turns out they didn't like it. And two weeks later, I saw it go on the market for the price of 930 and it did have included the buyer agent commission. So that just goes to show that when they were paying the buyer agent commission, the price was inflated by around that amount. Exactly. Yeah, remember how we thought that there were gonna be all of these unrepresented buyers coming to our open houses and we were gonna get all of these rogue offers and it was just gonna be a total disaster? That is, I haven't seen a single unrepresented buyer. I know. That was probably the thing I was most scared about was all of these buyers were gonna freak out and not use an agent. But yeah, you're right. I haven't really seen that. I guess buyers have really been smarter than that. Yeah, they know that we're looking out for their best interest and they see our value. So that's huge. Let's talk about sellers. What are you seeing with sellers? I thought I was gonna get all this pushback with sellers, oh, I don't have to pay that commission. I mean, who wants to pay something that they don't have to pay? I feel in my experience, once I'm breaking that down and showing them why it makes sense and why they're gonna end up netting more money, that's what they're focusing on is that net number. Exactly. That's been the same experience on my end too. It's all about the net. So, and also it is the best way to advertise their listing and I think that they're gonna get the most buyer's eyes, which is ultimately what we're looking for. So I haven't gotten much pushback at all. Yeah. I think the part that I like the most on the seller's end is that the commission is decoupled now on the listing agreement. Something I have been asking for for years. Yeah, it's so nice because before it was just say 6% total and you didn't know how much of that was going to the buyer's agent and how much was being kept for the listing agent. So now we kind of have a great understanding and the sellers know exactly what they're offering and I think you have a great example of this. Oh, yes. Well, we all know and I will not name names, but there was an agent going around offering $1 of commission on the buyer broker side and we were all of course thinking, does the seller know that they're doing that? Right. Because that is such a bad look for the listing and obviously is not gonna motivate a buyer's agent to wanna sell that property. So this is a great addition and I think there's a lot more transparency. So I am very happy with this change. I know there's been a lot of talk about if the commission is actually going down and we have not seen that to be the case at all. And other markets have also seen this, right? Seattle actually ended up going up 0.15%. They've been doing this for a long time. Yes, the media made this out to be like, commissions are going down and that was the result of what this was and that's not what this was. And in fact, just like you mentioned, there's been markets operating like this for three, four years and statistically those commissions have either remained the same or in some cases gone up a little bit. In our market so far, I'm seeing them be the same but that is what we anticipate. And even with listings that aren't offering full commission, I personally, I've been working them into all of my offers and they've gotten accepted. I personally have not had any instances so far, knock on wood, where the seller did not agree to pay the commission that my buyer and I had worked out beforehand. Even if they were originally offering a little bit less, I have been able to negotiate that in and the seller has recognized that it's in their best interest and the buyer's best interest, so they've agreed to it. Exactly, that's been the case on my end. Ultimately, I feel like this has been really good for our industry and I think it's added such a layer of professionalism and now our buyers are working exclusively with us. How do you feel about it? I completely agree. I think a lot of unethical agents have given us a very bad reputation and fortunately, all of these new changes are gonna weed those agents out and the good agents and the ethical agents are gonna shine. So I am thrilled with all of this and I'm so happy that we had the opportunity to chat about this and hopefully educate the public because this is really a great change that everybody should be excited for. And that's a wrap. Thank you for joining Chicago Real Estate Unfiltered. Again, I am your host, Haley Westhoff. I'm Ana Theofanis. And please don't forget to subscribe or share this with anyone that might need a little reminder that the world is not ending.