A proposed settlement of a lawsuit by the National Association of Realtors with home sellers clarifying sale details has drawn a lot of attention. The President of the Iowa Association of Realtors Shaner Magalhaes says the settlement will provide more clarity to transactions.
For example, there has always been a required disclosure statement for the seller, and the settlement would now require one for the buyer. “To just make it absolutely clear when I sit down with the buyer. I say, Okay, let’s go over this form. Here’s my responsibilities to you. Here’s what I expect out of you in the process. And here’s how the compensation will work,” he says.
Another issue in the settlement is the practice of the agents for the seller and buyer sharing the commission on a sale. Magalhaes says that this is done to bring in more potential buyers, and some reports have wrongly said that the practice will go away. “And that is absolutely not part of the settlement whatsoever. The settlement doesn’t say that they can’t continue to do that, it just has to be completely transparent and disclosed about how that system works,” he says. Magalhaes says the settlement will not lead to a cap on the amount of commission for realtors.
“I mean, that’s been in almost every headline I’ve seen is, you know, this notion that NAR can no longer require that agents charge six percent listing commission, whatever, that’s never been a thing,” he says. “I mean, NAR doesn’t require anything, you know, any agent can negotiate whatever commission with the seller that they think is reasonable.” Magalhaes says this covers anyone who is licensed to sell a home, not just those are part of the Realtors Association.
He says an update to Iowa’s real estate law to clarify these issues has passed the Iowa House and Senate, and is waiting for the governor’s signature. Magalhaes says
clearing up these issues is a good thing. “Codifying this and having the settlement, assuming it’s actually approved by the court, will really force real estate licensees and realtors to be as clear as possible about how that whole system works So ultimately it will be good for the consumer,” he says. He says it is likely the N-A-R settlement will be approved and completed by July.