NAR Policy Changes Could Weed out Agents in Texas

16 August 2024

For all the profound changes to the National Association of Realtors’ policy set to take effect Saturday, Texas brokerages think they’re beyond ready.

“Commissions have always been negotiated, and they still will be. Some people are concerned; some people aren’t. I think if you do business the right way, it equals out anyways,” said Alex Perry, an agent at Allie Beth Allman and Associates, one of the top brokerages in Dallas.

The changes mean a little more work for brokers on the front end, as they’ll be required to negotiate commissions and put them in writing before showing homes. That could be just enough of a hassle to weed out agents who picked up their licenses during high times, and the state’s active agent count is expected to drop.

In Dallas, the pool of active agents spiked in early 2021, only to drop by over 30 percent the following year, from 5,470 active agents to 3,240 by the fourth quarter of 2022, demonstrating how fickle agent counts can be in choppier waters.

“Buyer agents are going to have a rough road, because they’re the ones that most of these new requirements are hitting,” said Ben Caballero, CEO of HomesUSA.com and the top-ranked broker for real estate sales transactions in the country. “Before, [buyers] could talk to an agent and go see a home without a lot of razzle dazzle, but now agents are being taught to sit them down and explain their value and tell them why they need them.”

Last October, home sellers won a class-action suit against the NAR, and the judge ruled that the way buyers agents’ commissions were displayed on multiple listing services artificially inflated agent compensation and prevented sellers from negotiating fees paid to buyer representatives. As part of the NAR’s $418 million settlement agreement, no MLS can display expected commissions and each buyer’s agent must have a written buyer representation agreement on compensation before showing homes.

Brokers will have to sell not just houses but also their value to clients.

However, that won’t actually solve the problem of transparency for homebuyers, some industry insiders say. Any agent prone to steering buyers to listings that maximize their payout could essentially do the same over the phone, before penning the buyer purchase agreement. And there is likely to be a scofflaw element, Caballero said.

“A lot of these rules, while they are well intended, I imagine they aren’t going to be enforceable. It’s going to be to some degree like it was back in prohibition days, when we had these laws, but a lot of people were going to ignore them, and as a result, a lot of people are going to be in violation,” he said.

But that steering idea — central to the Sitzer/Burnett case — is not as big of a problem in the internet era, some agents say. Buyers are more emboldened than ever, owing to online platforms that provide buyers with easy access to listings, making them more resistant to any strong-arming agent imposing narrow options.