The NAR Settlement Explained Insights from AI and Fred Glick of Arrivva

Drew Thomas Hendricks00:00:00

Welcome to another episode of We Fixed Real Estate. Today, Fred and I are, we’re still delving deep into this NotebookLM. And Fred’s got a, Fred has downloaded or he’s uploaded the entire NAR settlement into this NotebookLM.

And our favorite AI podcast guests are going to dissect it for us. Fred, why don’t you tell us a little more about what’s about to happen here, if you didn’t listen last week.

Fred Glick00:00:24

Yeah, I hope you enjoyed it, and we’re working on more. I’m loving this. You don’t need to listen to me, yak.

They really talk in the type of language where you can really understand it. It’s very comprehensive, but it’s very explainable and simple. Props to Sergey Brin, man. I mean, this is his baby was the AI.

He came back and jumped right in on it. And there’s been good and bad, do we all remember Bard is, you know, too soon to hit on his Bard’s ex? I mean, you know, would be the joke. It’s a joke. But then, you know, they got Gemini, we’re using it in Google Meet. Hit one button, it summarizes records, transcribes, it does everything.

So, you know, it’s a nice clean product. Every AI is going gonna do differently. Anyway, I’m way off-topic here. So what I did is I took the settlement from the National Association of Realtors and the plaintiffs and stitch case.

Drew Thomas Hendricks00:01:24

The entire 67-page settlement.

Fred Glick00:01:26

That’s all I did, you’re gonna hear what’s coming up, so enjoy it and hopefully it’ll answer your questions. I know that’s one little thing. It’s since it’s been down the road a little bit and we’ve seen the consequences of it, that really won’t be in there. So this is really kind of would have been great six weeks ago.

Drew Thomas Hendricks00:01:44

To the average listener, if you haven’t heard of the NAR settlement, it’s new to you.

Fred Glick00:01:50

Yeah, exactly. So here you go. Enjoy.

Drew Thomas Hendricks00:01:54

Enjoy. Let us know your thoughts.

AI Podcaster 100:01:56

Okay, so, let’s dive into something pretty big happening in the real estate world.

AI Podcaster 200:02:02

Sounds good to me.

AI Podcaster 100:02:03

Yeah. We’re going to be talking about a legal case.

AI Podcaster 200:02:05

Okay.

AI Podcaster 100:02:06

A settlement, actually, that could really change things for anyone who’s ever bought or sold a house.

AI Podcaster 200:02:11

Yeah. This is a big one for sure.

AI Podcaster 100:02:12

Yeah. This involves the National Association of Realtors.

Yeah. You know, NAR.

AI Podcaster 200:02:17

Right.

AI Podcaster 100:02:17

And honestly, this whole thing is pretty fascinating.

AI Podcaster 200:02:20

Yeah. It’s a, it’s not your average legal document, that’s for sure.

AI Podcaster 100:02:24

We’ve actually got excerpts from the agreement itself.

AI Podcaster 200:02:27

Oh, wow. And let me tell ya.

AI Podcaster 100:02:28

It’s dense.

AI Podcaster 200:02:29

I bet.

AI Podcaster 100:02:29

But that’s why you’re here.

AI Podcaster 200:02:30

Happy to help break it down.

AI Podcaster 100:02:32

So, for those of us who haven’t been like glued to real estate news lately.

AI Podcaster 200:02:36

Sure.

AI Podcaster 100:02:37

Can you give us the backstory on this lawsuit? What was it all about?

AI Podcaster 200:02:40

Okay, so, imagine this. You’ve got a group of homeowners.

AI Podcaster 100:02:44

Okay.

AI Podcaster 200:02:44

And they are fed up with the lack of transparency.

AI Podcaster 100:02:47

Okay.

AI Podcaster 200:02:48

Around something called buyer-broker commissions.

AI Podcaster 100:02:50

buyer-broker commissions.

AI Podcaster 200:02:51

This is the fee that a buyer’s agent gets for helping their client, you know, buy a house.

AI Podcaster 100:02:56

Right,

AI Podcaster 200:02:57

Usually, it’s a percentage of the sale price.

AI Podcaster 100:02:59

Yeah, like those percentages you always see on listings online, right? Like, buyer’s agent 2. 5%.

AI Podcaster 200:03:05

Exactly.

AI Podcaster 100:03:05

Oh, I was wondering who sets that number anyway.

AI Podcaster 200:03:07

Yeah, that’s a great question. And it’s basically what these homeowners were questioning.

AI Podcaster 100:03:12

Okay.

AI Podcaster 200:03:12

They felt like NAR was kind of creating this system.

AI Podcaster 100:03:15

NAR being the?

AI Podcaster 200:03:16

The National Association of Realtors, which basically sets the rules of the game for how realtors operate.

AI Podcaster 100:03:22

Okay.

AI Podcaster 200:03:23

They felt like NAR created this system where these commissions were artificially inflated.

AI Podcaster 100:03:28

So they’re saying NAR was rigging the system to favor real estate agents.

AI Podcaster 200:03:32

Well, I wouldn’t say rigging, but they were arguing that NAR’s rules made it seem like these buyer-broker commissions were non-negotiable like it was some kind of mandatory fee set in stone.

AI Podcaster 100:03:45

Interesting.

AI Podcaster 200:03:46

And they claimed that this lack of transparency really limited their ability to negotiate better deals when selling their homes.

AI Podcaster 100:03:54

I see. So it’s more about having control and clarity than like accusing anyone of like pocketing extra cash or something.

AI Podcaster 200:04:01

Right. It’s about transparency and control.

AI Podcaster 100:04:03

Right. Okay. So let’s get to the good stuff here.

AI Podcaster 200:04:05

Oh.

AI Podcaster 100:04:06

The settlement itself.

AI Podcaster 200:04:07

All right.

AI Podcaster 100:04:07

Didn’t NAR admit they did anything wrong?

AI Podcaster 200:04:10

So let’s think they didn’t.

AI Podcaster 100:04:11

Really?

AI Podcaster 200:04:11

Yeah. They agreed to settle this lawsuit to avoid, you know, a long drawn out legal battle.

AI Podcaster 100:04:17

Sure makes sense.

AI Podcaster 200:04:18

But they haven’t admitted to any wrongdoing.

AI Podcaster 100:04:20

Companies hate bad press.

AI Podcaster 200:04:22

Yeah.

AI Podcaster 100:04:23

And lengthy legal battles.

AI Podcaster 200:04:25

Right. So what did they agree to? Did they have to pay up?

AI Podcaster 100:04:28

Oh, they paid up. All right.

AI Podcaster 200:04:29

Okay.

AI Podcaster 100:04:29

A whopping $418 million.

AI Podcaster 200:04:32

Wow. Okay, so they put their money where their mouth is.

AI Podcaster 100:04:35

Yeah, that got everyone’s attention.

AI Podcaster 200:04:36

I bet it did $418 million.

AI Podcaster 100:04:39

Big money.

AI Podcaster 200:04:39

So where does that money actually go?

AI Podcaster 100:04:42

So some of it will cover legal fees and, you know, administrative costs, but a good portion is going to be distributed amongst those homeowners who joined the lawsuit.

AI Podcaster 200:04:51

Oh, wow. So potential windfall for those involved in the case.

AI Podcaster 100:04:55

Yeah. Potentially a nice little bonus.

AI Podcaster 200:04:57

But I have a feeling that payout isn’t the real story here, is it?

AI Podcaster 100:05:01

You’re right. The settlement goes way beyond just money.

AI Podcaster 200:05:05

Okay.

AI Podcaster 100:05:05

NAR also agreed to some pretty major changes in how they do business.

AI Podcaster 200:05:09

And these changes could have a ripple effect throughout the entire real estate industry.

AI Podcaster 100:05:15

All right, now we’re talking. Okay, so we’re talking some serious shakeups in the real estate world. All because of this lawsuit against NAR.

AI Podcaster 200:05:22

Yeah, it’s a big one.

AI Podcaster 100:05:23

They agreed to that big payout.

AI Podcaster 200:05:25

Right.

AI Podcaster 100:05:25

But the real story here is how this could change the game for buyers and sellers.

AI Podcaster 200:05:30

Absolutely.

AI Podcaster 100:05:31

So, one of the big changes you mentioned is how buyer-broker commissions are handled.

AI Podcaster 200:05:35

Right.

AI Podcaster 100:05:36

So, are you telling me that those percentages we see on websites like Zillow, Redfin, all those, those might become a thing of the past?

AI Podcaster 200:05:44

They very well could. This settlement aims to make those buyer-broker commissions fully negotiable.

AI Podcaster 100:05:50

Okay, now we’re talking.

AI Podcaster 200:05:51

Put the power back in the hands of buyers and sellers.

AI Podcaster 100:05:53

But how would that work in practice?

AI Podcaster 200:05:55

So let’s say you’re selling your home, right? Instead of that buyer-broker commission being like right there up front.

AI Podcaster 100:06:01

Right.

AI Podcaster 200:06:01

As this like non-negotiable fee. It becomes a point of discussion just like any other term of the sale.

You as the seller have more leeway to negotiate with your listing agent.

AI Podcaster 100:06:13

Okay.

AI Podcaster 200:06:14

Potentially lowering the overall cost of selling your home.

AI Podcaster 100:06:17

That sounds like a win for sellers, but what about for buyers? Yeah. Especially those who are maybe like first time home buyers and trying to navigate this crazy market.

AI Podcaster 200:06:28

That’s a great point. And the settlement actually addresses that.

AI Podcaster 100:06:30

Okay.

AI Podcaster 200:06:31

It ensures that all listings are treated equally.

AI Podcaster 100:06:33

Okay.

AI Podcaster 200:06:34

Regardless of the buyer-broker commission offered.

AI Podcaster 100:06:36

So no more like playing favorites based on who’s offering the biggest piece of the pie.

AI Podcaster 200:06:41

Exactly. No more hiding listings for their clients just because the seller is offering a lower commission.

AI Podcaster 100:06:45

I like it. Transparency is key.

AI Podcaster 200:06:47

100%. And that focus on transparency goes beyond just like how the listings are presented.

AI Podcaster 100:06:52

Okay.

AI Podcaster 200:06:53

NAR will also require real estate agents to be super upfront about those buyer-broker commissions.

AI Podcaster 100:06:58

So, like, no more burying these fees in the fine print?

AI Podcaster 200:07:01

Exactly.

AI Podcaster 100:07:02

Yeah.

AI Podcaster 200:07:02

It has to be crystal clear what the commission is, how it’s calculated.

AI Podcaster 100:07:05

Gotcha.

AI Podcaster 200:07:06

And both the buyer and the seller have to acknowledge that they understand it’s negotiable.

AI Podcaster 100:07:14

So this all sounds good, you know, in theory.

AI Podcaster 200:07:17

Yeah.

AI Podcaster 100:07:18

But are there any potential downsides here?

AI Podcaster 200:07:20

So some real estate professionals are saying that getting rid of those kind of fixed commissions could make it harder for smaller brokerages to compete.

AI Podcaster 100:07:27

Interesting.

AI Podcaster 200:07:28

With these like bigger firms that can afford to offer lower fees.

AI Podcaster 100:07:31

That makes sense.

AI Podcaster 200:07:32

They also worry that it might be more difficult for first time homebuyers, especially those on a tighter budget, to find an agent who’s willing to represent them.

AI Podcaster 100:07:40

Interesting.

AI Podcaster 200:07:41

Yeah.

AI Podcaster 100:07:41

So transparency is good, but it’s not like a magic solution that’s going to solve everything.

AI Podcaster 200:07:47

Exactly. It’s going to be really interesting to see how this all plays out. We’re in uncharted territory here.

AI Podcaster 100:07:51

Yeah. It sounds like there’s some uncertainty about how this will actually work long-term.

AI Podcaster 200:07:55

For sure. But this settlement has the potential to be a real turning point in real estate.

AI Podcaster 100:08:01

Yeah.

AI Podcaster 200:08:02

Empowering both buyers and sellers with more information and more control.

AI Podcaster 100:08:07

Okay, so we’ve talked about the big picture here, but let’s break it down for our listener, the person at home who’s maybe heard about this case, but they’re not quite sure how it actually impacts them personally.

AI Podcaster 200:08:19

Right, so if you sold a home in the U. S. anytime between 2015 and now, you might be eligible for a piece of that $418 million payout.

AI Podcaster 100:08:27

Yeah, free money is always nice.

AI Podcaster 200:08:29

Right.

AI Podcaster 100:08:29

But what about for someone who’s thinking about buying or selling a home in the near future?

AI Podcaster 200:08:34

Yeah.

AI Podcaster 100:08:35

What’s like the key takeaway here for them?

AI Podcaster 200:08:37

So the big thing to remember is that those buyer-broker commissions, they’re not this mysterious non-negotiable part of the deal anymore.

AI Podcaster 100:08:46

Okay.

AI Podcaster 200:08:46

This settlement really levels the playing field.

AI Podcaster 100:08:49

Okay.

AI Podcaster 200:08:50

It gives both buyers and sellers a much clearer picture of the cost involved and it empowers them to negotiate more favorable terms.

AI Podcaster 100:09:00

It’s like we’re lifting the veil on a practice that’s been kept in the shadows for a long time.

AI Podcaster 200:09:04

Exactly. And it makes you wonder, right?

AI Podcaster 100:09:06

Yeah.

AI Podcaster 200:09:06

If we can do this with buyer-broker commissions, what other aspects of the real estate industry could benefit from this kind of transparency?

AI Podcaster 100:09:13

That’s the million-dollar question right there.

AI Podcaster 200:09:15

Right.

AI Podcaster 100:09:16

And this settlement focuses on residential real estate.

AI Podcaster 200:09:20

Hmm.

AI Podcaster 100:09:20

But could this spark a broader conversation about fairness and transparency across like the entire industry?

AI Podcaster 200:09:27

Absolutely. Including commercial real estate.

AI Podcaster 100:09:29

Now that’s a thought-provoking point.

AI Podcaster 200:09:31

It really is.

AI Podcaster 100:09:32

It’s like a domino effect.

AI Podcaster 200:09:33

Yeah.

AI Podcaster 100:09:34

This settlement could trigger a wave of change in how we buy and sell property in the future.

AI Podcaster 200:09:39

I think so.

AI Podcaster 100:09:40

We’ve covered a lot here today, and I know our listener’s head might be spinning with all these potential changes.

AI Podcaster 200:09:46

I bet.

AI Podcaster 100:09:46

So much to unpack here. We’ve talked about the potential impact of this settlement with NAR, but let’s break it down for our listeners.

AI Podcaster 200:09:53

Yeah, let’s get specific.

AI Podcaster 100:09:54

What are the concrete changes they can actually expect to see like in the real estate world moving forward?

AI Podcaster 200:09:59

So one of the big ones, and this is going to be pretty immediate, is how those buyer-broker commissions are displayed.

AI Podcaster 100:10:05

Okay.

AI Podcaster 200:10:05

Or rather not displayed on all those real estate websites we use. You know, Zillow, Redfin, all those.

AI Podcaster 100:10:11

You mean those percentages you see right next to the listing price?

AI Podcaster 200:10:14

Exactly.

AI Podcaster 100:10:15

The ones that always make me wonder, like, can I negotiate that?

AI Podcaster 200:10:17

Yep. Those are going to be a lot less prominent.

AI Podcaster 100:10:19

Really?

AI Podcaster 200:10:20

NAR is telling all the multiple listing services, the MLS platforms, that they have to remove those upfront offers of compensation to buyer-brokers from their public sites.

AI Podcaster 100:10:31

So no more seeing that 2. 5 percent buyer agent commission plastered right there on the listing?

AI Podcaster 200:10:36

You got it.

AI Podcaster 100:10:37

Wow. That’s kind of a big deal.

AI Podcaster 200:10:39

It is. It reinforces that those fees are negotiable.

AI Podcaster 100:10:42

Okay.

AI Podcaster 200:10:43

And it pushes that conversation offline, you know, into the hands of the buyer, sellers, and their agents.

AI Podcaster 100:10:48

Hmm. I see, I’m starting to see how this could actually like change the whole feel of a real estate transaction.

AI Podcaster 200:10:53

Right.

AI Podcaster 100:10:54

Like more transparency up front should, in theory, lead to more informed decisions. Exactly.

AI Podcaster 200:10:59

It’s not just about what’s visible on those websites, though.

AI Podcaster 100:11:03

Okay.

AI Podcaster 200:11:03

This settlement also says that agents have to be really upfront about those commissions.

AI Podcaster 100:11:08

Okay.

AI Podcaster 200:11:08

Like, disclose them in writing to both sides before anything serious happens, negotiation-wise.

AI Podcaster 100:11:13

So no more hiding those fees in the fine print?

AI Podcaster 200:11:16

Nope. Crystal clear what the commission is, how it’s calculated.

AI Podcaster 100:11:19

Okay.

AI Podcaster 200:11:20

And both the buyer and the seller have to say, yeah, I get it, this is negotiable.

AI Podcaster 100:11:24

Okay, that’s a win for transparency for sure.

AI Podcaster 200:11:26

Absolutely.

AI Podcaster 100:11:27

But now I’m curious about the actual process of like, buying a house.

AI Podcaster 200:11:31

Okay.

AI Podcaster 100:11:31

Will this settlement change anything for the people who are out there touring homes, making offers, all that?

AI Podcaster 200:11:36

Yes. So for buyers, one of the big changes is that before you even step foot in a house, your agent has to tell you in writing how much they stand to make from that sale.

AI Podcaster 100:11:48

So no more surprises down the line.

AI Podcaster 200:11:49

Exactly. That information’s on the table right away.

AI Podcaster 100:11:52

Okay.

AI Podcaster 200:11:52

Buyers know exactly what’s up financially.

AI Podcaster 100:11:55

That makes a lot of sense. And what about for the sellers out there?

AI Podcaster 200:11:58

Yeah.

AI Podcaster 100:11:58

Are there any protections built in for them in all this?

AI Podcaster 200:12:01

Oh, absolutely. The settlement makes it clear that sellers have to sign off on any payments or offers of payment made to a buyer’s agent.

AI Podcaster 100:12:09

So if a listing agent is trying to sweeten the deal to encourage a sale, the seller has to be in the loop.

AI Podcaster 200:12:15

A hundred percent. It’s all about making sure sellers are in control of the money part of the transaction.

AI Podcaster 100:12:21

Wow. This really does feel like a turning point for real estate. You know, from transparency to making sure buyers and sellers have more control, this has the potential to really change how we buy and sell homes.

AI Podcaster 200:12:33

You said it.

AI Podcaster 100:12:33

Yeah.

AI Podcaster 200:12:34

And while it’ll take time to see how it all plays out, one thing’s for sure.

AI Podcaster 100:12:38

Okay.

AI Podcaster 200:12:38

This settlement has people talking about fairness and transparency in real estate.

AI Podcaster 100:12:44

It’s like shining a light on a system that’s been kind of in the shadows for a long time.

AI Podcaster 200:12:48

And that’s huge.

AI Podcaster 100:12:49

Yeah.

AI Podcaster 200:12:50

That willingness to kind of challenge how things have always been done.

AI Podcaster 100:12:53

Yeah.

AI Podcaster 200:12:53

That could have effects way beyond residential real estate.

AI Podcaster 100:12:57

That is a really good point. So for our listener who’s been with us this whole time.

AI Podcaster 200:13:00

Yeah.

AI Podcaster 100:13:01

What’s the big takeaway here? The thing they should remember about this case and this settlement?

AI Podcaster 200:13:06

I’d say this whole thing was about giving the power back to the buyers and sellers.

AI Podcaster 100:13:10

Okay.

AI Podcaster 200:13:10

It’s about making the market a more transparent and fair place, one transaction at a time.

AI Podcaster 100:13:16

Well said. It’s a good reminder that even in something as complex as buying and selling a house, knowledge is power.

AI Podcaster 200:13:22

Right.

AI Podcaster 100:13:23

The more you know, the better off you’ll be.

AI Podcaster 200:13:25

Exactly.

AI Podcaster 100:13:26

Well, this has been incredibly insightful.

Thanks so much for breaking it all down for us.

AI Podcaster 200:13:30

Anytime. Happy to help.

AI Podcaster 100:13:32

And to our listeners out there, stay informed, stay curious, and happy house hunting.