Post-NAR Settlement Fee Structure Risks

Dated: March 23 2024

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How does the NAR settlement affect working with a Realtor?

A swipe left, swipe right app for home showings combined with a fee for service contract does not support and protect consumers in the home buying process.

Buying a home is a complex process with many steps along the way.

Fees based on percentages have been under fire in many lawsuits. Personally, I can flip to a menu of services easily as suggested in this US News article. However, the challenge is representation. Each step in the process ties into the next step and the most critical parts of negotiations.

For instance, the nuances I learn in the first consultation as well as during showings become part of a targeted negotiation strategy aimed to meet my clients' unique goals.

Discussions with the listing agent, getting insights into the sellers motivations as well as the landscape of our competition are key behind the scenes elements of successfull negotiation.

Everyone's win is different! I learned that a long time ago. A deep understanding of my clients wants and needs is developed throughout the process. That is all lost in a menu of service model.

Fee as percentage of the win - wait isn't that what lawyers do?

Have you ever had an attorney on retainer? Billed by the hour? I've noticed in the NAR lawsuits lawyers involved do not use their own fee structures as a model for real estate. Lawyers generally bill by the hour or take a percentage of the win.

Ironically the attorneys filing suits against the real estate industry are being paid on a percentage of the win. How is that different than being paid on a percentage of the sale? One thing missed about percentage fee structure is that your win is our win! If we billed by the hour, no one could afford a realtor.

Being service oriented, I don't share with my clients the countless hours behind the scenes done to support and protect them. My goal is to provide a high level of service that protects them from those grueling details.

When does representation start and end?

Most realtors are service oriented and enjoy helping people. What I don't hear discussed in main stream media are the legal risks we face with representation.

This is one of the reasons newer agents shy away from showing FSBO listings. Courts hold realtors liable for elements of a transaction with unrepresented parties, simply because we're held to a higher standard as a licensed professional vs a consumer.

Just because the deal closes, doesn't mean that there's no risk for us as the realtors involved.

If you're using a menu of services, used someone else to do the showings and ask me to "simply write up the contract" that means I'm the agent of record and take on all the liability. I wouldn't have access to the information gained at the showings as well as at our consult.

Let me explain with a true life story

A few years ago I agreed to transactional brokerage representation for a flat fee for past clients who were under contract with me on the buy side. It's a complicated story, but their condo purchase was contingent on the sale of a home they had under contract as FSBO and they wanted me to essentially just "do their paperwork for them."

It seemed simple enough. However, it unraveled into one of the ugliest transactions of my career. They started leaning on me for advice. Technically they were my clients on the purchase of a condo - but not on the sale of their home.

I'm focused on quality, consultative service and without a full representation agreement I could not answer their questions and concerns and had to continually push them to consult with their attorney. It ended up a canceled deal with a big lawsuit over the deposits.

Realtors as Uber Drivers?

Buying a home is NOT like ordering a car online with Carvana. Even with mobile homes that are titled like a car vs deeded fee simple property there are complexities involved;

  • In-depth market knowledge
  • Local trends that could impact home values
  • Due diligence on location amenities
  • Home inspections - knowledge of risks and how to negotiate
  • Finance guidance - working with your lender, supporting the process

I've worked successfully with FSBO sellers and lawyers representing my clients on both buy and sell sides. With 20 years of experience I'm confident to provide a flexible service model suited to meet your needs. 

However, modifying our entire industry to a menu of services leaves huge gaps of exposure for both consumers and their agents. Whether the fee is based on percentages or a flat rate, you are best served with a dedicated agent relationship. A professional to guide and support you throughout the entire process.


Susanna Kunkel, Realtor
eXp Realty, LLC
484-416-0567

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Susanna Kunkel

Susanna provides executive level service to all her clients based on her years in corporate CEO offices. Creative marketing, global networking and local expertise. Her unique mix of business savvy and....

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