In an interview with Yahoo Finance, Barbara Corcoran, founder of Corcoran Group, spoke on the NAR settlement and the confusion surrounding it—which ultimately she sees as more of an issue than the settlement itself.
From that confusion has come some interesting (and highly unlikely) speculation about buyer and seller behavior in the coming months.
Corcoran spoke clearly and went right to the point when asked what the Sitzer/Burnett ruling and industry settlements mean for real estate agents, consumers, and the housing market.
For one, she’s not buying the idea that sellers might set their prices a bit lower if they don’t have to pay as much in agent commissions.
Read on for more.
The real problem is the confusion surrounding the NAR settlement
In Corcoran’s own words, the main result of the NAR settlement is “total confusion” across the real estate industry.
She also believes that the change requiring buyer agents to create a written buyer representation agreement outlining the services they’ll provide, as well as the agreed-upon compensation—will “make a clear difference.” But in her view, that’s the only upside.
As Corcoran sees it, with the changes brought by the settlement, sellers will have to “make good with the buyers” to boost home sales and sale prices, even if the cost of making good comes out of their own pockets.
In other words, sellers will still be faced with the costs involved with—
- Attracting buyers (especially those motivated and able to buy)
- Preparing their home to make the best possible impression on buyers
- Negotiating the best sale price (especially if issues come up with the home inspection)
And those are just the obvious expense categories, not counting surprise expenses or larger-than-anticipated costs. That money has to come from somewhere. And having someone in their corner who can help the seller prepare for most if not all expenses can make a significant difference in how much they actually profit from a home sale.
That, of course, is where skilled, knowledgeable, and service-oriented agents come in.
All that said, Corcoran believes the (Sitzer/Burnett) ruling is “not a big deal.” The confusion arising from it—and from misleading news sources—is the real problem.
Home prices will not go down—even with lower commission rates
Corcoran was quick to provide a reality check when asked if she saw home prices coming down. With the continued shortage of available housing, home prices “have gone up despite everyone singing the blues,” thanks to supply and demand dynamics.
Unfortunately, misconceptions about the settlement have led some to speculate that if sellers don’t have to pay for a buyer agent, they might list their homes at a lower price. Others are suggesting more buyers might get off the sidelines if agent commissions go down.
Corcoran disagreed with both:
I don’t really believe either of those things are going to happen. It’s a neutral. Think of yourself. If you’re selling your home, and if you, let’s say you save 3% with a new ruling and say, ‘I don’t want to pay the buyer’s broker the extra 3%,’ do you think you’re going to pass that along to the buyer, which a lot of people are saying is the case?
No. Sellers are greedy. It’s a one-time chance to get the most for your house and you’re not going to give that money away. So if you think prices are going to come down, definitely not the case. There is such a shortage of houses right now, that prices have gone up despite everybody singing the blues. 6% this year, how did that happen? It happened simply because of supply and demand. There’s a lot of buyers and not enough houses to be available. And that’s what rules the market.
The time to buy a house is “right now”—not when rates go further down
Corcoran was then asked what she expects from home prices.
I think the prices are going to go through the roof, especially if interest rates come down another point by year end. I think everybody and their mother and their in-laws are going to come out looking for a new house. And the competition is going to be so fierce that house prices will have to go up.
Given that, you can probably guess Corcoran’s answer to the question, “So when should people be buying?” Her answer is the same as it was at the end of 2023.
Right now—but that’s always my mantra. It’s always the best time to buy, not because I’m an ex real estate broker, by any means, but I’m sure I’m biased in my attitude toward it. But it always is true that the minute you go out in the marketplace when everybody else is out, you always pay more. Why would you wait for that?
Byron Lazine and Nicole White responded to Barbara Corcoran’s comments in this week’s episode of The Real Word.
So, what’s your take on Corcoran’s views on the settlement? And what will you tell your clients who ask the same questions?
