Brad Noll Breaks Down the NAR Lawsuit: What Changes and What Doesn't
Entrepreneurship · From Student of the Game
Brad Noll Breaks Down the NAR Lawsuit: What Changes and What Doesn't
Brad Noll's previous Student of the Game guest, Coach Kenton Aubrey, talked about the March Madness mindset: survive and advance. In this solo episode, Brad applies that theme to his own industry and the lawsuit involving the National Association of Realtors, or NAR.
Brad wants to speak from "a practical, factual, experiential point of view" to clients who want to buy or sell a home, and to fellow realtors. As he sees it, the push behind the case is for more negotiation and more transparency. "Frankly, us realtors, we have to be better," he says, "and that's what it's going to call for." What follows is Brad's explanation of the case as he understands it, not legal advice.
What the Lawsuit Is About
Brad explains that the lawsuit against NAR and several major real estate companies centered on allegations that their practices artificially inflated the commissions paid to agents. According to Brad, the core argument was about an NAR rule requiring listing brokers to make a blanket, non-negotiable offer of compensation to buyer brokers when listing a home on the MLS.
He reads a few headlines that he believes have scared buyers, sellers, and agents, including claims that the settlement could slash home prices and end a standard 6 percent commission. Brad points out that there is no standard commission in his industry, and that realtors are not supposed to describe any rate as the industry standard. Commissions, he says, have always been negotiable, and flat fee brokers and a wide range of fee structures have existed throughout his 20 years in the business.
“The fundamentals of real estate is a seller is looking for a buyer and a buyer is looking for a home.”
Brad Noll
Why Brad Is Still a Fan of NAR
Brad admits he is talking out of both sides of his mouth, and he wants listeners to hear him clearly: he is a big fan of NAR. He calls it the largest trade organization in the world and points out, as he likes to, that there is no national association of homeowners. NAR's lobbying, he says, fights for tax incentives and guidelines that help people own the American dream.
Then he returns to the fundamentals, the way Student of the Game always does. "A seller is looking for a buyer. A buyer is looking for a home," he says. No lawsuit, regulation, or new way of doing business changes that, and Brad believes the free market will sort out the rest.
Change One: Compensation Offers Move Off the MLS
The first change Brad highlights is that offers of compensation to buyer brokers are being removed from the MLS. As he reads the settlement, NAR agreed to a rule prohibiting those offers on the MLS, but sellers can still offer compensation off the MLS through negotiation, and can still offer buyer concessions on the MLS, such as paying closing costs.
Brad is a believer in incentives. Just as a strong quarter can earn an employee a bonus, he thinks a seller who incentivizes buyer agents will likely get more showings. He shares some history from his grandfather's era in the 1950s and 60s, when a buyer had to walk into the listing office to buy that office's listing. When brokers began cooperating, Brad says, buyers had more options, sellers got more showings, and everybody won. Going forward, agents will simply need to communicate more and confirm the compensation on each home.
Change Two: Written Buyer Agreements
The second change, as Brad explains it, is that agents working with buyers must enter into a written representation agreement. In Indiana, he says, this is known as a buyer exclusive agency or buyer representation agreement, and he expects the requirement to take effect in the state on July 1. The agreement discloses what the agent charges and what the buyer gets for it.
Brad is candid that his industry brought some of this on itself. For years, some agents who struggled to explain their value told buyers it was free to work with them because the seller pays. "Well, it's technically not free," Brad says. There is a cost in every transaction. Now agents will need to explain price versus value up front. Brad says the purchase agreement alone has 496 lines and 92 checkboxes, and a buyer's representative had better know how to use every one in the buyer's favor.
For the Noll Team, little changes in practice. The team already sits down with buyers for a consultation before touring homes, covering finances, education, and the lifestyle change behind the move. Here is how Brad summarizes what buyers and sellers should expect:
- Sellers decide what, if anything, to offer a buyer's agent, and that offer is communicated off the MLS.
- Sellers can still offer concessions to buyers, like help with closing costs.
- Buyers sign a written agreement with their agent that spells out the fee and the services.
- Fees remain negotiable, and consumers have many choices of agents and fee structures.
- Agents must clearly explain, and deliver, the value they bring.
What Does the NAR Settlement Mean for Home Buyers and Sellers?
In Brad's view, it comes down to two changes: compensation is no longer offered on the MLS, and every buyer signs a representation agreement so they understand how their agent is paid and what value they receive. He compares it to a map app that offers several routes from point A to point B. The route may change slightly, but the destination is the same: a seller finding a buyer and a buyer finding a home.
Brad says he knew he needed to record this episode when his own mom called to ask whether everything was going to be okay. He wants clients to hear it directly: his team, with over 60 years of combined experience, plans to keep adding services and doubling down on value. Consumers should ask any professional two questions, he says. Can I trust you? And are you good at what you do?
Over 20 years, Brad says, the team has completed nearly 2,000 transactions and written about 14,000 personal notes, because no matter what the headlines say, relationships win. He sees the moment as one more chance to show the difference between price and value, and between an amateur and a pro. "Amateurs get paid to play," he says, "but professionals get paid to practice."
▶ Listen to the full episode
Survive and Advance: NAR Lawsuit Edition with Brad Noll, on Student of the Game.
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