Real Estate

Beverly Hills Brokerage Preempts NAR's $418M Settlement, Displays Buyer Agent Fees

Beverly Hills brokerage adapts to NAR's $418M settlement by displaying buyer agent compensation on all listings starting August 17.

By Doug Elli

6/11, 12:29 EDT
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Key Takeaway

  • Beverly Hills brokerage Nourmand & Associates preemptively displays buyer agent compensation on its website ahead of NAR's new rules effective Aug. 17.
  • The $418 million NAR settlement mandates brokers can't negotiate buyer agent commissions through MLS, requiring buyers to sign agreements with agents.
  • President Michael Nourmand believes the industry will adapt smoothly, dismissing fears of a major shakeup and highlighting ongoing commission negotiations.

Navigating New Real Estate Rules

Michael Nourmand, president of Beverly Hills brokerage Nourmand & Associates, is proactively adapting to upcoming changes in the real estate industry. In response to the National Association of Realtors’ (NAR) $418 million settlement, which mandates new rules for buyer agent commissions starting August 17, Nourmand has decided to display buyer agent compensation for all listings on his firm’s website. This move aims to streamline the process for agents and attract more web traffic in an increasingly competitive "attention economy." Nourmand’s approach reflects a broader trend of transparency and efficiency in real estate transactions, as brokers and agents prepare for significant regulatory shifts.

The Impact of NAR Settlement

The NAR settlement has introduced a wave of uncertainty in the real estate market, particularly concerning buyer agent commissions. As of mid-August, brokers will no longer negotiate these commissions through the MLS, and buyers must sign agreements with their agents before collaboration begins. Despite the industry buzz suggesting a potential shakeup, Nourmand remains optimistic. He points out that commission negotiations have always been part of the homebuying process, especially for high-end buyers who are well-informed by financial advisors and other professionals. This perspective is supported by data showing that out of 112 recent listings in areas like Echo Park and Pacific Palisades, only one did not offer buyer compensation.

Broader Market Dynamics

The changes in commission rules are part of a larger conversation about broker fees and their impact on the real estate market. For instance, in New York City, the proposed Fairness in Apartment Rental Expenses Act (FARE) aims to shift the responsibility of paying broker fees from tenants to landlords. This bill has sparked significant debate, with industry professionals arguing it could reduce brokers' incomes and inadvertently increase rents. However, proponents like Council member Chi Ossé believe it will empower tenants by providing more bargaining power and mobility. This ongoing debate highlights the complex interplay between regulatory changes and market dynamics, as stakeholders navigate the evolving landscape.

Industry Perceptions and Reality

Nourmand also addresses the public perception of real estate agents, often glamorized by reality TV shows. These shows, he argues, present a skewed view of the profession, focusing on the luxurious lifestyles of a few high-profile agents while ignoring the hard work and modest earnings of the majority. This misrepresentation can lead to misconceptions about the industry, especially in light of the NAR settlement. Nourmand emphasizes that most agents are dedicated professionals striving to make a living, with many earning around $50,000 to $60,000 annually. This reality contrasts sharply with the opulent image portrayed on television, underscoring the need for a more nuanced understanding of the profession.

Management Quotes

  • Michael Nourmand, President of Nourmand & Associates:

    "I want to make it easy for buyers’ agents to see what they’re getting paid. They don’t have to ask the question. It will save my agents time because they don’t have to answer that question."
    "We’re in an attention economy where more clicks can translate to web monetization for the nearly 50-year-old firm."
    "All of the [settlement headlines] were ‘This is the end of real estate agents,’ ‘They’re all going to be out of the business,’ ‘The compression is going to be unbearable,’ ‘The fee structure in all these other countries is so low.’ And my whole thing was like, wait, wait, wait, hold on. You’re telling me people in L.A. didn’t know that they could negotiate their fees?"
    "America sees four agents that are getting a lot of promotion on TV and eating at fancy restaurants, driving expensive cars and it’s truncating the process... The truth is most agents are grinding it out in the U.S. making $50,000 or $60,000 a year trying to make ends meet."
    "This NAR settlement has primetime TV written all over it... I think Bravo is going to give exactly what the consumer wants on TV."