Navigating the NAR Settlement: What It Means for Relocation Support
Published By Kerrie Weldon, SVP Destination, Rental & Travel Services Dec 6, 2024
The National Association of Realtors (NAR) Settlement Agreement has officially been upheld by Federal Judge Stephen R. Bough of the Western District of Missouri in November 2024. This landmark decision solidifies the changes already in effect since August 17, 2024, and marks a new era for relocation support in the U.S. While additional negotiations and refinements to the agreement may emerge, its core principles are now firmly rooted, requiring organizations to adapt and strategize accordingly.
In August 2024, WERC provided a two-part article series covering the impacts of the decision on the relocation industry. In sum, supporting buyer agent commissions as part of relocation benefits is crucial to ensuring successful employee transitions, maintaining satisfaction, and avoiding risks like unfilled positions and employee turnover.
While the primary focus has been on home buying and selling, the settlement’s implications for rental operations are equally critical. Key areas of concern include evolving agent compensation models, shifts in rental tour protocols, and financial impacts. Let’s dive into how these changes affect relocation support and what can be done to navigate them effectively.
Agent Compensation: A New Landscape
The Settlement removes the longstanding obligation for landlords to guarantee compensation to both their agent and the renter’s agent. This change means relocating employees will now encounter Buyers/Tenants Representation Agreements before rental tours. These agreements outline agent compensation and the duration of representation, adding layers of negotiation and potential complexity.
For areas like New York, New Jersey, and parts of New England, where tenants traditionally shoulder broker fees, these shifts may feel less significant. However, for others, the absence of guaranteed compensation introduces uncertainty, emphasizing the need for clear guidance to relocating employees.
While the obligation (and allowance for it to be stated on MLS systems) has been removed, it does not mean the Landlord/Properties/Sellers will not offer compensation as part of the negotiation for the property in question. It simply means it is now an unguaranteed negotiation, rather than a guaranteed obligation.
Impacts on Relocation Programs:
Without proactive education, relocating employees may feel tempted to bypass agent support altogether, opening the door to potential risks, including:
- Legal and financial vulnerability: Unrepresented renters may lack essential protections and face disadvantageous terms.
- Narrowed housing options: Limiting searches to "no-fee" properties significantly reduces available choices.
- Added costs to companies: If reimbursed agent fees are taxable, it could drive up expenses for mobility programs. Moreover, mistakes made by unrepresented employees could result in additional costs to resolve issues.
These scenarios can undermine employee satisfaction and add unexpected strain to relocation budgets.
Education, Counseling, and Policy Adaption:
At Coppergate Global, National’s Destination Services Division, we’ve already seen how confusion around these changes can disrupt the relocation process. That’s why we’re committed to equipping our clients and their employees with the tools and knowledge needed to navigate this new environment. Our approach includes:
- Stakeholder education: Ensuring clients and employees understand the Settlement’s requirements and how they impact the relocation process.
- Policy reviews and updates: Helping companies define who is responsible for agent fees and manage associated tax implications.
- Personalized counseling: Guiding employees through signing unfamiliar agreements and understanding the new rental tour protocols, with special attention to international assignees facing additional challenges.
By addressing these changes head-on, we ensure a seamless transition for everyone involved.
Why This Matters:
The NAR Settlement is undeniably a game-changer, and the adjustments it brings may feel daunting at first. However, these changes are ultimately a step toward greater transparency and fairness for all parties involved. With expert guidance and thoughtful adaptation, your organization can continue to support relocating employees effectively while navigating the complexities of this new landscape.
At Coppergate Global, we thrive on challenges like these. With our expertise, we’ll help you turn uncertainty into clarity, ensuring your relocation programs remain robust and successful.
