"Total confusion"—When Shark Tank investor Barbara Corcoran discussed the industry concerns over real estate fee adjustments

Shark Tank investor and Corcoran Group founder Barbara Corcoran addressed concerns over the National Association of Realtors (NAR) settlement. On March 15, 2024, NAR announced that the organization would pay $418 million for over four years to settle the commission lawsuits from home sellers.

According to The New York Times, a U.S. federal judge in Missouri ruled that NAR and other large brokerages had conspired to inflate commissions. The settlement introduced new rules mandating written agreements between buyers and brokers to outline services and costs.

In a Yahoo Finance interview on March 28, 2024, Corcoran was asked whether these changes would disrupt the industry. She responded:

"I think a lot less than people expected to but what it is causing is total confusion. Brokers are confused, buyers and sellers are confused, I even think the people who made the amendments are confused."

While the settlement aims to increase fee transparency, Shark Tank star Corcoran emphasized that uncertainty remains the biggest issue.

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Impact of real estate fee adjustments on home prices according to Shark Tank Barbara Corcoran

Written agreements and service fees

One of the key changes introduced by the settlement is the requirement for written agreements between buyers and brokers. This documentation must outline the services provided and their associated costs. Corcoran noted that while this clarifies buyers, it may lead to additional expenses. The Shark Tank investor explained:

"If you're a buyer in the market and you want to hire a broker to represent you to find you a house, it now has to be in writing exactly what they're going to do for you and exactly what each service is going to charge."

She further elaborated on how this adjustment could shift financial responsibility. Corcoran explained that if sellers choose not to cover broker fees within the commission as they did in the past, buyers may have to pay these costs directly. She noted that buyers generally prefer to avoid out-of-pocket expenses, making this change a potential concern for those entering the market.

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Seller strategies in response to changes

Barbara Corcoran shed light on whether these changes would lead to an increase in overall fees for buyers or adjustments in seller strategies. She stated:

"I think that's going to happen. I think particularly the sellers will step up to the plate because you have to remember sellers want buyers coming in. The more buyers that come in the house, the better the price they get."

The Shark Tank star indicated that sellers might compensate for the changes by covering certain costs that buyers would otherwise have to pay.

"They're going to find a way to make good with the buyers, whether it be paying closing costs or any myriad of things that they can do, but it will even the score out."

Through this comment, she suggested that while the overall structure of real estate transactions may shift, sellers may adjust their approach to maintain competitive pricing and attract buyers.

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Home prices and market outlook

While discussing the potential impact on home prices, Corcoran stated that the ruling is unlikely to lower buyers' costs. She explained that sellers, aiming to maximize their profits, are unlikely to pass on any savings from commission adjustments to buyers.

Since selling a home presents a one-time opportunity to secure the highest possible price, sellers are expected to retain any financial benefits rather than reducing listing prices. The Shark Tank investor pointed to the existing housing inventory shortage as a key factor in maintaining rising prices.

"There is such a shortage of houses right now that prices have gone up despite everybody singing the blues. It happened simply because of supply and demand."

Corcoran also suggested that interest rate adjustments could further impact demand, emphasizing that increased competition could drive prices higher.

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