Some people who have invested in property in Whatcom County in recent years may get a portion of their realtor fee back in 2025, thanks to a landmark legal settlement in the real estate industry.
The National Association of Realtors, or NAR, introduced new rules on Aug. 17 as part of a national class action lawsuit agreement, said Brandon Nelson, a realtor at Compass Real Estate in Bellingham. NAR agreed in March to pay $418 million over a four-year period to settle claims made by home sellers across the United States.
This settlement has the potential to disrupt the traditional process of buying and selling a home. Instead of home sellers paying a commission to their agent, realtors will now negotiate their own fees with clients, which could give buyers and sellers more power to negotiate prices.
“People buying homes in Washington state are not experiencing dramatic changes yet,” said Nicholas Wonder, associate professor of finance at Western Washington University. “I expect any impact of the NAR agreement itself to be minute in Washington.”
Since the NAR agreement focuses on how real estate agents are compensated for their work, a more competitive commission marketplace will probably reduce the number of licensed real estate agents in Whatcom County, Wonder said. Many low-volume agents may also decide to leave the business.
Buyer services
In essence, the NAR settlement is about compensation and transparency, said Jeff Braimes, a realtor at eXp Realty in Bellingham.
“For decades, the services provided by real estate agents representing sellers have been defined and clarified in writing whereas the corresponding services provided to buyers by their representatives have not,” Braimes said. “This is a failure on the industry’s part to educate the public to safeguard against this predictable outcome.”
The new NAR rules do not represent a significant shift for brokers in Washington state — including Whatcom County — because they are a part of the Seattle metropolitan-area-based Northwest Multiple Listing Service, Nelson said.
The NWMLS opted out of NAR’s settlement agreement in May 2024, as it is owned by its member real estate firms. But home buyers who have purchased from outside the state could be eligible for compensation from the settlement.
The NWMLS stopped requiring sellers to post offers of compensation in 2019, Wonder said. The NWMLS was also the first in the country to publish broker compensation on online real estate platforms like Redfin and Zillow.
“The new NAR rules about transparency in broker compensation aren’t really new to us in Whatcom County — they’ve been standard practice here for several years,” Nelson said.
Changes in house hunting
The key change that might feel new to brokers and clients in Whatcom County is the requirement for a signed Buyer Brokerage Services Agreement to be in place before a buyer broker provides any services such as showing a property, Nelson said.
The Washington Agency Law, effective as of Jan. 1, is designed to formalize the relationship between buyers and their brokers, making sure that compensation terms and other details of broker representation are clear and agreed upon upfront, he said.
“For homebuyers in Whatcom County, this means that before you tour any home, you must sign a written agreement with your broker that outlines exactly how much they will be paid, usually as a percentage of the final purchase price,” Nelson said. “This agreement prevents any unexpected costs from cropping up later in the process.”
With the new rules that took effect in January, the notion of buyers’ compensation should be a seller-initiated discussion, Braimes said. The NWMLS allows sellers to continue advertising a buyer’s agent commission, and that commission has remained consistent at 2.5%–3% for many years.
“People house hunting in Whatcom County are going to continue to consider this part of doing business,” he said.
Whatcom County homebuyers and sellers will undergo a period of adjustment as the real estate industry adapts to the new rules, Nelson said. Buyers might be more selective about the properties they tour and the brokers they work with, given the clarity around compensation. Sellers might also rethink their strategies, possibly leading to more competitive pricing or creative incentives to attract buyers.
“These changes will encourage a more transparent and informed market, though it may take a few quarters for the dust to settle,” Nelson said.
Affordability concerns remain
Despite the changes in buying a home in 2024, Bellingham-based realtors like Nelson and Braimes both acknowledge the appeal of living in Whatcom County, including its proximity to Mount Baker and the Salish Sea.
The adventurous hiking and mountain biking lifestyle, along with the temperate climate of the Pacific Northwest, continue to lure record numbers of people to Whatcom County, Braimes said.
Bellingham’s population as of April 2024 is approximately 97,270 inhabitants — up significantly from the 2020 Census when it was around 91,482 residents — according to Washington’s Office of Financial Management.
This migration has increased demand and has driven up prices in Bellingham and environs, Braimes said.
The median household income nowadays in Bellingham is approximately $63,950, while the median home price is around $757,000, according to Neilsberg Research from January 2024.
“This significant gap makes homeownership increasingly unaffordable for many residents,” Nelson said.
Housing affordability is not a new issue in Bellingham and Whatcom County. The COVID-19 pandemic has exacerbated costs of living increases for essentials like groceries and utilities, Nelson said. Meanwhile, supply chain disruptions have led to labor shortages on construction sites and have delayed building materials, which has reduced the building of new homes.
Other economic factors like prolonged low interest rates from the Federal Reserve, and property tax and insurance increases have reduced affordability for many buyers and existing homeowners alike in Bellingham, Nelson said.
While these national trends have impacted many similar-sized cities to Bellingham — like Olympia and Bend, Oregon — real estate is hyperlocal, Braimes said.
“What affects buyers — or sellers — in one market simply doesn’t apply in others,” he said. “Because of the seemingly bottomless popularity of Bellingham, I don’t see the potential for sweeping change in the way deeds are traded here. Buyers from out-of-town are still going to be willing to overpay to live here.”
The Salish Current is a nonpartisan, nonprofit, online local news organization serving Whatcom, San Juan and Skagit counties by reporting local news with independence and strict journalistic integrity, and by providing fact-based information and a forum for civil commentary.
