NAR Settlement FAQs

The National Association of Realtors (NAR) settled a lawsuit to address claims related to broker commissions and to reduce liability for its members.

Compensation offers will no longer be listed on the Multiple Listing Service (MLS). Buyers and sellers will negotiate compensation directly.

Offers of compensation will move off-MLS, though sellers can still offer buyer concessions.

Practice changes begin on August 17, 2024, with final court approval expected by November 26, 2024.

Buyers will need to negotiate and agree on agent compensation upfront in a written agreement before viewing homes.

Sellers may need to discuss and negotiate compensation for buyer agents directly with buyers, as compensation offers will no longer be automatically included in MLS listings.

Sellers should evaluate market conditions and discuss strategies with their listing agents to offer competitive compensation that can attract buyer agents while ensuring fair negotiation.

First-time homebuyers will face new requirements to negotiate and agree on their agent’s compensation before touring homes. This means they will need to be more proactive in understanding agent fees and services. Written agreements will be necessary, which adds a layer of complexity to the home-buying process. However, these changes aim to bring more transparency and control over costs. First-time buyers might benefit from additional guidance from their real estate agents to navigate these new practices and make informed decisions.

These changes encourage direct negotiation between buyers and sellers regarding agent compensation, leading to more transparent and potentially lower costs. By removing automatic commission listings from the MLS, buyers and sellers can discuss and agree on fair compensation, avoiding unnecessary fees. This transparency helps ensure that both parties understand and control their expenses, potentially leading to reduced transaction costs overall.

Yes, the benefits include:

• Increased Transparency: Clearer understanding of agent compensation.
• Cost Control: Direct negotiations can help avoid inflated fees.
• Empowerment: Both buyers and sellers gain more control over the transaction process, leading to informed and fair decision-making.

1. Increased Negotiation Effort:

• Sellers will need to actively negotiate agent compensation, which can be time-consuming and complex.

2. Market Uncertainty:

• Without clear benchmarks for commission rates on the MLS, sellers may struggle to determine what constitutes a competitive compensation offer, potentially affecting the attractiveness of their listings.

3. Potential for Higher Costs:

• In some cases, direct negotiations might lead to higher compensation demands from buyer agents, especially in competitive markets.

4. Additional Administrative Work:

• More paperwork and discussions are required to finalize compensation agreements, adding to the seller’s responsibilities.

1. Increased Complexity:

• Buyers will need to understand and negotiate agent compensation upfront, adding complexity to the home-buying process.

2. Potential for Higher Out-of-Pocket Costs:

• Buyers may need to pay their agents directly, which could result in higher initial expenses.

3. Need for Greater Awareness:

• Buyers must be more informed about typical compensation rates and services to ensure fair negotiations.

4. Possible Impact on Agent Relationships:

• The negotiation process could strain relationships with agents if disagreements over compensation arise.

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