The NAR Settlement: How Does it Change Things for Home Buyers/Sellers?
The way that people buy and sell homes is changing, thanks to a recently settled lawsuit against the National Association of Realtors. The terms of the wide-ranging settlement, effective August 17th, 2024, call for changes in the way that buyers, sellers, and real estate agents interact when a property is bought or sold, especially regarding the way that agents are compensated.
An NAR statement on the settlement neatly sums up the changes faced by home buyers and sellers:
- If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much.
- Written agreements are required for both in-person and live virtual home tours.
- You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
- Agent compensation for home buyers and sellers continues to be fully negotiable.
- When finding an agent to work with, ask questions about their services, compensation and these written agreements.
Agents listing properties on the MLS system must include, in their written agreements:
- A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
- Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
- A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
- A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
Why It’s Good for Consumers
We agree with NAR president Kevin Sears, who noted that “these changes help to further empower consumers with clarity and choice when buying and selling a home.” By making the real estate market more transparent, it will work more efficiently. However, as noted in one of NAR’s letters to its members, “Buyers and sellers need to be mindful of how these new commission structures may influence their strategies during negotiations. For instance, sellers may need to consider offering competitive commissions to attract buyers, while buyers should be prepared to negotiate their own representation costs.”
Furthermore, as the NAR letter notes, “it’s crucial for buyers and sellers to have open discussions with their realtors about how these changes might impact their specific transaction. This ensures clear expectations and helps both parties navigate the complexities of the market effectively.”
Helping Clients Toward Win-Win Real Estate Transactions
Team Rita is excited about the new, consumer-centric real estate environment created by the NAR settlement. We are confident that our time-tested strengths, our deep links to the local community, advanced negotiation skills, connections to other qualified parties (such as Home Inspectors, Attorneys, and Mortgage Bankers), and passionate dedication to our clients will continue to give us returned business and referrals in the post-NAR settlement era. We know that the best way to earn our commissions is to serve our clients — both buyers and sellers — in a way that allows each to maximize their interests whenever a property is bought or sold.
