NAR Settlement Changes Real Estate Commissions and Services

Who pays the buyers agent commission?

In light of the recent NAR Settlement, which significantly alters real estate commission structures and practices, understanding how buyers agents get paid has become crucial. With ongoing changes in real estate regulations, new rules aim to help buyers compare different buyer agency agreements when selecting an agent. Compensation is likely to continue being based on a commission at closing. For example, a top buyer agent from New York noted that his standard agreement will now include a notification clause specifying that the agreement will deduct a 2% commission at closing to compensate the buyer’s agent. “That is not a request, it is a notification.”

The National Buyers Agents Association has advocated for a written agreement for the past 25 years, emphasizing the importance of reviewing these agreements before beginning a property search. With the recent NAR Settlement, which introduces significant changes to real estate commission structures and practices, this review becomes even more crucial. Ensuring clarity on compensation terms and services provided will help buyers navigate the evolving market effectively.

What is the NAR settlement?

In 2019, Missouri home sellers sued the National Association of Realtors (NAR) for antitrust violations, claiming inflated commissions. The jury awarded $1.8 billion to the plaintiffs. To settle the lawsuit, NAR will pay $418 million and implement two changes. These changes include removing buyer agent compensation from MLS listings and requiring written agreements between buyers and agents.

Check out this insightful video featuring Matt Frankel and eXp CEO Leo Pareja. They discuss the implications of the NAR settlement and its potential to transform the real estate industry. The video explores how this landmark settlement could reshape real estate practices. It also examines what it means for buyers, sellers, and agents alike.

You can also check the article by the National Association of Realtors® for their explanation of the settlement. NAR states that they have “agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS. But they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers. They are also consistent with the real estate laws in the many states that expressly authorize them.”

Impact on Real Estate Agents

For real estate agents, the NAR settlement agreement may require changes to business practices and strategies. With greater transparency and competition, agents might need to justify their commission rates and stand out in a more competitive market.

However, this also provides an opportunity for agents to showcase their value to clients. By offering personalized service, expertise, and guidance, agents can remain essential in helping buyers and sellers navigate the real estate process.

Key Points for Home Buyers and Sellers

The question of how buyers agents get paid will change on August 17, 2024. A landmark settlement with home sellers and the National Association of Realtors® happened in March, 2024, it will affect all US states. The NAR Settlement includes some changes to real estate transactions. Importantly, consumers will continue to have choices regarding real estate services.

Here are some key points for home buyers and sellers:

• Buyer Requirements: If you’re a buyer and your agent uses an MLS, you must sign a written agreement before visiting a home. This agreement ensures you clearly understand the services provided and their cost.
• Agreement Necessity: Written agreements are mandatory for both physical and virtual home tours.
• Open House Exception: A written agreement is not needed if you’re simply talking to an agent at an open house. You only need it if you inquire about their services in detail.
• Compensation Negotiability: Compensation for agents, including buyers agent or real estate commissions, remains fully negotiable for both buyers and sellers.
• Agent Selection: When choosing an agent, inquire about their services, compensation, and the details of any required written agreements.

Get Insights from a Local Buyers Agent

The NAR settlement marks a significant shift in real estate structures and service standards. It impacts how buyers, including changes to real estate agent commissions, and agents navigate the market. Staying informed and adapting to these changes will be crucial for ensuring a smooth and successful real estate experience.

See how this settlement will affect you. You may also wish to get a free consultation from a local buyers agent in your area. This will offer insights into how their office handles the new rules.