How the NAR Settlement Affects Buyers and Sellers in 2024

On March 15, 2024, the National Association of REALTORS® (NAR) announced a $418 million settlement with a group of home sellers. This settlement addresses claims in multiple antitrust class actions accusing NAR and major real estate companies of making sellers pay high real estate fees.

This settlement has various implications for the housing market. Here’s a breakdown of the key points:

What Was the Suit About?

The lawsuit focused on NAR’s Buyer Broker Commission Rule, which required listing agents to offer compensation for the buyer’s agent on a Multiple Listing Service (MLS). The plaintiffs argued that this forced sellers to pay for buyer’s agents, inflating home prices and violating antitrust laws.

How Was the Suit Settled?

NAR agreed to a $418 million settlement and made several changes to real estate agent commission practices:

• MLS Changes: Agents’ compensation will no longer be published on the MLS, allowing buyers to negotiate fees directly with their agents.
• Written Agreements: Buyers must sign a written agreement with their agents before viewing properties, outlining the agreed-upon compensation.
• Subscription Requirements: MLS services cannot require REALTORS®/brokers to subscribe to the service for compensation.

These changes are set to take effect in July 2024.

How Proponents Feel About the Settlement

Supporters believe the settlement will make the market more transparent and competitive. Buyers paying their own agents might lower commission rates and offer more flexible service packages. Sellers could save money if they no longer need to cover buyer’s agent fees, potentially lowering home prices.

How Opponents Feel About the Settlement

Many real estate professionals are concerned about the settlement’s impact on buyers and sellers. They worry that adding agent fees to buyers’ costs could make home buying unaffordable for some, especially first-time and VA buyers, who are prohibited from paying certain fees.

Why Agents Are Concerned for Sellers

Sellers might not save as much as expected. With fewer buyers able to afford additional fees, sellers may need to offer incentives to attract buyers, potentially still covering the buyer’s agent fees indirectly.

Why Real Estate Agents Charge What They Do

Real estate commissions are negotiable but often reflect the extensive work agents do, including marketing, negotiations, and managing transactions. The 6% commission, though common, is not mandated and covers various upfront and behind-the-scenes costs.

What the NAR Settlement Means for Buyers and Sellers in 2024

For Buyers:

• You might not need to pay your agent out-of-pocket, as sellers may offer concessions to cover these costs.
• You must have a signed agreement with your agent before touring properties.
• Negotiating different payment structures with agents is possible but might not always be cheaper.

For Sellers:

• Expect to pay similar overall rates as before, with around 3% to your agent and possibly 3% in concessions to buyers.
• Real estate commissions remain negotiable, but skilled agents will likely maintain their rates.
• Refusing to cover buyer’s agent fees could reduce your pool of potential buyers.

The Bottom Line

The NAR settlement aims to create a fairer and more transparent commission structure but introduces new challenges. If you have questions about these changes, feel free to reach out for guidance on navigating the current real estate market.