On March 15th, 2024, The National Association of REALTORS® (NAR) reached an agreement with plaintiffs that would end litigation of claims brought on behalf of home sellers related to broker commissions. The Settlement also includes some changes to real estate transactions, but importantly, consumers will continue to have choices regarding real estate services.
Buying a home is one of the largest financial transactions of a person's life. Below are facts about NAR's proposed settlement and how the changes taking effect August 17, 2024 will impact home buyers and sellers.
Understanding the real estate practice changes
- Compensation remains fully negotiable by buyers and sellers and their agents.
- When finding an agent to work with, buyers and sellers should ask questions about compensation and understand what services they are receiving.
Buyers must sign a written agreement with their chosen agent before touring a home - whether in-person or live virtually. The agreement will reflect the terms they have negotiated with their agent, including what services will be provided, for how much and how the agent will be compensated.
The listing agent or seller may offer compensation to the buyer's agent, but there are limitations to how that offer can be marketed-i.e., agents can no longer communicate offers of compensation on a Multiple Listing Service (MLS).
If there is an offer of compensation to a buyer's agent from a listing agent or the seller, the seller must approve the specific amount or rate of payment in writing.
- If sellers have not offered compensation, buyers can request in their offer that sellers compensate the buyer agent. If the seller is not paying buyer agent compensation, the buyer will be responsible or paying their agent if agreed to in the written agreement.
- Buyers do not need a written agreement when just speaking to a listing agent at an open house or asking them about their services.
- Current regulation does not allow agent commission payments to be financed as part of a mortgage
- Sellers can still offer -and buyers can still accept- concessions such as offers to pay the buyer's closing costs.
- The changes further empower consumer choice through transparency
- Agents who are REALTORS® are ethically obligated to work in the client's best interest.
Home buyers and sellers have a wide range of choices. As a trusted source of advice, agents who are REALTORS® help home buyers and sellers as they navigate their home journey and make the choices that work best for them.
