National Association of Relators Settlement and What it Means For You

 

Background 

The National Association of Realtors (NAR) agreed in March to pay $418 million and make changes to how the home-buying process works in order to settle a class-action lawsuit that alleged the industry conspired to make agent commissions higher than they needed to be.

How the process used to work was that the listing agent and a seller would agree on a commission to be paid to the agent’s Broker, out of the proceeds of the transaction. The agent would post the listing on the MLS (Multiple Listing Service). The listing on the MLS would state the commission that the listing Broker would pay to compensate the buyer’s Broker.  This amount of compensation varied, it was a percentage of the sale price and was negotiable, not set. 

The lawsuit alleged that most homeowners either didn’t know, or didn’t feel they could negotiate, the commission rate and that some real estate agents would “steer” buyers to specific homes based on the amount of compensation they could receive.  

As a result of the settlement new provisions have been made in regards to the way buyer’s Brokers receive compensation. Click here to read the Broker Compensation Advisory.

The provisions of the settlement go into effect on Aug. 17. 

Here is a synopsis of what will happen starting August 17th, 2024:

1. Buyer Broker commission will no longer be published in the Multiple Listing Service (MLS).
2. Buyers will not be allowed to view homes with their Realtor without a signed Buyer Representation Agreement between them and their Realtor.

 

How will Buyer’s agents be paid for their work going forward?

Who pays the buyer’s Broker’s commission is negotiable.  In the past, the listing Broker has paid this fee (which came from the seller’s profit). 

  

Here are some scenarios we may see after August 17th:

1. The buyers can pay their agent’s Broker directly at close of escrow – it would be assumed that buyers may make an offer on a property that reflects this payment.
2. The buyer can ask the seller to cover all or a portion of this fee. This may also change the offered price on a property.

 

These major changes will take place on a NATIONAL LEVEL.

I will be doing one on one counseling with all my buyers and sellers so they can be fully informed on how these changes will affect them as they move forward in the buying and selling process. In addition to this, educating buyers on how they can best negotiate this contract with their agent is top of my list. Please contact me directly if you want to set up a time to meet and review the Buyer Representation Agreement together.