The National Association of Realtors (NAR) recently came to an agreement that would resolve litigation brought on behalf of home sellers related to broker commissions.

NAR to this date denies the allegations, but in order to protect their members and to end the lengthy court battle, they agreed to a settlement that will change the way both Buyers and Sellers do business selling and buying real estate.

Here is a very brief summary as of this date, highlighting the 4 major changes that will affect Sellers and Buyers AND agents. A detailed version of the facts can be found on NARS Website

1. Commissions will no longer be offered in the Multiple Listing System.
2. Buyers will be REQUIRED to sign a “Buyers Broker Agreement” before an agent can show a property.
3. Sellers are not required to offer compensation to a Buyers Broker.
4. If an agent wants to be guaranteed payment, they will have to negotiate payment with with the Sellers agent BEFORE even SHOWING the home or submitting an off to Purchase on behalf of a BUYER and or ensure that the Buyers Broker agreement has verbiage stating the BUYER will be responsible for compensating the BB should the Seller be unwilling to pay any compensation.

Historically, Listing agents would post the amount of commission in their regional Multiple Listing Service (MLS) that the Home Seller had agreed to pay the Buyers Broker upon a completed transaction. This posted amount would in a sense be the contract between the Sellers agent and the Buyers agent stating the Buyer would receive compensation and how much. Now all of that will have to be negotiated outside of the MLS and before a Purchase offer can be presented to a Seller.

Most states already require Buyers to enter into a Buyer Broker Agreement before working with them and many states already required the compensation to the Buyers Broker be paid by the Buyer. But for the remaining states that have not had that requirement, it will be necessary to education the Buyers of the changes going forward.

One of NARS arguments against the accusation of “price fixing” is that, NAR nor it’s members have ever set a required price to pay each agent. It has always been up to the Home Owner (or Seller) to decided how much if any they would pay. However, the new Settlement Agreement, is hoping to clarify that the Seller is under no obligation to pay anything to anybody to sell a home.

Before your agent can even go on a 20 house road tour to help you find your dream home, they will have to reach out to each individual Sellers agent to find out if and how much they may be willing to compensate the Buyers agent for bringing them a Buyer. If the Seller has not agreed to pay a Buyers agent and the Buyer does not agree to pay any compensation to their agent, the agent may choose not to show the property. This could be a dicey road for Agents and Clients (Sellers and Buyers) and only time will tell how this all plays out.

In conclusion, as of June 10, 2024, the Settlement has not been finalized and could change. But until then, a date of August 17th has been set for the switch to flip. If you are looking to Buy in Arizona or any state that has not required a Buyers Broker agreement, be prepared to sign one.

Stay tuned for updates.

The Truth About the NAR Settlement Agreement