NAR Settlement Explained

THINGS HAVE CHANGED.  What does the NAR ( National Association of REALTORS) Lawsuit Settlement Mean For You??

In a real estate transaction, the seller typically pays a negotiated  commission with the listing Broker, The listing Agent (the Agent representing the seller) then chooses to share a percentage of that commission with the buyer’s Broker (the Agent representing the buyer).

Example: If you hire a painter to paint your home and that painter chooses to hire someone to help him in order to get your house painted faster, The listing Agent is choosing to compensate a buyer’s Agent to get the home sold faster.

The amount of the compensation the listing Agent is offering is added to the MLS (Multiple Listing Service) so the buyer’s Agent knows what she/he will make.

As of August 17,2024 that process will no longer be allowed,  The National Association of Realtors (NAR) settlement refers to a significant legal development involving the NAR and several major real estate brokerages related to antitrust lawsuits. The lawsuits challenged certain practices in the real estate industry, particularly the way commissions are handled in home sales.

Settlement Details
In 2023, the NAR and some of the brokerages involved reached a settlement to resolve these antitrust claims. While the specifics of the settlement varied, key elements included:

Changes to Commission Practices: The settlement required changes to how commissions are disclosed and negotiated. Commissions are no longer allowed in MLS.

Impact on the Industry: The settlement has led to increased scrutiny of traditional commission structures and could lead to more competitive commission rates in the future. Real estate professionals are now more likely to discuss commission structures upfront, and there may be a shift toward alternative pricing models.

What Does This Mean For Sellers? Not much has changed for the sellers, they still will negotiate the commission with the listing Agent and then decide if there will be compensation offered to a buyer’s Agent.

What Does This Mean for Buyers?  Buyer’s will see the biggest change, Prior to beginning to look at homes Buyers all across the country will have to sign a Buyer's Broker Agreement with a REALTOR®, should they want to work with one. It will outline what duties the Broker owes the buyer and the compensation the Broker will receive. This agreement can be property specific (like for just a day of showings) or longer term. Compensation can't be open-ended or vague. The agreement is exclusive and Buyers should take care not to sign overlapping multiple contracts with different Brokers.

Buyers can choose not to see homes that won't pay for their Broker. If they choose to see houses that the seller is not offering compensation and if the buyer's Broker cannot negotiate that in the offer then the buyer is responsible for paying their Broker.

Buyers don't have to work with a broker at all and never had to. They can proceed as Unrepresented Buyers. 

 

If you chose to work with an Agent, then now more than ever it’s so important to find a REALTOR® that you trust, all good Agents will explain it to you before you sign, read what you’re signing. 

I’m always here if you have any questions at all. Please feel free to reach out to me. 

JoAnn Deville 

BROKER/OWNER

Southern Homes & Land Real Estate

318.451.2385 Direct

joanndeville@gmail.com

 

Brokers Buyer Agreement Example

Brokers Buyer Agreement by Joanndeville