What We Know About the NAR Real Estate Settlement: A Local Realtor’s Guide

What We Know About the NAR Real Estate Settlement: A Local Realtor’s Guide

  • Liz Kroft
  • 03/21/24

The real estate landscape in the United States is poised for significant changes with new regulations set to take effect this summer. While some specifics of these changes vary and require further clarification, it is important to stay informed about the evolving regulatory environment to navigate the real estate market effectively. As a dedicated real estate professional with over a decade of experience selling and in various leadership roles, my priority is to keep you in the loop with accurate information to help you make informed decisions about your real estate journey.


What happened?

On March 15, 2024, the National Association of Realtors® (NAR) announced a $418 million settlement with a nationwide class of plaintiffs in an antitrust lawsuit. The lawsuit centered around claims that Realtors® conspired to artificially inflate commission rates by not being transparent about how buyer’s agents are compensated.


How are buyer’s agents compensated today?

When listing a home, the listing agent negotiates their “commission” or “compensation” with the seller. That can include a portion of that amount being paid or offered to the broker who represents the buyer in that transaction. The details of these commissions are negotiable and incorporated into the written listing agreement, buyer’s agency agreement, and/or purchase and sale price agreement.


What’s changing about how buyer’s agents are compensated?

When a seller’s agent lists a home on a REALTOR®-owned Multiple Listing Service (MLS), they are currently able to include an offer of compensation to the buyer’s agent as part of the listing. Moving forward, this compensation cannot be advertised on the MLS.

The practice of putting the buyer’s agent commission percentage on the MLS has led many to believe that number is fixed. Many agents have not done a good job explaining that commissions are negotiable.

If the court approves NAR’s settlement, agents will no longer be able to advertise any buyer’s agent’s compensation when they list a home on a REALTOR®-owned MLS. This will encourage agents to have more in-depth conversations with their clients around compensation, promoting greater transparency across the industry.

Lastly, buyers will now be required to sign buyer’s agency agreements to ensure they fully understand the buyer-broker relationship, obligations between broker and client and how their buyer’s agent is compensated.


Does this mean buyers are now responsible for the buyer’s agent’s commission?

Not necessarily. Buyer’s agents can continue to be compensated by the seller, whether through the listing agreement which would directly outline the compensation offered or through a credit as negotiated as part of the purchase agreement.  

At the same time, sellers are not required to offer compensation to the buyer’s agent. So if a particular seller chooses to offer 0% commission to the buyer’s agent, as is their right, the buyer may have to find an alternative way to compensate their agent if they wish to purchase that property.


As a seller, what are the benefits of paying the buyer’s agent’s commission?

In most cases, it is in your best interest as a seller to have an experienced, highly professional buyer’s agent on the other side of the transaction to ensure the deal closes on time and that the buyer’s rights are protected. If the buyer, lacking adequate representation, feels the transaction was weighted against them, there’s a greater likelihood of them bringing a claim against you in the future.


In Summary

As we anticipate upcoming regulatory changes in the real estate industry, it's essential to stay informed and adaptable. While the specifics may vary and require further clarification, staying updated will empower you to navigate the evolving landscape confidently. I'm here to provide guidance and support, ensuring you have the information you need to make decisions that align with your real estate goals. Feel free to reach out if you have any questions or want to discuss how these changes may impact you.

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About The Author:

Liz Kroft is a seasoned real estate professional with over a decade of experience serving clients throughout the Bay Area. As the co-founder of Sol Property Advisors and Sol Property Management, Liz is committed to excellence, innovation, and advocacy on behalf of her clients. With a wealth of full-time experience and over $117 million in sales across the California Bay Area, Liz has established herself as a well-regarded agent, industry innovator, and ambassador for her clients.

Liz's dedication to her craft has earned her numerous industry awards, including the 2020 Santa Cruz Sentinel Readers Choice "Best Realtors®" and consecutive nominations for the 2022 and 2021 Good Times Santa Cruz "Runner-Up Best Real Estate Team." In addition to her accolades, Liz has served as the president of the Women’s Council of Realtors® in Santa Cruz, demonstrating her leadership and commitment to the real estate community.

Her expertise and insights have been sought after by reputable publications such as the Santa Cruz Sentinel, KCET, and KION, as well as organizations like Leadership Santa Cruz County and Modern Real Estate Professionals. With a passion for changing clients' lives and creating lasting memories through real estate, Liz approaches her work with integrity, dedication, and a deep understanding of her clients' needs.

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With over nine years of full-time experience and more than $114 million in sales across the greater Bay Area, I work tirelessly to be a well-regarded agent, industry innovator, and ambassador for my clients.

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