As the dust settles from the NAR agreement, one thing is clear: the real estate commission landscape will never be the same. For buyers and sellers alike, understanding these new compensation models is key to maximizing value in your next transaction.
Key Takeaways:
Commission Transparency: Buyer agent commissions can no longer be listed on MLS platforms, promoting a more transparent and competitive real estate market.
Written Buyer Agreements: Buyers must sign a written agreement with their agent before touring homes, detailing the agent's compensation, which is fully negotiable.
Impact on Pricing: The removal of mandatory buyer agent commission listings could lead to more flexible pricing strategies and potentially lower home prices.
Background on the NAR Settlement
In 2019, a class-action lawsuit was filed against the National Association of Realtors (NAR) by a group of home sellers in Missouri. They alleged that NAR’s practices inflated real estate commissions, violating antitrust laws. In 2023, the jury ruled in favor of the plaintiffs, leading to a $1.8 billion verdict against NAR. To settle this lawsuit and several others, NAR agreed to pay $418 million and implement significant rule changes, although they denied any wrongdoing.
Key Changes Introduced by the Settlement
The NAR settlement introduces two major rule changes:
Elimination of Buyer Agent Commission on MLS Listings: Previously, when agents listed homes on Multiple Listing Services (MLS), they were required to disclose the buyer agent’s commission that was to be paid by the sellers. This practice has been removed. Sellers can still offer compensation to buyer agents, but these offers can no longer be listed on MLS, Zillow, Redfin, etc. This change is intended to increase transparency and encourage more competitive commission structures.
Requirement for Written Buyer Agent Agreements: Buyers must now sign a written agreement with their agent before touring homes, whether in person or virtually. This agreement must include clear and conspicuous details about the agent's compensation, which is fully negotiable. The agreement must also ensure that the agent cannot receive compensation beyond what is specified in the contract, and that commissions are not set by law.
These changes, effective August 17, 2024, aim to create a more transparent and competitive market for real estate services.
Pros and Cons for Home Buyers
Pros | Cons |
Increased Transparency: Buyers fully understand the services they are receiving and the costs involved, which can lead to more informed decisions. | Potential for Higher Upfront Costs: Buyers may need to pay their agent's commission directly, increasing the upfront cash needed to complete a purchase. |
Negotiation Power: Buyers have more leverage to negotiate their agent’s compensation, potentially leading to lower costs. | Complex Negotiations: The responsibility for negotiating commissions falls more heavily on the buyer, complicating the process. |
Customized Services: Agents may offer non-traditional pricing models, allowing buyers to pay only for the services they need, potentially reducing overall costs. | Risk of Reduced Services: Some buyers might choose to forgo certain services to save money, potentially leading to costly mistakes. |
Why Buy With KPeterson.realty?
Let’s get real. Most people think real estate agents are just glorified door openers, not worth the commission they charge. Honestly, we used to think that too. But here’s the truth: while some agents might live up to that low bar, the great ones? They’re worth their weight in gold. And that’s exactly what we deliver when we represent you as a buyer.
Here’s how we do it differently:
Financing Strategy That Saves You Hundreds of Thousands: Crafting the right offer isn’t just about choosing a number—it’s about making the smartest financial moves. Whether you’re financing through a loan or going all-cash, how you structure your deal can make or break your investment, especially when factoring in tax implications and long-term interest. With over a decade of experience as a private lender, our team has a proven track record of saving clients hundreds of thousands through savvy mortgage and tax strategies. That’s real money in your pocket, not just empty promises.
Top-Tier Contractor Network: Buying a home isn’t just about the house - it’s about having a rock-solid plan. We don’t just hand you a list of contractors; we plug you into a network of top-tier pros who deliver quality service and competitive pricing every time. With our extensive renovation experience, we’re not just your agents—we’re your lifelong advocates and partners. We’ll point you to the best deals on materials, furnishings, cleaners, and everything else you need. Bottom line? We’ve got you covered, from start to finish.
The Data-Driven Dream Team: We’re not your average real estate squad—we’re a powerhouse with serious credentials. We’ve got a Fortune 500 management consultant and a former multinational VP with an MBA on our side. That means when it comes to pricing, negotiations, and client relationships, we don’t just play the game—we dominate it. We pioneer cutting-edge data analytics to give you an unbeatable edge, ensuring every decision you make is smart, strategic, and sets you up to win big. This isn’t just real estate—it’s real strategy.
We’re not just here to open doors - we’re here to open doors to your future. And we make sure every step of the way adds value to your investment. That’s our promise.
Pros and Cons for Home Sellers
Pros | Cons |
Potential Cost Savings: Buyer agent commission is now a negotiating point in the offer (i.e. Residential Purchase Agreement). Sellers will now be able to evaluate offer price, terms and conditions, and buyer agent commission to net them the highest amount. | Increased Risk To Closing: Discount agents may not be competent enough to provide a solid and reliable offer for their buyers, resulting in buyer’s inability to close on time or at all. |
Greater Control: Sellers have more control over how and when they disclose compensation to buyer agents, helping them avoid overpaying. | Need for Strategic Negotiation: Sellers will need to be strategic in negotiating with both their own agent and potential buyers, adding complexity to the selling process. |
Flexibility in Marketing: Sellers can offer incentives through various channels, such as seller concessions towards closing costs or buying down the buyer’s mortgage rate. | Legal and Ethical Concerns: The removal of buyer agent commissions may prompt buyers to work directly with the listing agent, resulting in a dual agency situation. Dual agency can present significant legal and ethical challenges, particularly if the agent does not properly disclose their dual representation or if there’s any perception of favoritism towards one party. Such issues can lead to legal disputes, and in some instances, the transaction could be nullified. |
Potential for Lower Home Prices: One of the most anticipated outcomes of the settlement is a potential decrease in home prices. If sellers are not paying as large of a buyer agent commission, then buyers will decrease their offer price accordingly. |
Why Sell With KPeterson.realty?
We get it—selling your home comes with three major fears: overpricing or underpricing, lack of killer marketing, and agents who ghost you when it matters most. Here’s how we crush those concerns:
Nailing the Perfect Price (Precision Over Guesswork): Pricing your home isn’t just slapping a number on it—it’s a calculated, strategic play. We go deep into the data, breaking down every trend, from the stock market to mortgage rates, unemployment stats, and local Bay Area pricing trends. We don’t just analyze the market—we dissect it, pinpointing the price that not only attracts serious buyers but also maximizes every dollar of profit. Want proof? Check out my monthly market reports—they’ll show you the depth of our analysis. We’ve even developed a customized, proprietary scattergram that visually maps out where your home’s price per square foot stands, based on the latest neighborhood comps. This is how we position your home to sell fast and for top dollar. This isn’t guesswork—it’s precision at its finest.
Marketing That Dominates: We don’t just list your home - we launch it like a rocket with marketing that demands attention. Forget just the basics like professional photography and virtual tours - that’s entry-level stuff. We’re talking about blanketing the neighborhood with directional signs, knocking on doors, hosting catered open houses, and unleashing targeted ads and social media blitzes that make your property impossible to ignore. We even text local buyer’s agents to get their passive buyers off the couch. Our marketing isn’t just good—it’s next-level, and it’s designed to get your home in front of the right buyers, fast.
Communication That Puts YOU in the Driver’s Seat: Let’s get one thing straight - communication isn’t just important, it’s non-negotiable. From day one, we’re all about clarity and transparency. When you’re selling one of your biggest assets, you need to know exactly what’s going down. With our background in project management and corporate leadership, we don’t just talk - we deliver. We manage every detail with precision, using Gantt charts to keep contractors and vendors on point, so your house hits the market ready to dominate. And you? You’re getting real-time updates on market shifts, how they’re affecting your sale, every offer on the table, and our exact strategy for negotiation. We don’t just keep you informed - we make you a partner in every move, ensuring you’re in control, empowered, and ready to win from start to finish.
The Bottom Line to the NAR Settlement:
The NAR settlement is shaking up the real estate game in a big way. For both buyers and sellers, this is a moment of opportunity—more transparency, potentially lower costs—but it’s also a time for sharp focus. The new rules bring challenges that demand serious attention.
Here’s the deal: navigating this new landscape requires a top-tier agent who knows their stuff. Competence and professionalism aren’t just nice-to-haves anymore; they’re non-negotiable. If you want to make informed decisions and come out on top, you need an agent who’s not only ethical but also laser-focused on strategy and negotiation.
Choose wisely, and you’ll navigate this market with confidence and come out ahead.
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