Buyer Beware: Big Shifts in Real Estate Commissions Coming Soon

From August, 2024, the National Association of Realtors (NAR) implemented significant changes to real estate commissions as part of a $418 million settlement resolving lawsuits alleging its policies inflated home selling costs. The key changes are:

  1. Listing brokers can no longer advertise or make blanket offers of compensation to buyer’s agents on Multiple Listing Services (MLS), requiring compensation to be negotiated outside the MLS.
  2. Buyer’s agents must enter into written agreements with clients before showing homes, outlining services provided and fees charged.

Ramifications for Buyers

The changes aim to increase transparency around agent compensation paid by buyers. Some potential impacts include:

  • Buyers now need to directly negotiate and agree to compensate their agent through the written buyer-broker agreement. This could lead to lower or differentiated commission rates as agents compete for buyers’ business.
  • If sellers refuse to pay the buyer’s agent, buyers may need to pay their agent’s fee out-of-pocket or negotiate a seller concession to cover it. This added upfront cost could deter some from using an agent.

Ramifications for Sellers

  • In a seller’s market, the seller most likely won’t pay buyer agent commissions.
  • Buyers may factor higher agent costs into their offer price or request closing cost credits. Sellers with multiple offers may favor those not asking for concessions.
  • Listing agents may be incentivized to steer buyers to listings offering buyer’s agent compensation to secure both sides of the commission.

Overall, the changes aim to increase competition and options around agent compensation. However, the full impact on pricing, service models, and negotiating dynamics remains to be seen as the real estate industry adapts to the new rules starting in July 2024.


The National Association of Realtors (NAR) reached a $418 million settlement to resolve a series of lawsuits brought by home sellers alleging that NAR’s policies inflated real estate commissions and costs for consumers.

The key issue in the lawsuits was the practice of “tying” or “steering,” where NAR rules required that commissions paid to buyer’s agents be set and offered by the seller’s agent when listing a home on the Multiple Listing Service (MLS). This effectively forced sellers to offer compensation to the buyer’s agent in order to have their home listed on the MLS, which dominates around 90% of the residential real estate market.

The lawsuits alleged that this tying practice, along with other NAR rules, unfairly inflated commissions and costs for home sellers by restricting competition and negotiation over agent compensation.

Rather than going to trial, NAR agreed to an out-of-court settlement in March 2024 to resolve these nationwide claims brought by home sellers. Key terms of the settlement include:

  • NAR will pay $418 million in damages over four years to the plaintiffs.
  • Listing agents can no longer advertise or make blanket offers of compensation to buyer’s agents on the MLS. Compensation must be negotiated outside the MLS system.
  • Buyer’s agents must enter into written agreements with their clients before showing homes, clearly disclosing compensation details.

The settlement covers NAR, over 1 million NAR members, state/local realtor associations, and smaller brokerages. Larger brokerages can opt-in to be covered.

While NAR denied wrongdoing, the settlement aims to increase transparency around agent compensation and give home buyers/sellers more options to negotiate commissions directly rather than having them dictated through the MLS listing.

Future Implications

While the settlement aims to increase transparency and competition around real estate commissions, it’s difficult to predict how the changes will fully play out and evolve in the industry. A few factors that make the long-term impact harder to foresee include:

  • The real estate market can vary significantly by location and conditions, impacting negotiating dynamics between buyers, sellers, and their agents. Commissions may evolve differently in hot markets versus buyer’s markets.
  • Larger brokerages and agents may adapt their business models and pricing structures in unexpected ways to remain competitive. There could be unintended consequences as the industry adjusts to the new rules prohibiting published buyer’s agent compensation on MLS.
  • Consumer behavior and preferences are also difficult to predict. Some may embrace the ability to negotiate commissions, while others may prefer the traditional commission model for convenience. The extent to which buyers are willing to pay their agent directly or request seller concessions remains unknown.

Ultimately, how quickly and smoothly the new commission landscape takes shape is hard to foresee given the complex factors at play as the July 2024 changes get implemented across the nation.

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