The recent National Association of REALTORS® (NAR) settlement, finalized on March 15, 2024, marks a significant shift in real estate transactions, particularly concerning broker commissions. Effective August 17, 2024, this settlement introduces key changes aimed at enhancing transparency for consumers. Here’s what home buyers and sellers need to know:
Key Takeaways for Home Buyers and Sellers
For Home Buyers:
- Written Agreements with Agents:
- Buyers must sign a written agreement with their agent before touring homes, whether in person or virtually. This agreement will include:
- The amount or rate of compensation the agent will receive.
- A clear compensation structure (e.g., flat fee, percentage, hourly rate).
- A provision stating that the agent cannot receive compensation exceeding the agreed amount.
- A clarification that commissions are negotiable.
- Buyers must sign a written agreement with their agent before touring homes, whether in person or virtually. This agreement will include:
- Negotiable Commissions:
- Commissions remain fully negotiable between buyers and agents. There are no mandated rates, so it’s important to discuss compensation details upfront.
- No Compensation Offers on MLS:
- Offers of compensation to buyer brokers will no longer be displayed on Multiple Listing Service (MLS) platforms. However, sellers can still provide buyer concessions, such as closing cost assistance, through the MLS.
- Open Houses:
- Buyers do not need a written agreement when speaking to an agent at an open house or when inquiring about their services.
For Home Sellers:
- Transparency in Agent Compensation:
- When listing a property, agents must clearly disclose the compensation offered to them, as offers of compensation for buyer brokers will no longer be visible on the MLS.
- Negotiate Freely:
- Sellers can still negotiate the commission offered to agents or concessions for buyers, but these discussions must take place outside the MLS listing.
Why It Matters:
This settlement aims to provide consumers with a clearer understanding of how agents are compensated, ensuring that fees are fully negotiable. By requiring written agreements at the outset, it increases accountability and removes ambiguities surrounding broker compensation. Ultimately, this empowers buyers and sellers, granting them more control and transparency throughout the real estate process.