OVerview

On March 15, The National Association of REALTORS® (NAR) reached an agreement with plaintiffs that would, if approved by the court, end litigation of claims brought on behalf of home sellers related to broker commissions. The Settlement also includes some changes to real estate transactions, but importantly, consumers will continue to have choices regarding real estate services.

These practice changes will go into effect on August 17, 2024:

  • Offers of compensation will be prohibited on Multiple Listing Services (MLSs). Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make homeownership and the benefits of professional representation more accessible to buyers, including first-time homebuyers, increase homeownership opportunities for historically underserved groups, and benefit sellers by expanding the potential buyer pool. and ensuring they receive the best offer possible for their property.
  • Agents working with a buyer will enter into a written buyer agreement before touring a home. The practice changes do not require an agency agreement or dictate any type of relationship. 

Here is what the settlement doesn’t change:

  • Agents who are REALTORS® are here to help you navigate the process of selling your home and are ethically obligated to work in your best interest.
  • Compensation for your agent remains fully negotiable, and if your agent is a REALTOR®, they must abide by the REALTOR® Code of Ethics and have clear and transparent discussions with you about compensation. When finding an agent to work with, ask questions about compensation and discuss what you would like to offer buyers.
  • You have choices. Work with your agent to understand the full range of these choices when selling your home, which will help you make the best possible decision for your needs.

What the NAR Settlement Means for You

Home Sellers

As a home seller, you have a wide range of choices when it comes to listing your home. Agents who are REALTORS® are a trusted source of advice and stand ready to help you navigate this complex process and make the choices that work best for you. NAR’s recent settlement has led to several changes related to broker commissions that benefit sellers, and we wanted to clearly lay them out for you.

Here is what the settlement means for home sellers:

  • You still have the choice of offering compensation to buyer brokers. You may consider doing this as a way of marketing your home or making your listing more attractive to buyers.
  • Your agent must conspicuously disclose to you and obtain your approval for any payment or offer of payment that a listing broker will make to another broker acting for buyers.
  • This disclosure must be made to you in writing in advance of any payment or agreement to pay another broker acting for buyers, and must specify the amount or rate of such payment.
  • If you choose to approve an offer of compensation, there are changes to how this can happen.
  • You as the seller can still make an offer compensation, but your agent cannot include it on a Multiple Listing Service (MLS)—MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale.
  • Your agent can advertise your listing via off-MLS platforms such as social media, flyers and websites.
  • You as the seller can still offer buyer concessions on an MLS (for example, concessions for buyer closing costs).
Home Buyers

Buying a home is one of the largest financial transactions most people will ever undertake. Agents who are REALTORS® are a trusted source of advice and stand ready to help you navigate your homebuying journey and make the choices that work best for you. NAR’s recent settlement has led to several changes that benefit homebuyers, and we wanted to clearly lay them out for you.

Here is what the settlement means for homebuyers:

  • You will sign a written agreement with your agent before touring a home.
  • Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.
  • The buyer agreement must include four components concerning compensation:
    • A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
    • Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
    • A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and,
    • A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
  • Written agreements apply to both in-person and live virtual home tours.
  • You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
  • The seller may agree to offer compensation to your agent. This practice is permitted but the offer cannot be shared on a Multiple Listing Service (MLS)—MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale.
  • You can still accept concessions from the seller, such as offers to pay your closing costs.

Consumer Guides

These guides cover important topics about working with a REALTOR® and explain the recent changes in real estate practices.

  1. Consumer Guide to Written Buyer Agreements
    Learn what buyer agreements are, why you’ll be asked to sign them, and how they help ensure a clear and transparent relationship with your real estate professional.

  2. Open Houses and Written Agreements
    Get a simple explanation of when written agreements are needed at open houses and when they’re not.

  3. REALTORS’® Duty to Put Client Interests Above Their Own
    Understand what it means for a REALTOR® to act in your best interest and how these changes prevent unlawful steering practices.

Additional Resources

Written Buyer Agreements

Buyer agreements clearly outline the services to be provided and account for choice and optionality the buyer and agent have when negotiating the terms of their relationship. The written agreement must include:

  1. A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
  2. Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
  3. A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
  4. A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

Offers of Compensation

While offers of compensation are prohibited on-MLS, compensation and concessions option off-MLS through negotiation between consumers and real estate professionals.

  • Sellers and brokers can still offer compensation off an MLS, and they can still offer buyer concessions on an MLS, such as for buyer closing costs.
  • The types of compensation available for buyer brokers will continue to take multiple forms, including fixed-fee commission paid directly by consumers, concessions from the seller, or a portion of the listing broker’s compensation.
  • Commissions and fees will remain fully negotiable; the settlement preserves the ability of consumers to negotiate their broker’s compensation.

Whether you’re a REALTOR®, homebuyer, or home seller, you can find more resources and the latest updates on NAR’s settlement agreement at facts.realtor.