With terms going into effect August 17, 2024, The National Association of REALTORS® (NAR) settlement has introduced significant changes to how real estate transactions are conducted in the U.S. From new rules on agent compensation to mandatory written agreements for buyers, these updates affect both homebuyers and sellers in important ways. In this FAQ, we break down the most pressing questions about the settlement, helping you understand what’s changed, what remains the same, and how to navigate the evolving real estate landscape with confidence.
The National Association of REALTORS® has provided the following guides for buyers and sellers, explaining the impact of the 2024 settlement. Frequently Asked Questions are below, or read more at NAR’s website:
Here’s What the NAR Settlement Means for You
For Home Buyers | For Home Sellers
How do the new rules affect how real estate agents are paid?
Each agent must negotiate compensation directly with their own client. While sellers can still offer to pay buyer’s agents, these agents can’t simply rely on the seller’s offer – they need a signed agreement with their buyer client first. All commission rates are negotiable and must be agreed upon before any contracts are signed.
Do I have to sign a written agreement with a buyer’s agent before touring homes?
Yes, buyers must sign a written agreement with their agent before viewing homes. This document clarifies the services provided and how the agent will be compensated. The goal is to ensure both parties fully understand the agent’s service and costs upfront.
Can sellers still offer to pay a buyer’s agent’s commission?
Yes, sellers can still offer a buyer’s agent’s commission, but they are not required to do so. Any such offer must be made off the MLS, and negotiations on compensation must be handled separately. The NAR settlement encourages more options for structuring commissions.
Will this change how much I pay in commissions as a seller or buyer?
Possibly. With commissions no longer bundled into the listing, buyers may need to pay their agent directly, while sellers may negotiate lower listing-side commissions. Overall, the market may see increased competition and potentially lower commission costs.
How do I negotiate compensation with my real estate agent?
Buyers and sellers should discuss the services being offered and agree on their agent’s compensation before signing anything. Compensation can be structured as a flat fee, hourly rate, percentage of the sale price, or another agreed-upon method. Agents must clearly outline their services and commission they seek before working with clients.
Will the changes impact the total cost of buying or selling a home?
The overall cost may shift depending on how commissions are negotiated. Buyers may need to budget separately for their agent’s fees, while sellers may adjust their pricing strategies based on new commission structures. Over time, the market will determine how these costs balance out.
Will these changes make it harder for buyers to afford an agent, and what are my options?
Some buyers may find it challenging to pay for an agent out of pocket, especially first-time buyers. However, alternative payment structures (e.g., flat fees, rebates, or lender credits) may emerge to help buyers manage costs. Buyers can also attempt to negotiate with sellers for agent compensation or explore dual-agency scenarios if permitted in their state.
Are there any risks to buyers or sellers with these new rules?
Buyers who don’t fully understand agent fees may find themselves unrepresented or paying more than expected. Sellers may need to adjust their pricing or marketing strategies if fewer buyers’ agents are bringing buyers. It’s essential to have clear agreements in place and a strong understanding of the market before proceeding with a transaction.
Will I still get the same level of service from my real estate agent?
After the NAR settlement it may be expected that agents will tailor their services based on the compensation structure agreed upon. Buyers and sellers should clearly define expectations in their agreements to ensure they receive the level of service they need.
What should I look for in a written agreement with a buyer’s agent?
Ensure the agreement clearly states the services provided, the compensation structure, and any exclusivity clauses. Look for flexibility in payment terms and understand whether the fee is fixed, negotiable, or contingent on seller contributions.
For any questions about the NAR settlement or how it affects buyers and sellers in New York, feel free to contact Cornerpin’s licensed real estate broker Hans Soderquist or book a 15 minute call on Google Calendar.
