TODAY’S WAY OF
BUYING A HOME
Big Changes Ahead on How Americans Buy and Sell Homes
LET'S CATCH YOU UP
The National Association of REALTORS® (NAR) Settlement
In August 2024, the real estate landscape in America made a profound shift, particularly in how buyers and sellers negotiate and disclose their agent commission fees.
Traditionally, broker commissions were listed on the MLS (Multiple Listing Service) and sellers used a percentage of their proceeds (upwards of 6% of the purchase price) to pay the real estate commission of both the listing agent and the buyer's agent. ​However, with the NAR lawsuit settlement now in effect, offers of compensation are prohibited on MLS, and sellers are only held responsible to pay their listing agent's fee; not required to pay the commission for the buyer's agent. While many sellers may choose to still offer compensation to the buyer brokers as a way to make their listing more attractive, buyers may need to pay their agents out-of pocket, which could be a percentage of the sale price, a flat fee, or an hourly rate.
This shift represents a major departure from how commissions have traditionally been paid, potentially leading to sticker shock for buyers. For instance, if a buyer's agent commission is 3% on a $400,000 home, the buyer would need to pay $12,000 out-of-pocket.
Another significant change is the mandatory "Buyer Agreement" that must be signed prior to any touring. This contract provides a clear understanding of how much the buyer's agent will be paid and for what services giving agents some reassurance that a client will stick with them through their home-buying process, and will also benefit consumers by providing transparency about compensation and the services being offered.
However, with sellers no longer footing the bill for the buyer's agent, some realtors have openly stated they won't show homes where the seller isn't willing to pay a commission. This scenario places an added burden on buyers, who must now do more homework before selecting a realtor. Researching agents, reading reviews, and meeting face-to-face or over Zoom is more crucial than ever.
