While the lawsuit details and accusations vary, in a nutshell, there have been nationwide claims that NAR allowed inflated pricing strategies, along with supposed “set” commission rates.  Recently, the association reached a settlement (that will still need to go before a judge to make it final) which include two specific details:

(1) buyers’ agents will be required to go into written agreement before showing consumers properties, (2) agents will no longer be permitted to advertise commission rates within the MLS.

I wanted to break down the basic information for practical, day-to-day understanding.

#1 Written Agreement: 

How will this affect you?  From the onset of working with a real estate agent, you will notice more discussion regarding commissions than there has been in the past. 

• Buying a home:  Your agent will provide you with all options available to you during the homebuying process.  An agreement will now be required before showings can be arranged (this process is slightly stricter than before).

• Selling a home:  Similar to the past, you’ll discuss and agree ahead of time the amount of commission you are willing to pay your listing brokerage.  You and your agent will also discuss any additional commission you’re willing to pay to the buyer agency brokerage.  Sellers have always had the choice to pay buyer brokerages for bringing them qualified buyers.  

#2 Commission cannot be advertised within the Multiple Listing Service (MLS):

How will having an agent help you? Commissions will continue to be negotiable for both buyers and sellers.  To clarify, there has never been a set commission rate as some reports have misinformed.

• It remains, that having an advocate on your side of a real estate transaction will provide several benefits to you whether you’re buying or selling a home.  Proficient agents are always busy while working with active clients before, during and up until the closing day, keeping all details of the transaction moving forward in the escrow period. Savvy buyers and sellers should always find an agent who is available, organized, and knowledgeable.  Without that professional working behind the scenes, you and your transaction are at risk for missing important details and deadlines that could impede on your your financial potential.

Example #1…If you’re buying a home without a buyer’s agent, the listing agent can and will work with you, but has the responsibility to negotiate for their seller clients’ best interest.  The listing agent will not work to negotiate what is best for you, but simply provide timely communication. 

Example #2…If you’re selling a home without a listing agent the buyers’ agent will likely have more experience negotiating real estate, a clearer understanding of the due diligence period and escrow process, all of which potentially puts you in a precarious position.

As of now, the settlement details are projected to go into effect mid-July 2024.  Until then, if you have any questions about the changes ahead, I would love to help wade through the information and help create some clarity.