The NAR Settlement and What YOU Need to Know!

🏡As the real estate landscape evolves, so do the rules of engagement! 🏡The real deal with the NAR Settlement is about transparency. Read further to find out the key aspects of the National Association of Realtors®️ (NAR) settlement and how it affects consumers.

How Do Agents Get Paid?

Traditionally, real estate agent commissions have worked on a percentage basis, where agents receive a percentage of the final sale price of the property they help buy or sell. Commission Rate: ALWAYS negotiable. Every brokerage is free to set their own commission fee. This is usually a percentage (~5-6%) of final sales price. This can vary based on local market conditions, property type, and level of services provided. When a seller agrees to pay a listing agent a pre-determined commission, the listing agent would typically offer a portion of the commission to the buyers agent/brokerage. Split Commission: If listed by an agent, total commission is divided between listing agent and buyer’s agent, with each receiving a portion based on their agreement with clients and brokerage firms.

Will The NAR Settlement Change Things?.. If Yes, How?

Initiated in August of 2024, buyer broker compensation or Buyer Agency Commission (BAC), cannot be shown or listed in the MLS… nationwide. Sellers can still offer compensation to the buyer brokerage, but it has to be arranged/negotiated and communicated outside of the MLS. Also initiated in August 2024, buyers nationwide MUST sign a written agreement (for representation), with their real estate agent’s broker. This is similar to the listing agreements that are always required to be signed by the sellers when working with a listing agent’s broker. Buyers and their agents will need to reach an agreement regarding how the agent will be compensated for their services and put it in writing prior to touring a home.

How It Affects Home Buyers:

A written buyer agreement is an agreement between you and your real estate professional outlining the services your real estate professional will provide you, and what they will be paid for those services. Buyers would ultimately benefit from buyer broker agreements, as increased clarity regarding the services their agent provides, and more variable commission structure. Additionally, buyers may need to have extra funds to compensate their agent for representation and protecting their interests, especially if the sellers does not or is unwilling to offer cooperative compensation.

NAR policy does not dictate:

What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).
The term of the agreement (e.g., one day, one month, one house, one zip code).
The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).
The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate).

How It Affects Home Sellers:

Sellers could experience delays in selling their home/property as buyers might not have the necessary funds to cover their agent’s commission. Over time, sellers who initially opted not to provide a fee for buyer agents may find it necessary to renegotiate with their listing agent and offer cooperative compensation to buyers agents. Buyers may include contingencies requiring the seller to cover the cost or request other concessions in an offer. The settlement does NOT prohibit sellers from paying commission to buyer’s agents. Sellers have the choice, and always have had the choice to offer buyer’s agent commission. Sellers can continue to offer compensation to buyer’s agents if they feel it will lead to the best outcome for their home sale. ** It is important to note that a seller has never been obligated to pay buyer agent compensation, yet this practice has worked well. Today the MLS accepts all listings, regardless of buyer agent compensation.**

The Impact On Real Estate Agents

Real estate agents will continue to consistently prioritize their clients’ best interests as our foremost responsibility. We will continue ensuring unwavering protection and advocacy in every circumstance. As a local Upstate, SC REALTOR, I am committed to providing expert guidance and competitive rates throughout my clients’ buying and selling journey. This settlement opens the door for potentially more flexible commission structures in the future. Agents have an opportunity to showcase their value more transparently, potentially leading to stronger client relationships and a more tailored service approach.

There is a lot of misinformation in the media, and it is important that you are aware of what is going on in the industry. Misinformation can cost you time and money. So speak to a professional. Someone who is working in the industry, and has knowledge about these changes. If you have questions about the NAR settlement, or general questions about the home buying or selling process, please reach out today! Give me a call! I would love to assist you!