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By Susan Cooper

The Facts: What the NAR Settlement Means for Home Buyers and Sellers

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:

Real estate agents who use and list properties for sale on a Multiple Listing Service (MLS)—a local marketplace used by real estate professionals (both buyer brokers and listing brokers) to share information about inventory in a particular area—will be required to enter into written agreements with buyers before touring a home. Those written agreements must include:
- 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.

NAR has long encouraged its members to use written agreements with buyers because they help consumers understand exactly what services they have agreed to, the roles and responsibilities, and the amount. For this reason, several states already have laws requiring buyer agreements.

There are also changes to how and where real estate professionals may communicate with each other about offers of compensation. These offers are no longer allowed on Multiple Listing Service (MLS) platforms. Sellers can still offer compensation off an MLS. Sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).

Things to know as a home buyer or seller:

If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much.
Written agreements are required for 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.
Agent compensation for home buyers and sellers continues to be fully negotiable.
When finding an agent to work with, ask questions about their services, compensation and these written agreements.
More details about these changes and what they mean can be found at facts.realtor.

Homebuyers: Here's What the NAR Settlement Means for You

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.

These practice changes will go into effect August 17.

Here is what the settlement doesn’t change:

Agents who are REALTORS® are here to help you navigate the homebuying process 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 understand what services you are receiving.
You have choices. Work with your agent to understand the full range of these choices when buying a home, which will help you make the best possible decision for your needs.

More details about these changes and what they mean can be found at facts.realtor.

Home Sellers: Here's What the NAR Settlement Means for You

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).

These settlement practice changes will go into effect August 17.

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.

More details about these changes and what they mean can be found at facts.realtor.

Home Sellers: Here's What the NAR Settlement Means 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).

These settlement practice changes will go into effect August 17.

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.

More details about these changes and what they mean can be found at facts.realtor.

The source of the information is by the NAR (National Association of Realtors) Real Estate Topics Nar Settlement get the facts. Updated on May 24, 2024

For more information about NAR click below

https://www.nar.realtor/the-facts/what-the-nar-settlement-means-for-home-buyers-and-sellers

Community Information and Education provided by Susan Cooper of Centennial & Realty & Mortgage Company a local REALTOR, Real Estate Broker and Founder of the Community Impact and Empowerment Foundation a 501c3 organization.