Lawsuit over NAR real estate commissions.

The NAR Settlement: What Does It Mean For You?

You’ve probably seen the recent headlines…

“The Realtors settlement is already changing the way some Americans buy and sell homes.”
“Consumer advocates — and even some realtors — hail NAR settlement.”
“The 6% commission on buying or selling a home is gone.”


But what does it really mean for the average home buyer and seller? I am going to dive into the details and lay out actual real world examples and info based on the text of the current settlement. But all of this is just speculation since it is NOT yet approved by the court. That won’t happen until July 2024.


So what is this all about? Basically, the National Association of REALTORS (NAR) recently announced a settlement for the Sitzer Burnett case that would, among other things, make it so sellers would no longer have to offer to pay the buyers agent commission and post that offer of compensation in the Multiple Listing Service (MLS).

For the past few decades, sellers have been paying their listing agent a commission for their services. This usually includes a portion specifically labeled to be paid to the buyers agent which is often a 50/50 split of the total commission being charged to the seller. Meaning the listing agent got 50% and the buyers agent got 50%.

Now, while this has always been negotiable between the seller and the listing agent, many in the public view it as a “standard” that was “just the way things are done”. In fact, that offer of sharing compensation with the buyers agent is one of the original reasons to create the MLS databases in the first place. It was a way for listing agents to state what percentage the buyers agent would get paid upon closing. This allowed the buyers agent to cover their costs of representing their client without the buyer coming out of pocket.

However, some sellers and buyers felt it was unfair. Leading to the lawsuit which began around 5 years ago. Specifically it said the National Association of REALTORS did wrong by having rules in place that almost force the seller to pay the buyers agent.


So what does the settlement agreement say? What changes will happen?

Based on the declarations in the media… this outcome will render transacting real estate almost free, protect consumers, and make homeownership affordable once again. Hate to break it to you, but the settlement does none of that.

Here is the truth:

  • The settlement forces brokers to reduce their compensation. False.
    The settlement in no way establishes a standard or limitation on Realtors for what they may charge, nor what services they elect to deliver. Those fees have always been negotiable and there has never been any collective bargaining. In every market, there is a wide variety of fees, just as there are levels of marketing, service and competence.
  • The settlement will, for the first time, allow sellers to no longer pay compensation for an agent bringing the buyer. False.
    There has never been an obligation for a seller to pay buyer agent compensation, yet it is a practice that works well. A past rule requiring an offer of some amount of compensation was a rule of display on a Realtor-owned MLS, yet it could have been as low as $1. NAR chose to remove that limitation last year. This means that as of today the MLS accepts all listings, regardless of buyer agent consideration. Sellers can right now sign a listing agreement that gives ZERO dollars to the buyers agent.
  • The settlement prohibits sellers from paying a commission to a buyer’s agent and relieves sellers of the financial burden. False.
    The mandate restricts properties with an offer to pay the buyer agent compensation from displaying on the MLS. But they can’t restrict the practice in any other form of marketing. That means sellers may still elect to pay buyer agent compensation to differentiate their properties. While sellers can elect not to pay buyer agent compensation, that doesn’t mean they will avoid the economics as buyers may write into any offer a contingency requiring the seller to cover the cost or request other concessions.
  • The settlement will lower prices and make homeownership affordable again. False.
    We determine real estate values by supply and demand. Fees in a real estate transaction represent additional expenses, yet these include not only commissions but many other related charges. Should real estate commissions be reduced by 1% because of compression, that $500,000 home will now cost $495,000. Not only is the potential impact marginal at best, but do you think the seller now believes the home is worth less and will happily give the difference to the buyer? The reason home ownership is increasingly less affordable is that homes in our market have significantly risen in value these last few years. Average real estate agent commissions have remained pretty much the same for the past decade while prices continued to rise. So the two are not, and most likely never were, connected.
  • The settlement is a win for buyers who will now be able to negotiate the fee for representation. Questionable.
    For readers who have purchased homes, it is more than likely you were happy to have the seller compensate your agent so you didn’t have to. For buyers who had to provide the down payment and closing expenses, having the seller pay the commission and incorporating it into the home price did allow them to finance the amount over time instead of coming up with additional cash at closing. For buyers who have a lot of cash on hand, they can afford to pay for their own agent to represent them. But most buyers, especially first time homebuyers, can barely scrape together enough for a down payment. So adding a couple extra thousand dollars to their expenses for a home purchase will be a hard burden.
  • The settlement will result in significant restitution to consumers who were “harmed” over recent years in their transactions by Realtors. False.
    The settlement is huge. Yet when one divides the amount by the number of potentially consumers it works out to about $10 per person. That’s it… $10. The ones who are really benefiting are the attorneys who have submitted a request to the court for over $80 million in fees.


As of now, the National Association of REALTORS has stated they will make the following 2 rules changes:

  1. There will be no more cooperating compensation on the MLS. Agents will still be able to offer compensation to a buyer broker, but it just cannot state it on the MLS.
    Buyers agents will need to contact each listing agent independently to find out if that seller is willing to pay part or whole of the buyers agent commission, or if there are any other concessions the seller will cover to help the buyer. This will take more time. I’m sure this will be a pain point for most buyers agents for a while until everyone gets settled.
  2. If you are a REALTOR MLS participant, you will need a written agreement when representing a buyer.
    This will be a new practice for most agents, but is a good change that needed to happen anyways. For the public, the big change you will notice first is you will get a prompt to sign a buyer representation agreement. This agreement will state, among other things, what you will pay the agent. This will need to be agreed to prior to receiving any property info. It could also potentially mean you will sign an agreement before going on any showings with the agent.


Don’t just take my word for it. Here are some videos and links to get more information that backs up the facts on this page.

Official statement on the settlement from the President of the National Association of REALTORS:

NAR Facts Page:


In the next few articles throughout April, I will be breaking down the settlement language and really show how it will affect you, the consumer. Whether you are a potential new first time homebuyer, thinking of selling your property in the next year or two, or an investor who just wants to know how it affects their bottom line… we will go over all of it in detail.

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