My Take on the Proposed NAR Lawsuit Settlement

You may or may not have heard about a proposed national settlement involving the National Association of Realtors (NAR) and others.

I’ve seen many headlines such as “No More 6% Commissions!” and “The NAR real estate settlement could make your next home more affordable.”

Here are the bigger headlines (from my perspective):

“All commissions are negotiable!”

“You’ve always been able to go at it alone!”

“Buyers and sellers have always had a choice to pay a Realtor’s professional fee.”

In the same way that you don’t *have* to pay a CPA to do your taxes or attorney to write up your will, you don’t have to pay a Realtor. But a professional brings great value to a transaction, and that’s no different in real estate.

There are two main features of the national agreement:

1. NAR has agreed to put a new rule in place that prohibits offers of compensation on the Multiple Listing Service (MLS), effective mid-July 2024. Compensation can still be pursued outside of the MLS (on individual brokerage and agent websites, for instance.)
2. MLS participants are required to have written buyer agency agreements.

In Indiana, Governor Holcomb had already signed a state-level requirement for written buyer agency agreements (just a week before this settlement was announced).

What does that mean for you, a homebuyer or home seller? All real estate licensees (whether Realtor members or otherwise) will be governed by the same law on buyer agency agreements.

What exactly does that mean? In the same way that a seller hires a listing broker, pursuant to the terms of their listing agreement, a buyer will now hire a buyer agent, pursuant to the terms of a buyer agency agreement. Personally, I think this is great! Now both buyers and sellers will understand, in writing, what to expect from their real estate broker, the terms of their compensation, and how that compensation can be paid. There is still an option for sellers to cooperate on buyer broker compensation, which is important to homebuyers, especially first-time homebuyers who have been squeezed by higher mortgage rates, inflation, and rising home prices—one more out-of-pocket cost could push them beyond their budget or out of the market altogether.

Home buyers and sellers value the services and expertise offered by their REALTORS^®: 89% of both buyers and sellers in the most recent NAR Survey used a real estate broker throughout their transaction. 90% of buyers would recommend or use their agent again, and 87% of sellers say the same. (This is from the 2023 Profile of Home Buyers and Sellers.) 

At the end of the day, our commitment is to educate you, our customers and clients. That’s what Realtors do. We aim to EARN your business, today, tomorrow and forever, just as we always have!