Recently, the Department of Justice sued the National Association of Realtors (NAR) for what
many home sellers thought was price fixing. There are many arguments to be made on both
sides of the issue, and for accurate details you can check it out here: https://www.nar.realtor/
the-facts
After much legal wrangling, a settlement was reached that took effect in August, 2024. First, it
will help to understand a little history …
For decades agents working with home buyers could see how much they would be
compensated (i.e. commission) by looking at a special coded field for each property listing in
their local MLS (Multiple Listing Service). Agents representing sellers (referred to as a “listing
agent”) would input the data and photos about the home into the MLS, including the amount of
compensation that was being offered to “cooperating brokers.” Usually this was a code that
indicated the percentage of the sale price that a buyer’s agent could expect.
The buyer’s agent then would present an offer to a seller through the listing agent. After the
offer was accepted and once the many items of the sale transaction had been handled the
transaction would be recorded (making it public record) and ownership would then transfer
from the seller to the buyer.
After closing, the buyer’s broker would receive the commission promised in the MLS listing,
typically from the seller’s proceeds.
All that has changed as of August, 2024. There are two rule changes to be aware of:
1. MLS listings will no longer address the amount of compensation that may be offered by the
seller, and
2. Buyers seeking to view properties (other than by visiting an open house) must have a
written representation agreement signed in advance with the showing agent … Meaning
that buyers must hire their own representation, and it must be in writing and stipulate how
their agent will be compensated.
What does this mean for you, the home seller?
First, you and your listing agent must have a conversation about the new rules and discuss
your options and the potential outcomes. Here are a few options:
A. Compensate only your listing broker/agent
B. Offer “buyer concessions”
C. Share in the cost of concessions with the buyer
The main downfall to option A is that the vast majority of home buyers only have so much cash
on hand and no alternate sources for additional funds. If the seller refuses to offer additional
concessions and the buyer cannot cover it, the buyer may overlook your property in favor of
sellers who are offering concessions.
The reality is … The buyers have always paid for their agent’s commission. It has been
included in the price of the home.
These changes will force us to be absolutely transparent with our clients, and with buyers we
will have to demonstrate our value and earn our fee. Much like other professionals who
discuss their fees up front and have a written employment agreement, this same expectation
will ultimately elevate the real estate profession, and greatly benefit the buyers and sellers we
serve.
For more information and a more in depth conversation, contact me. I’m here to help!