Understanding the NAR Settlement: A Transformative Shift in Real Estate

Commission Agreement

The real estate landscape is undergoing a seismic shift, and it’s essential for both home buyers and sellers to stay informed. On March 15, 2024, the National Association of Realtors (NAR) announced a landmark settlement that promises to reshape how we buy and sell homes. Let’s dive into the details:


The MLS Rule Change: A Before-and-After Comparison


Current Commission Handling

  1. Buyer-Seller Transaction Flow:
    • In the current system, when a buyer purchases a home, the seller typically pays a total commission.
    • This total commission is usually split between the seller’s agent (listing agent) and the buyer’s agent (selling agent).
    • The buyer’s agent receives a portion of this commission as compensation for their services in helping the buyer find and close on the property.
  2. Seller Pays Both Commissions:
    • The seller pays both the listing agent’s commission (for marketing and selling the property) and the buyer’s agent’s commission (for bringing a buyer to the table).
    • These commissions are usually calculated as a percentage of the home’s sale price.
  3. Cooperative Compensation via MLS:
    • The Multiple Listing Service (MLS) acts as a central hub where real estate agents share property listings.
    • When a buyer’s agent brings a client to view a property listed on the MLS, the listing specifies the commission that the buyer’s agent will receive if the transaction closes successfully.

Upcoming Changes: What to Expect

  1. MLS Communication Shift:
    • Starting in mid-July 2024, the MLS will no longer facilitate offers of compensation.
    • Buyers and sellers will need to negotiate directly with agents regarding commissions.
    • Important Note for Home Buyers: You’ll no longer be able to view homes for sale in person without a signed representation agreement with an agent.
  2. Buyer-Paid Commissions:
    • Buyers may now be responsible for paying their own agent’s commission.
    • Previously, this cost was typically covered by the seller.
    • Buyers should budget accordingly and understand that their agent’s services come with a cost.
  3. Seller’s Perspective:
    • Sellers can expect buyers to be more conscious of commission costs.
    • Buyers may negotiate for higher compensation to cover their realtor’s fees.
    • Sellers should be prepared for these discussions during the transaction process.
  4. Transparency and Informed Decisions:
    • While the changes may seem significant, they also bring greater transparency.
    • Buyers and sellers will have a clearer view of how commissions are structured.
    • Informed decisions become crucial for both parties.

Home Buyer

If You’re a Home Buyer…

Before we dive into the specifics, here’s a heads-up:

  • Required Representation Agreement:

    • Once this rule goes into effect, buyers will need a signed representation agreement with a real estate agent to view any available homes in person. No more casual browsing without a commitment. Choosing the right agent will be more important than ever.

Now, let’s explore what this means for you:

1. Budgeting for Commissions

  • Understand that you may need to pay your own agent’s commission.
  • Factor this cost into your homebuying budget.
  • Discuss commission expectations with your realtor upfront.

2. Negotiating Power

  • With direct negotiations, you have more control.
  • Advocate for fair compensation for your buyer’s agent.


Home For Sale

If You’re a Home Seller…

Let’s explore the seller’s perspective:

1. Expect Buyer Conversations

  • Buyers will discuss commission-related matters.
  • Be prepared for discussions about compensation.
  • Consider how this impacts your net proceeds.

2. Navigating Negotiations

  • Understand that buyers may request higher compensation.
  • Evaluate offers with commission considerations.
  • Understand how seller concessions will impact the salability of your home


The NAR settlement represents a pivotal moment in real estate. Whether you’re buying or selling, understanding these changes ensures that you navigate the process with confidence.

If you’re thinking of buying or selling a home and want to understand how these new commission rules could impact you, I invite you to schedule a free consultation. I’ll personally guide you through the changes, answer your questions, and help you make informed decisions. Simply fill out the form below to set up a personalized zoom call. Your real estate journey matters, and I’m here to assist you every step of the way! 🏡✨