2024 NAR Settlement

NAR Settlement

From NAR [1]

• Buyer, not Seller, is now responsible for Buyer's Agent Commission
• Buyer negotiates commission with their agent up front.
• Sellers can still offer compensation off an MLS. Sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).
• But caveat - 'Agent compensation for home buyers and sellers continues to be fully negotiable.' Is this is the sense that 'some things are more negotiable than others' - before the new law and now as well?
• 'You as the seller can still make an offer compensation, but your agent cannot include it on a Multiple Listing Service (MLS)' - why this non-transparency on cost structure?

Confirmation:

• [2]

The next question becomes - who ACTUALLY pays for which parts now, and are payments shifted in some way so the new law makes the practice effectively that the seller still pays?

Or, are most buyers unaware of the law, and taken advantage of by real estate buyer's agents, so that they are still told that seller will pay their sellers' agent fees?

More here [3] -

• '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.'. Therefore, make it explicit that the Buyer Pays for Buyer's Agent Fees in the offering.

Effect

• 2025 is early to tell, but so far nothing much changed in commissions % for buyer's and seller's agents[4].
• Buyers always paid the fees… sellers just rolled it into the sales price and buyers paid it through their mortgage. -[5] - is that how it still works?

Musings

• Inflated sales prices have contributed to the demise of the American dream of owning a SFH (single family home). Unsavvy buyers and sellers view the transaction fees as “baked in” or “free” but if both sides could open their eyes, 5.5% of the sales price can be put back into their wallets [6]
• Sellers know that if they don't pay.. the buyers simply move on to the next house. [7]

Communications

The new National Association of Realtors law from the NAR settlement of 2024 says that buyers are responsible for compensating their agent.

This is what it means for buyers. That is what it means for sellers.

But in practice, it seems that nothing has changed. The buyer's agent always counters for seller to pay, or something similar, as a buyer simply doesn't want to pay, or it is actually much harder for buyer to eat this cost.

After NAR settlement, after 6 months or so, has not changed commission rates for buyer's or seller's agents.

Do we go against the tide? For that to work, we would need to have something exceptional. Do we have it now, or is this something to address later?

Advantages: 

• We net $7500 more (3% buyer's agent fee)
• Buyer's agents will still have incentive to show our listing to clients
• Lower commission homes take only 12% longer to sell
• Ethically, the seller pays payer fees, buyer pays buyer fees - is fair and constitutes a proper incentive for lowering buyer's agent fees as they have to compete for their buyers. This is consistent with making housing more affordable.
• Real estate buyer's agent still gets paid whatever they negotiate with buyer.

Disadvantages:

• Buyer foots the bill, therefore has to come up with more cash up front
• They may counter for OSE to cover buyer's agent fee
• The small guy is screwed like normal - this new law does not appear to advantage the first time home buyer, but expensive homes are likely to have more negotiation power for lowering costs

In summary, we know 'buyer pays buyer's agent fees' on paper but in practice 'seller pays buyer's agent fees.' It's a crazy example of how a new law can be executed or be unenforceable. Basically, it says 'buyers pay' but practical considerations make the seller pay. It seems that 'buyer pays' is just unenforceable. Should we even try it?

There was one comment on reddit that caught my attention:

• Inflated sales prices have contributed to the demise of the American dream of owning a single family home. Unsavvy buyers and sellers view the transaction fees as “baked in” or “free” but if both sides could open their eyes, 5.5% of the sales price can be put back into their wallets [6]

Do we still state 'Buyer pays buyer's agent fees' for transparency, and - judging by how many offers we get, we decide whether to keep to the 'buyer pays' or make a concession? Any creative ways to address this issue at this time?

Thanks,
Marcin

Is the NAR a Scam?

• Apparently, many startups are itching to dismantle it. Read more - [8]

How corrupt is the National Association of Realtors monopoly and when will we get rid of the NAR?

I understand that many start ups intend to disrupt the monopoly that is the NAR. The NAR essentially renders a real estate salespersons license useless. No one tells you this before you sign up to get your license, of course. It is your broker who ultimately gives you the news that you will be required to fork over around $1000 annually plus monthly fees for this membership. Most of this money, I understand, is spent on lobbying for this operation to continue. The NAR boasts that their members are "held to a higher ethical standard", however, I don't see anything different in their code of ethics from what I learned was required by all real estate agents. This is a gimmick to dupe the public. At the end of the day, real estate agents and realtors are contractors and ultimately there is no way to ensure that either are adhering to any such standards. A broker is basically an agent's liability insurance and just because agents work "under the broker" doesn't mean the broker is privy to all of their activity or their handling of clients. What say you, Reddit community? When do you think this antiquated system will be dismantled? If you are a defender of the NAR, please provide evidence of its factual usefulness and tell me where all of these NAR dues go if not to lobbying efforts and political interests. Poster is from Virginia

In 2021, $37 out of the $150 annual dues went to lobbying.

https://www.nar.realtor/membership/dues-information