The NAR Settlement and New Rules Implemented on August 17
The National Association of Realtors (NAR) implemented new rules on August 17, 2024, as part of the settlement agreement in several antitrust lawsuits that challenged the organization’s long-standing commission structures and practices. The lawsuits accused NAR of fostering anti-competitive behavior, particularly around how real estate agent commissions were handled, with claims that sellers were forced to cover both the listing and buyer agent fees, leading to artificially inflated costs.
Background of the Settlement
The NAR, one of the most influential organizations in the real estate sector, has long been a focal point of discussions regarding competitive practices within the industry. The settlement was the culmination of ongoing legal scrutiny and antitrust concerns. The core issue at hand was the transparency and fairness of commissions paid to buyer’s agents, a topic that has been under legal and consumer advocate scrutiny for years.
The settlement required the NAR to make significant changes to how commissions are disclosed and negotiated, aiming to increase competition and provide more clarity for homebuyers and sellers.
Key Changes and New Rules
Real estate agents who use and list properties for sale on a Multiple Listing Service (MLS) will be required to enter into written agreements with buyers before touring a home. Those written agreements must include:
A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
Impact on the Real Estate Industry
The immediate impact of these changes will likely be an increased awareness among consumers regarding how real estate transactions are structured, particularly in terms of agent compensation. This could lead to more informed decision-making by buyers and sellers and potentially more pressure on agents to offer competitive rates.
For real estate professionals, the settlement introduces a new landscape where transparency and competitive pricing will be paramount.
In the long term, this could lead to a more competitive and consumer-friendly market. The increased transparency and the ability to negotiate commissions openly could drive down costs for consumers, making home buying and selling more affordable.
In summary
The NAR settlement and the implementation of new rules on August 17 represent a watershed moment for the real estate industry. By promoting transparency, encouraging competition, and protecting consumer interests, these changes have the potential to create a more equitable marketplace. Overall, this settlement is a major win for buyers and sellers by clarifying the services their agents provide, and the fees charges for those services.
