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Understanding How the NAR Settlement Impact the Consumer?

Historically, real estate commissions in the United States have typically ranged between 5-6% of the home’s selling price. This commission was usually split between the buyer’s agent and the seller’s agent, with each receiving around half. This system was designed to compensate both parties for their efforts in facilitating the transaction. However, the burden for paying this commissions has always been on the seller.

The practice of “tying” commissions, where the seller’s agent set the commission for the buyer’s agent, was seen as contributing to higher costs for consumers. This practice became the subject of numerous lawsuits, leading to significant changes in how real estate transactions are conducted.

What Is Changing?

In March 2024, the National Association of Realtors (NAR) reached a landmark settlement to resolve these legal claims. The settlement introduces several key changes aimed at increasing transparency and fostering competition in the real estate market.

For Buyers:

  1. Pro: Transparency and Negotiation Power
    • No More Hidden Commissions: The MLS (Multiple Listing Service) will no longer display buyer agent commissions. Buyers will now negotiate their agent’s fee directly, leading to greater transparency and potentially lower costs.
    • Empowerment Through Agreements: Buyers must enter into written agreements with their agents, clearly outlining the services provided and the associated fees. This ensures that buyers are fully aware of the costs and can make informed decisions.
  2. Con: Increased Responsibility
    • More Negotiations: Buyers will need to negotiate fees with their agents for every transaction, which could be daunting for those unfamiliar with real estate dealings.
    • Potential for Higher Costs: In some cases, without a standard commission set by the MLS, there’s a risk that negotiations could lead to higher fees, especially if buyers are not well-prepared to negotiate.

For Sellers:

  1. Pro: Potential for Lower Overall Costs
    • Flexibility in Commission Offers: Sellers are no longer bound to offer a fixed commission to buyer agents through the MLS. This could lead to lower overall selling costs as they can negotiate commissions based on the specific services and value provided by the buyer’s agent.
  2. Con: Uncertainty in Attracting Buyer Agents
    • Need for Strategic Commission Setting: Sellers will need to strategically decide on commission offers to attract buyer agents, as lower commissions might discourage agents from showing their properties, potentially slowing down the sale process.

What to Expect Moving Forward

For Buyers:

  • Preparation is Key: Buyers should educate themselves about the real estate market and be prepared to negotiate. It’s essential to understand what services are worth and to choose an agent who provides value for money.
  • Use of Written Agreements: Ensure that all agreements with agents are in writing, detailing the scope of services and fees. This helps in avoiding misunderstandings and ensures a smooth transaction process.

For Sellers:

  • Competitive Commission Offers: Sellers should be prepared to offer competitive commissions to attract buyer agents. Understanding the market and setting a reasonable commission can help in attracting more potential buyers.
  • Focus on Property Presentation: With changes in commission structures, the emphasis on how well a property is presented and marketed will increase. Investing in good marketing strategies can help in selling the property faster and at a better price.


The NAR settlement introduces significant changes aimed at increasing transparency and competition in the real estate market. While these changes bring about opportunities for savings and empowerment, they also require both buyers and sellers to be more informed and strategic in their transactions. By understanding the new landscape and preparing accordingly, you can navigate these changes effectively and benefit from a more open and competitive real estate market.

For more detailed information on the NAR settlement and its implications, you can refer to NAR’s official statement and expert insights from Tom Ferry.

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