Understanding the Impact of the NAR Settlement on Real Estate Buyers and Sellers

Understanding the Impact of the NAR Settlement on Real Estate Buyers and Sellers


The recent settlement between the National Association of Realtors (NAR) and the U.S. Department of Justice has reverberated throughout the real estate industry, triggering discussions and debates on its implications for buyers and sellers alike. With changes aimed at commission structures and competition, it's crucial to explore how this development might reshape the landscape for those engaging in real estate transactions.

Commission Negotiations and Transparency:

A pivotal aspect of the settlement revolves around reshaping commission structures and enhancing transparency. Historically, real estate commissions flowed from the seller’s earnings to their agent's brokerage, with the listing agent's broker typically dispersing an agreed-upon percentage to the buyer's agent. While negotiable, the standard rate has often hovered around 6%, split equally between listing and buyer's agents. However, the settlement challenges this norm by redefining commission responsibility. Each individual party would now negotiate compensation within their initial contracts, be it the listing agreement or the buyer broker agreement.

Greater Transparency in Fees:

Alongside changes to commission structures, the settlement also emphasizes the importance of transparency in fee disclosures. Real estate agents will be required to provide more detailed information about the services they offer and the fees associated with those services. This increased transparency can empower consumers to better understand the costs involved in buying or selling a property. In addition, it will help buyers understand the financial commitment their agent is putting forth. 

Impact on Buyers:

Buyers, particularly those in the entry-level market, will feel the brunt of these changes. With buyers now shouldering their agent's commission along with closing costs, down payments, and the purchase price, the financial burden increases. Hence, the expertise and resourcefulness of their agent will become critical in navigating these added expenses. Negotiation strategies will now incorporate the buyer's commission as a crucial factor when competing for properties.

Impact on Sellers:

The proposed changes offer sellers more flexibility regarding the payment of commissions to buyer’s agents. Traditionally, commissions were derived from the proceeds of the sale, with sellers typically agreeing to compensate both their listing agent and the buyer’s agent equally. I use “typically” because we have been in plenty of deals where the listing agent is offering less commission to the buyer’s agent, but because it was the house for our clients, we accepted less. That being said, under the new provisions, sellers are granted the option to set the buyer’s agent commission at 0%, effectively allowing them to forego payment to the buyer’s agent entirely. 

While this option may seem appealing initially, it's crucial to carefully consider the implications. Listings that include a buyer’s agent commission attract more attention from potential buyers, enhancing the property's marketability. Therefore, sellers must weigh the potential benefits of cost savings against the impact on their property's visibility and attractiveness to buyers.

Potential Changes in the Industry:

As the real estate landscape responds to the settlement, a stronger emphasis will be placed on transparency and consumer education. For our clients, the changes may not be as noticeable since transparency has always been a cornerstone of our service. Providing quotes, detailed cost breakdowns, and soliciting bids have been standard practices in our approach to serving you. However, on an industry-wide scale, significant revisions are expected, particularly in the commissions section of both listing agreements and buyer broker agreements. Moving forward, the buyer broker agreement will play a central role, clearly defining commission responsibilities and amounts, thereby enhancing clarity and accountability for both buyers and their agents.

Navigating the Changing Landscape:

In a competitive and nuanced real estate market, investing in expert guidance from a skilled agent can yield substantial time, energy, and financial savings. These professionals bring invaluable experience and insight to the table, streamlining the buying or selling process and helping clients avoid costly mistakes. By leveraging their market expertise, agents can identify hidden opportunities, negotiate favorable terms, and navigate complex transactions with ease. Their guidance not only saves clients the time and effort of navigating the intricacies of the market on their own but also minimizes the risk of overlooking crucial details or making uninformed decisions. Moreover, skilled agents have access to extensive networks of industry professionals, from lenders to inspectors, enabling them to assemble a top-notch team to support their clients throughout the transaction. Ultimately, paying for expert guidance in a competitive and nuanced market is an investment that can lead to significant savings in terms of time, energy, and money, while also ensuring a smoother and more successful real estate experience.


The NAR settlement has sparked discussions regarding commission structures and transparency within the real estate industry. Our commitment has always been centered around delivering exceptional service to our clients. While our market already presents its fair share of challenges, we view this as an opportunity for adaptation and a chance for growth. We hope this settlement will foster greater transparency among agents, encouraging them to openly communicate their skills, services, and ability to effectively advocate for their clients. Buyers and sellers should feel empowered to ask pertinent questions during their initial consultations. Recognizing that agents operate their own businesses, it's crucial for both sellers and buyers to have clarity on the level of representation they can expect before entering into a contractual agreement. This transparency ensures that clients can make informed decisions that align with their needs and objectives.

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