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National Association of Realtors Settlement and its Effect on the Real Estate Industry
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National Association of Realtors Settlement and its Effect on the Real Estate Industry

April 2, 2024 Real Estate Development, Sales and Leasing Industry Legal Blog

Reading Time: 5 minutes

If you have been paying attention to the news lately, you have likely seen stories surrounding a major shakeup with real estate commissions stemming from a settlement in a prominent federal lawsuit. On March 15th, a settlement was agreed on between the National Association of Realtors (“NAR”) and the U.S. Department of Justice (“DOJ”) who alleged anticompetitive practices. The settlement addresses concerns that NAR’s rules limited competition and hindered innovation in the real estate market. As part of the agreement, NAR will make significant changes to its rules and policies, including modifications to how property listings are displayed online and greater transparency in the homebuying process. These changes aim to enhance competition, provide consumers with more choices, and foster a fairer marketplace for real estate agents, buyers, and sellers.

Major Rule Changes Happening Soon

Aside from the $418,000,000.00 settlement agreed to by NAR, there are other changes to the rules around selling homes that will commence in July 2024. The biggest shakeup is undoubtedly the change in how real estate agents representing buyers will be paid. Prior to the settlement, it was common practice for a seller to advertise on the Multiple Listing Service (“MLS”) the commission being paid to the buyer’s agent out of the seller’s net proceeds from the sale. This would naturally incentivize agents to show the property to their clients looking to purchase a new home. Whereas, if no commission was advertised, buyers’ agents would be less likely to show the home to their clients since there was no guarantee for how the buyers’ agents would be compensated.

Under the terms of the new settlement, sellers are barred from advertising a blanket commission paid to the buyer’s agent on MLS, which, in many cases, could result in the buyer compensating their agent directly rather than having the commission paid by the seller. It should be known that this ruling does not prohibit sellers from paying a buyer’s agent’s commission. In fact, many sellers may still see the value in offering a commission to a buyer’s agent for bringing a bona fide purchaser to the table to make a deal. However, the buyer’s agent commission could be reduced from the industry standard of 2% – 3% of the purchase price to 1% – 2%. It’s all dependent on what, if anything, the seller is willing to pay.

This change in compensating buyer’s agents could wind up saving buyers thousands of dollars on the price of the home that would otherwise be included to pay the buyer’s agent’s commission.  Sellers will be saving money too. The typical total commission from a sale generally ranges from 5% – 6%. Only paying out one commission will result in significant savings.

What Should Homebuyer’s and Buyer’s Agents Expect Moving Forward?

The crux of the settlement and the argument of the DOJ in this case and in other similar cases nationwide is that NAR has been violating antitrust law for years by conspiring to inflate home prices to enrich itself and real estate agents nationwide. Whether you agree with this position may depend on your personal dealings with real estate agents when buying and selling property.  The commission structure has also been the industry standard stretching back decades, and it certainly has not been kept a secret from buyers and sellers. Simply because the US experienced a housing boom from 2019 – 2021 where it was easy to sell a house in many markets across the country may not necessarily mean that the agents were not being justifiably compensated for their work. Like all industries, real estate ebbs and flows. Sellers in today’s market may have likely a much different opinion on the value brought to the deal by a top-notch real estate agent.

In light of the new rules, homebuyers may seek to save money by representing themselves in a home purchase rather than seeking the services of an agent. While this may seem tempting from a cost savings perspective, inexperienced or unsophisticated buyers can potentially find themselves in hot water if a deal goes awry, and guidance is needed from an experienced professional.  Most buyers are unfamiliar with contract law, what is required to be done during the inspection process, how to deal with title issues, et cetera.  Rather than navigating this on their own, it’s likely buyers will continue to seek the services of a licensed agent.

Buyers’ agents will now have to seek other creative means for compensation if a seller is not offering a buyer’s agent commission from the sale. One alternative option that is being considered is a flat fee service where the buyer’s agent provides the costs of their services to the buyer upfront. Often, a buyer would pay half of this fee up front and then the remaining half at closing. Buyers’ agents are also considering setting hourly rates for their services, which are common in other professional services nationwide such as attorneys and accountants. It will, however, likely take time for the industry to settle on an acceptable range of hourly rates for realtors.


In sum, the recent settlement reached by the National Association of Realtors marks a pivotal moment in the real estate industry. By addressing concerns of what has been deemed as anticompetitive behavior, the settlement paves the way for a more transparent, innovative, and consumer-friendly marketplace. With changes to rules governing property listings and increased transparency in transactions, the settlement aims to foster greater competition and empower both real estate professionals and consumers alike. Ultimately, it potentially brings a new era of fairness and opportunity in the real estate landscape. However, the possibility for issues in the real estate purchasing process has not been eliminated. As such, should you ever find yourself in need of guidance during a real estate transaction, the experienced real estate attorneys at Jimerson Birr are here to help.

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