What homebuyers and sellers need to know about the NAR settlement and commissions

Summary

Starting August 17th, major changes are coming to how real estate agents are paid, following a $418 million settlement by the National Association of Realtors over antitrust claims. Key updates include mandatory buyer agency agreements and the removal of buyer agent fees from MLS listings. While sellers still negotiate commissions, buyers may now be responsible for paying their agents in some cases, affecting pre-approvals and negotiations. Sellers should focus on net proceeds, considering all fees and costs. Homeowners who sold property after October 31, 2019, and paid a commission may be eligible for a settlement payout at RealEstateCommissionLitigation.com.

Takeaways

• 🏡 A major change in real estate commission rules takes effect on Saturday, August 17th, following a $418 million settlement by the National Association of Realtors.
• ⚖️ The settlement ended an antitrust lawsuit alleging brokerages conspired to keep agent commissions artificially high.
• 📝 Listing agents can no longer advertise buyer agent fees on the Multiple Listing Service (MLS).
• ✍️ Buyer agency agreements are now mandatory; buyers must sign an agreement with an agent before viewing homes in person.
• 💵 There is no explicit rule stating that sellers must pay for buyer agents or that buyers must pay for their own agents.
• 🤝 Real estate commissions remain negotiable, and sellers should carefully negotiate and understand the impact on their net proceeds.
• 📊 Sellers should calculate their expected net from a home sale, including closing costs, listing agent fees, and potentially buyer agent fees.
• 🏦 For buyers, paying their own agent fees could complicate mortgage pre-approval, although most sellers may still cover part of the buyer agent fee.
• 📅 Eligibility for the settlement payout applies to anyone who sold a home on an MLS between October 31, 2019, and the present and paid a commission to a realtor or broker.
• 🌐 Eligible claimants can submit their claims through the website RealEstateCommissionLitigation.com.

Q & A

What major change is taking place in real estate commissions starting August 17?

Starting August 17, new rules from the National Association of Realtors settlement go into effect, changing how real estate agents get paid, including restrictions on advertising buyer agent fees and mandatory buyer agency agreements.

What prompted these new real estate commission rules?

The changes are part of a $418 million settlement resolving an antitrust lawsuit claiming brokerages conspired to keep agent commissions artificially high.

How will the new rules affect listing agents and how they advertise fees?

Listing agents can no longer advertise buyer agent fees on the Multiple Listing Service (MLS). Previously, these fees were included in listings.

What is required from buyers under the new rules when working with an agent?

Buyers must now sign a buyer agency agreement before viewing homes in person, making the agreement mandatory.

Are buyers now required to pay their own agent fees?

Not necessarily. While the rules allow for the possibility that buyers might pay their own agent, most cases will still see sellers paying at least part of the buyer agent’s fee. The payment arrangement is negotiable.

How should sellers approach negotiating commissions under the new rules?

Sellers should carefully negotiate commissions and calculate their net proceeds, including listing agent fees, potential buyer agent fees, and closing costs, often using a seller’s net sheet.

What is the impact of these changes on buyers’ mortgage pre-approval?

If buyers are expected to pay some or all of their agent fees, it could complicate pre-approval calculations and affect how much they can afford.

Who is eligible to claim a payout from the NAR settlement?

Anyone who sold a home listed on the MLS after October 31, 2019, and paid a commission to a realtor or broker in connection with the sale may be eligible.

Where can individuals submit a claim for the NAR settlement?

Eligible individuals can submit a claim at RealEstateCommissionLitigation.com by filling out the provided claim form.

What are the two main takeaways from these commission changes for buyers and sellers?

First, listing agents can no longer advertise buyer agent fees on the MLS. Second, buyer agency agreements are now mandatory for all buyers viewing homes in person.

What advice did Steve Necastro give regarding navigating the new commission rules?

Steve Necastro advised that while the changes add complexity, buyers and sellers should focus on negotiation, understand potential costs, and use tools like a seller’s net sheet to make informed financial decisions.