Gone are the days of the standard 6% commission. While denying any wrongdoing, the National Association of Realtors (NAR) agreed to a $418 million settlement that will resolve a number of lawsuits against the trade group. This move is expected to reduce the cost of buying and selling a home by decreasing the “standard” commission rates. While the settlement is still subject to court approval, all parties involved are confident it will move forward. 

NAR also agreed to a new set of rules. To start, the new rules will prohibit offers of broker compensation through the MLS. This means that offers of broker compensation cannot be offered via the MLS but can still be offered/advertised elsewhere. Brokers will also no longer be required to be members of the MLS.

NAR also agreed to enact a new rule that would require buyer brokers to enter into written agreements with their buyers, potentially shifting the cost of working with a buyer’s agent from the seller to the buyer. Barring listing agents from including the buyer’s agent compensation offer on the MLS means buyers and sellers will have to negotiate the commission. If a seller does not agree to the buyer agent fees, then it will likely fall to the buyer to cover those costs. This rule goes into effect in July 2024.

The long-term effect of this settlement is not entirely clear yet, but it does effectively end the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker. Only time will tell what the new commission model will look like.

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