How the NAR Settlement Changes the Game for Home Sellers
The National Association of Realtors' $418 million settlement in 2024 marks a pivotal shift in residential real estate. Here's what sellers need to know about the changes:
Commission Structure Overhaul
The traditional 5-6% commission model is ending. Sellers will no longer automatically pay buyer agent commissions. This gives sellers more flexibility in negotiating their listing agent's commission and whether to offer a buyer agent commission at all.
Financial Implications
- More negotiating power over total commission costs
- Potential for lower selling costs if buyer pays their agent directly
- Possible longer selling times if buyers are hesitant about paying agent fees
- Risk of reduced buyer pool if some cannot afford agent fees
Market Adjustments
Home sellers may need to adjust pricing strategies to account for buyers' new agent costs. Some may choose to lower asking prices slightly to offset buyer agent fees, while others might maintain prices and offer buyer agent incentives to attract more prospects.
New Best Practices
- Compare listing agent fees more aggressively
- Consider whether to offer buyer agent compensation
- Factor agent fees into initial pricing strategy
- Be prepared for more direct buyer negotiations
- Review multiple listing service (MLS) terms carefully
Long-term Market Impact
The settlement likely leads to more transparent pricing and diverse service models. Sellers should expect a transition period as the market adapts to new commission structures and negotiation practices.
