The New Rules of Real Estate – What Buyers and Sellers Need to Know Now After the NAR Settlement

What Is The Latest?

The National Association of Realtors (NAR) has entered into a settlement agreement about real estate commissions.

The settlement ends the requirements of a blanket offer of compensation paid for by the seller to a buyer agent that has been enforced through MLS rules and membership requirements. Cooperative offers of compensation have not been banned, but an MLS can no longer publish information about cooperative offers of compensation. When selling a home, a seller may continue to offer sale concessions or other incentives that an MLS can continue to publish (as most already do).

An agent representing a buyer is now required to have a written buyer agency agreement in place prior to touring any MLS listed home. Beginning in January of 2025, California buyer agency agreements can be valid for no more than 90 days at a time and can be renewed as many times as the parties agree.

There are additional details, but these two items are at the heart of the settlement.

This blog post is a summary of the complex and constantly changing set of issues around the settlement. Download our white paper, The NAR Settlement & San Francisco if you’d like our full 12-page deep-dive into this hot industry topic that changes the rules for San Francisco home sellers and home buyers.

 

The settlement is not an admission of wrongdoing or guilt. Commission rates are not set by law nor the NAR and continue to be fully negotiable.

How Did We Get Here?

Lawsuits. In 2019 several real estate brokerages and the National Association of Realtors, (abbreviated as NAR) were sued by homeowners named Moehrl, Sitzer, and Burnett in different lawsuits in different courts over real estate commissions. The initial lawsuits eventually became consolidated into class action lawsuits covering two distinct geographies while still being known by the original plaintiff case names: Moehrl and Sitzer/Burnett.

Questions and Answers For Home Sellers:

Q: Will I Still Sign a Listing Agreement to Sell my House?
Yes. You’ll still sign a listing agreement with a real estate brokerage to sell your house. That broker will still most likely list that home in the MLS to advertise it to the widest audience and comply with fair housing laws. Standard listing agreements will be very similar to what exists now and will be updated with new language to accommodate the settlement’s requirements.

Q: How Much Will I Be Charged In Total Commissions?
Commission rates continue to be negotiable. NAR-affiliated agents will no longer require sellers to make a blanket offer of compensation to a buyer’s agent as a condition of being listed in an MLS.

Q: Can I Offer Compensation to a Buyer’s Agent?
Yes. You can continue to offer compensation to both sides in the real estate transaction. The precise language of the offer and the mechanics of how it is made will change.

Q: Do I Have To Offer Compensation to a Buyer’s Agent?
No. A listing broker can no longer require you to agree to make a blanket offer of compensation to a buyer’s agent.

Q: If I Don’t Offer Compensation to a Buyer’s Agent and an Unrepresented Buyer Wants to Buy My House, Who Will Represent the Buyer?  Great question and conversations and negotiations like this are now happening. If a buyer doesn’t want to have representation and doesn’t want to pay for representation, we expect that they would proceed by making an offer with the listing broker providing them with blank forms.

Q: Can a Listing Agent Decline to Work with a Buyer who Doesn’t Have Representation?
Depending on the terms of the listing agreement between the seller and their brokerage, a listing agent will likely have several different options available for responding to buyers without representation.

Q: Does Jackson Fuller Real Estate Offer Seller Representation?
Yes. We will continue to offer both seller and buyer representation.

 

Questions & Answers For Home Buyers

Q: I Want Buyer Representation, Can I Still Have It?
Yes. If you want buyer representation, you’ll need to agree to it in writing in advance of seeing a home listed on the MLS. The agreement will specify how much the buyer’s agent will be compensated, the source of the compensation, and that the total compensation can’t be more than agreed.

Q: Can I Buy A House Without Representation As a Buyer?
This has been and continues to be an option. We help our buyer clients win at San Francisco real estate by questioning what they might not know they need to ask, bringing context and actionable insight to overwhelming amounts of information, and providing high quality data to enable our buyers to make life-changing decisions with confidence.

Q: Who Pays For Buyer Representation?
Historically, this has been paid for by the seller. If the settlement is approved, this practice will become optional. If a seller elects not to pay for a buyer’s representation, there are a variety of methods that can be agreed upon to compensate a buyer’s agent but the buyer is ultimately responsible.

Q: How Does a Buyer Agent Know if a Seller is Offering Compensation?
Phone calls, text messages, and anything but the MLS data fields about seller concessions are the typical methods. What we do know is that offers of compensation cannot be distributed by the MLS, nor can the settlement parties work to create an MLS-in-all-but-name workaround to the rule changes.

Q: Until This Proposed Settlement, Were Written Agreements Required for Buyer Representation?
No. This is new in California. While written buyer/broker representation agreements have existed, their use has been optional.

Q: Does Jackson Fuller Real Estate offer buyer representation?
Yes. We will continue to offer both seller and buyer representation.

 

This blog post is a summary of the complex and constantly changing issues surrounding the settlement. Download our white paper, The NAR Settlement & San Francisco if you’d like our full 12 page deep-dive into this hot industry topic that changes the rules for San Francisco home sellers and home buyers.