Q&A: What Does The NAR Settlement Mean For Buyers and Sellers?

Q&A: What Does The NAR Settlement Mean For Buyers and Sellers?

There has been a lot of misinterpretation, misunderstanding and outright falsehoods being spread regarding the recent NAR (and other large brokerages) Settlement regarding Real Estate Agent and Brokerage commissions, as well as written agreements between Buyers and their Agents and/or Brokers.

Below are 7 questions for you to answer either “True” or “False” and below the questions are the answers.

Before we start, I have a question for my readers: Do you think Agent compensation is paid by the Seller out of their proceeds, or do you view the Agent compensation as being paid by the Buyer, rolled into the purchase price? (My answer at the end of this article.)

Now, for our Q&A…


  1. This is the first time in history that real estate commissions have been negotiable.

FALSE. Commissions have always been negotiable. Rates vary by area, by Agent, by Brokerage, and even by transaction. Part of negotiating their commission includes an agent standing firm on what their fees are. Clients are free to choose that Agent, or a different Agent who is possibly willing to work for a lower fee (and likely, service level).

  1. The NAR settlement broke up a “cartel” whose intent was price fixing and inflating commissions.

FALSE. Agents are all Independent Contractors and operate independently, perhaps with some restrictions from the Brokerage where they choose to hang their license. Typically, each Agent decides what their individual fees are, what level of service they provide for those fees, and the business model under which they conduct their business. The amount charged for each transaction is mutually agreed upon between the Seller(s) and the Agent(s), in writing, well before the property goes on the market.

  1. Prior to the NAR settlement, Sellers never had a say in how much compensation Buyers’ Agents were offered.

FALSE. Sellers have always had the ability to negotiate the total commission as well as how much compensation they are willing to pay the Buyers’ Agents.

  1. Part of the NAR settlement is that Sellers will no longer be allowed to offer Buyers’ Agents any compensation.

FALSE. Based on the current iteration of the NAR settlement, Buyer Agent compensation will no longer be clearly stated on the MLS listing, as it is now. Sellers’ agents will have to find another way of disseminating that information, details of which have yet to be determined.

  1. As a result of the NAR settlement, Real Estate Agents will be required to charge less beginning July 2024.

FALSE. As has always been the case, Agents (like plumbers, electricians, hairdressers, doctors, lawyers, etc.), whose time and expertise have value, determine what rate they will charge for their services.

  1. Based on the NAR settlement, Buyers will no longer need an Agent to represent them, effective July 2024.

FALSE. Representation for Buyers has never been required. Some Buyers have in the past, and will continue to into the future, hope that they can obtain a property for less by avoiding Representation. However, some Buyers have found out the hard way that true Representation and Advocacy with an experienced Real Estate Agent will save them far more money and headaches in the long run. In fact, many Agents put more money in their clients pockets than if they had attempted negotiations on their own. Additionally, many Sellers are not likely, or willing, to reduce their price just because a Buyer is choosing to forgo Representation. In fact, many Sellers will want to keep the additional proceeds for themselves.

  1. The NAR settlement will make written Agreements between Buyers and their Agents/Brokerages mandatory, like Listing Agreements with Sellers, effective July 2024.

TRUE. What once was optional, will now be mandatory. The Buyer Agent/Broker Agreements will be required to spell out exactly what services the Agent will be providing the buyer(s) and at what rate.

In some cases the Seller’s cooperation in the Buyers’ Agents compensation will cover ALL of the compensation that the Buyers and their Agents agree upon.

Some Sellers will be willing to cover some of the compensation with the Buyer making up the difference.

And some sellers will not be willing to participate in the Buyers’ Agents compensation at all, in which case the Buyer will have to come up with the entire amount, as well as down payment and closing costs.

The amount of Seller participation is now on MLS, but come July 2024 it will not be. In which case, the Buyers’ Agents will need to find that information and share it with the Buyers to make sure that Buyer is willing and able to make that financial commitment to their Agent.

This will have to be completed, in writing, for each property and the buyer will have to decide on the whether or not to see and/or pursue each property.


In a nutshell, it means that Buyers and Agents sign an Agreement committing to working together in writing. It spells out how the Agent is compensated, typically through the proceeds from the Seller—just like it is now. Only now we have to put it in writing and everyone agrees to it in advance, for each property.

If for some reason the Seller is not participating in compensation to the Buyer’s Agent, then how the Buyer’s Agent gets compensated would be agreed upon in writing, prior to viewing the properties or writing offers, in the same Agreement.

As has always been the case, everything in real estate is negotiable. Whether the Seller is participating in Buyer Agent Compensation or not, it can (and should be) written into the offer. The same is true if the Buyer is paying some or all of the Buyer’s Agent, or even the Seller’s Agent, compensation. If the lender is providing credit back to compensate some or all of agent compensation, that should be itemized as well.

To Summarize:

Some people view the Agent compensation coming from the Seller proceeds.

Some people view the Agent compensation paid by the Buyer, rolled into the purchase price.

Depending on how you look at it, both are correct.

As always, let us know if you have any questions.

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