NAR Settlement

What is the NAR Settlement all about?
On Friday, March 15, 2024, The National Association of Realtors announced a
proposed lawsuit settlement that included two proposed changes to our business
practices:
1. Removal of the offer of Buyer Agent Compensation (commission) in NAR-owned
Multiple Listing Services (MLS).
2. Adding a requirement for Buyer Agents to use Buyer Representation
Agreements.
These changes have already gone into effect in Arizona, as of August 1, 2024.

What does this mean in Real Life?
1. Broker Compensation
Broker fees have always been and continue to be negotiable. The settlement does not
establish any standard or limitation on compensation. However, as in any other
commission driven profession, there are suggested standards that should reflect the
level of service you are seeking.
2. Seller Compensation for Buyer’s Agent
Offering compensation was always flexible and never an obligation. However, the
practice of compensating a buyer’s agent always benefitted both parties in a
transaction. Offering to compensate a Buyer’s agent will draw agents to your property
and ultimately move the property.
3. Commission Prohibitions
Seller’s do not have to offer buyer’s agent compensation. We are finding that Sellers are
opting to compensate a buyer’s agent to ensure their listing remains competitive and
attractive.
The Seller receives advice and determines what compensation he/she offers the Listing
Agent, and Buyer’s Agent. If the Listing Agent agrees to the terms, the Listing
Agreement is signed by both parties and marketing begins.
4. Impact on Home Prices
The settlement is very unlikely to lower home prices as real estate values
are determined by supply and demand. The Seller will continue to get his/her fair market
price, and the brokers get paid for their time, service, and expertise.
Keep in mind that a buyer cannot include a Buyer’s Agent compensation in their
financing.

5. Buyer Representation
While buyers do not have to use a Buyer’s Agent (a buyer can be unrepresented), it is
difficult to compete against other buyers who are getting expert advice and guidance.
Navigating the real estate market without professional representation can lead to
missed opportunities and many challenges.
Much of the value of a seasoned Buyer’s Agent is the network and relationships they
have established over many years with other professional agents, home inspectors, and
contractors. This can be extremely valuable in the buying negotiation process, and the
closing process. An experienced agent helps make the closing process run smoothly.
Here are just a few examples of how a Buyer’s Agent can be of value:
 Provide expert market knowledge
 Access to off-market opportunities
 Identify integrity and appreciation potential of a residence or neighborhood
 Negotiation skill specific to real estate
 Prepare strategic and competitive offers, especially in a multi-offer situation
 Supervision of contract timelines (due dates, inspections, …)
 Negotiate credits and/or reductions
 Save time and money

Offer Process
The offer process has changed. Now the Buyer’s Agent compensation can be a term in
purchase contract. An experienced Buyer’s Agent can guide you through this process.
When an offer is prepared, the Buyer should be aware of financing cost/terms, and
closing costs, including:
 what the Seller is offering as Buyer’s Agent as compensation; and
 the compensation due per the Buyer Broker Agreement (between Buyers and
Buyer’s Agent).

To keep it simple, here are (only) three examples:
A. Seller offers 3% of purchase price; and Buyer Broker Agreement commits to 3%
of purchase price: Buyer pays Buyer Broker $0 compensation.
B. Seller offers 1% of purchase price; and Buyer Broker Agreement commits to 3%
of purchase price: Buyer pays Buyer Broker 2% of purchase price compensation
(compensation comes from both Seller & buyer).
Note: An offer can have an additional term like “Seller to pay an additional 1% to
Buyer’s Broker at closing.” Then Buyer would pay Buyer Broker $0
compensation and full 3% paid by Seller.
C. Seller offers 4% of purchase price; and Buyer Broker Agreement commits to 3%
of purchase price: Buyer pays Buyer Broker $0 compensation, and Seller credits
Buyer 1% of purchase price

We recommend you find a trusted advisor, a professional who is an experienced full-time
agent and affiliated with a reputable brokerage. It’s more important now than ever
during this period of change.

Supported by Russ Lyon Sotheby’s International Realty, The Luckys remain dedicated
to offering the best expert guidance and insight to help you make informed decisions
whether you are selling or buying.