Understanding the NAR Settlement

Understanding the NAR Settlement: What Homebuyers Need to Know

Introduction

Buying a home is often the most significant financial decision many people will make in their lifetime. Navigating this journey can be complex, but REALTORS® are there to guide you, ensuring that your decisions align with your best interests. With the recent settlement by the National Association of REALTORS® (NAR), several changes have been introduced that directly benefit homebuyers. Here’s a breakdown of what these changes mean for you.

Key Changes from the NAR Settlement

1. Written Agreements Before Touring Homes

Before you tour any home, you’ll now be required to sign a written agreement with your real estate agent. This document is crucial, as it outlines the terms you’ve negotiated with your agent, the services they will provide, and the associated costs. Make sure to review this agreement carefully to understand the value and services you’ll receive.

2. Clear Disclosure of Agent Compensation

The buyer agreement must clearly state four key components related to your agent’s compensation:

• Disclosure: The exact amount or rate of compensation your agent will receive, or how this amount will be determined.
• Objectivity: Compensation must be clearly defined (e.g., $0, flat fee, percentage, hourly rate) and not ambiguous.
• Limitations: Your agent cannot receive compensation for brokerage services from any source that exceeds the amount or rate agreed upon in your buyer agreement.
• Negotiability: A clear statement must be included, emphasizing that broker fees and commissions are fully negotiable and not set by law.

3. Applicability of Written Agreements

Whether you’re touring a home in person or through a live virtual session, the written agreement applies. However, you do not need a written agreement if you’re simply speaking to an agent at an open house or inquiring about their services.

4. Seller Compensation Offers

While a seller may offer to compensate your agent, this offer cannot be shared through a Multiple Listing Service (MLS). MLSs are local marketplaces where brokers share property information.

5. Seller Concessions

You can still negotiate with the seller for concessions, such as covering your closing costs. These options remain available under the new settlement guidelines.

Effective Date

These changes took effect on August 17 2024.

For more details and facts about the changes, visit the NAR website: 

NAR Settlement: Get the Facts