Understanding the 2024 NAR Lawsuit Settlement and Its Impact on Consumers

The real estate industry saw a major shift in 2024 with the National Association of Realtors (NAR) lawsuit settlement. This case revolved around broker compensation practices, leading to significant changes in how real estate transactions are handled. Whether you're a homebuyer or seller, these updates will affect how you navigate the housing market.

Let’s break down what happened, the key changes, and what it means for you as a consumer.

What Was the NAR Lawsuit About?

The lawsuit challenged the long-standing practice of listing brokers offering compensation to buyer brokers via Multiple Listing Services (MLSs). Plaintiffs argued that this practice inflated commission costs for home sellers, leading to the settlement that introduced new rules aimed at increasing transparency and consumer choice.

To resolve the case, NAR agreed to pay $418 million over four years and implement two major practice changes:

1. Written Buyer Agreements – Buyers must sign a contract with their agent before touring homes, specifying compensation and services.
2. No More MLS Compensation Offers – Listing brokers and sellers can no longer advertise offers of compensation to buyer agents on MLS platforms.

These changes officially took effect on August 17, 2024.

What This Means for Home Sellers

If you’re selling a home, you now have more control over how you compensate buyer agents. Here’s what you need to know:

• You are not required to offer compensation to buyer agents, but you can if you choose to.
• If you offer compensation, it must be disclosed in writing and cannot be listed on an MLS.
• You can still provide buyer concessions (e.g., helping with closing costs), which can be listed on the MLS.
• Compensation for your listing agent remains negotiable, and all terms should be discussed upfront.
• Marketing strategies may shift—agents may use social media, flyers, or direct outreach to communicate offers of compensation.

While sellers can still incentivize buyer agents, these incentives must now be discussed off-MLS. This means finding the right listing agent is even more important since marketing strategies will need to adapt.

What This Means for Homebuyers

For buyers, the biggest change is that you must sign a written agreement with your agent before touring homes. This agreement will outline:

✅ The specific compensation rate or amount your agent will receive.
✅ How your agent will be paid (by you, the seller, or through another arrangement).
✅ A clear disclosure that commissions are negotiable and not set by law.

Here’s what else is changing:

• You might need to pay your agent directly, but sellers can still offer compensation—it just won’t be advertised on an MLS.
• You should carefully review your buyer agreement to understand what services your agent will provide and at what cost.
• VA homebuyers can now pay their agents directly, thanks to a temporary rule change.
• Commissions cannot be financed—buyers must pay out of pocket, negotiate concessions, or have the seller contribute.

These changes give buyers greater clarity about what they’re paying for, but they also place more responsibility on buyers to negotiate fair terms with their agents.

Will Buyers and Sellers Save Money?

There’s no definitive answer. The settlement did not mandate a reduction in commission rates, so costs will depend on market dynamics.

• Sellers may offer less in compensation to buyer agents, potentially lowering their overall costs.
• Buyers may need to pay their agents directly, which could increase upfront costs. However, they can still negotiate seller concessions to offset expenses.

Ultimately, these changes put more power in the hands of consumers to decide how much they are willing to pay for real estate services.

How Will Buyer Agents Get Paid?

Buyer agents will still be compensated, but the process is now more flexible:

🔹 Buyers can pay their agent directly (fixed fee, hourly rate, or percentage).
🔹 Sellers can still offer compensation, just not via the MLS.
🔹 Buyers can negotiate payment from the listing agent’s commission.

The key takeaway? Compensation is now a conversation, not a pre-set expectation.

The Role of MLSs in a Changing Market

While MLSs will no longer display buyer agent compensation, they still provide value by:

• Offering a centralized database of homes for sale.
• Ensuring accurate and reliable listing information.
• Supporting small and independent real estate businesses.

Agents and consumers will need to adapt to a system where compensation discussions happen off-MLS through direct negotiations.

Final Thoughts: What Should Buyers and Sellers Do Now?

The 2024 NAR lawsuit settlement has reshaped real estate transactions by increasing transparency and flexibility in agent compensation.

If You’re a Seller:

✅ Decide whether to offer compensation to buyer agents.
✅ Work with a knowledgeable listing agent to develop a strong marketing strategy.
✅ Ask questions about commissions and how they impact your home’s marketability.

If You’re a Buyer:

✅ Find an agent who clearly explains their compensation model.
✅ Understand your written agreement before signing.
✅ Negotiate seller concessions to help cover agent fees if needed.

This new landscape may feel different, but it ultimately empowers consumers to make informed choices about how they engage with real estate professionals. If you’re buying or selling a home, being proactive and having open discussions about compensation will be key.

Still have questions about how these changes affect your home-buying or selling experience? Reach out to me directly at (714) 656-6325

Ruben Sanchez

REALTOR® | Team Lead

(714) 656-6325

ruben@trxg.net

DRE 02091617

ΓEA⅃ Brokerage