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Summary of the Lawsuit
A significant lawsuit against the National Association of Realtors® (NAR) and other major real estate agencies has recently changed how real estate agent compensation works. The lawsuit argued that certain practices around agent commissions were unfair, resulting in new rules that impact how agents are paid, particularly when selling a home.
Understanding the Changes:
Two-Agent Transactions:
In most home sales across the U.S., two agents are involved—one representing the seller and one representing the buyer. Our study shows that around 89% of transactions are done this way.
Seller’s Agent Commission:
Traditionally, the seller’s agent and the seller agree on a commission rate, which has always been negotiable. There’s no fixed fee, but market trends have created a common range that people often expect.
Multiple Listing Service (MLS):
Properties for sale are listed on a system called the Multiple Listing Service (MLS).
This system shares property details online, making them accessible to the public.
Buyer Agent Compensation in the Past:
In the past, when a property was listed on the MLS, the seller’s agent would usually offer a commission to any buyer’s agent who helped sell the property. The buyers agents could either accept or negotiate this compensation.
New Rules on Buyer Agent Compensation:
Under the new rules, sellers are no longer required to offer a commission to a buyer’s agent through the MLS per MLS rules. However, sellers can still offer compensation to attract buyers’ agents and encourage them to show the property.
MLS Variations:
Some MLS companies are privately owned and not connected to the NAR, so they may continue offering buyer agent compensation, but it’s not required.
Best Practices for Sellers:
It is crucial to have an open discussion with your real estate agent about the benefits of offering compensation to the buyer’s agents. Doing so can increase your property’s exposure, attract more buyers, and help you get the best possible price.
