As the real estate market evolves, staying informed is crucial — especially with the recent National Association of Realtors (NAR) settlement. If you're thinking about buying or selling a home soon, this settlement will likely impact your experience, so let me break down what it means and how it could affect you.
What’s Changing in Real Estate Commissions?
In the past, when a home was listed for sale, the seller signed a listing agreement with the listing broker. The agreement spelled out compensation to the listing broker and how much compensation would be paid to the buyer’s broker. If the seller chose not to pay a commission to the buyer’s broker, the property was not allowed to be listed in the Multiple Listing Service (MLS). In most cases, commission was offered and agents would see these commission amounts right on the MLS listing.
As of August 2024, due to the NAR settlement, commissions are not allowed to be listed on the MLS when offered to buyers’ brokers. This has created much more paperwork for both agents and buyers.
What This Means for Buyers
As a buyer, one of the more significant changes is that you'll need to sign a buyer representation agreement before you can even start viewing homes with your real estate agent. This contract spells out the services your agent will provide and how much they’ll be paid. This might feel a little formal initially, but it gives you clarity upfront. If the seller doesn’t cover your agent’s fee, you may need to pay it yourself.
The good news is that this commission is negotiable. You have the power to work out an arrangement that makes sense for your budget and your goals. Your agent will strategize with you on how best to have commission covered when it is time to make an offer.
This could be incredibly challenging for first-time buyers or anyone trying to save up for a down payment. However, understanding this change allows you to plan accordingly and weigh your options carefully. You may need to factor your agent’s commission into your budget or you may elect not to consider homes whose owners are not offering commission to the buyer’s broker.
Having a good real estate agent is still crucial. Yes, there’s the possibility of navigating the process on your own to avoid paying an agent, but in my experience, going it alone can lead to costly mistakes. Real estate transactions are full of intricacies, and having an expert on your side can save you from overpaying for a property or missing out on crucial details during the negotiation.
Will This Change Affect Home Prices?
There’s been some speculation about whether the NAR settlement will drive home prices up or down. The settlement allows sellers to not pay the buyers’ broker at all or pay the buyers’ broker directly, the same as with the listing broker. But while commissions are handled differently, the truth is factors like market demand, available inventory, and interest rates influence home prices — not agent fees.
However, the likelihood remains that homes offering to cover the buyer’s agent commission could attract more interest, which might lead to more competition for those properties — and reduce the burden on buyers. It’s honestly still too early to tell how this will play out. But I can see plenty of scenarios where market dynamics soften; sellers may continue to offer concessions and commission “sweeteners” to help close a property sale.
Navigating This New Landscape
Because many buyers do not have the funds to pay their brokers and still believe that they need their brokers to navigate the purchase, some buyers will eliminate properties from their search if no compensation is being offered. This could negatively impact the number of buyers looking at these listings.
So, how do you navigate these changes as a buyer? The key is to go into your home search prepared. Budget carefully, keeping in mind that you might need to cover your agent’s commission. It’s also a good idea to start thinking about the type of representation you want. Since you will be signing a contract committing to work with your agent, much like when selling a house, it is more important than ever to find the right match. Make sure you have an agent that is available to you for questions and showings, someone that is knowledgeable, ambitious, and will go above and beyond to find the right home for you.
Why You Still Need a Real Estate Agent
Even with these new rules, working with a knowledgeable real estate agent is still one of the best decisions you can make. A great agent brings so much more to the table than just handling paperwork — they guide you through the complexities of the market, help you make informed decisions, and negotiate on your behalf. From a personal standpoint, it's one of my favorite parts about what I do: the opportunity to help buyers find a forever home, a wise investment, or the perfect place for right now.
A seasoned agent helps you avoid the pitfalls of buying or selling a home. They have the expertise to foresee issues, whether with the house itself or within the contract, and they can save you from costly mistakes. Plus, they’re deeply familiar with local market conditions, which is invaluable when you’re trying to make the best financial decision.
My Takeaway
As a buyer, it’s essential to understand these changes and how they impact your next steps. The NAR settlement is shifting the way real estate transactions happen, but it’s also empowering you to have more control over finding the best agent for your needs, and how much their services are worth. Take this opportunity to clarify your budget, ask questions, and negotiate where it makes sense.
Remember, buying a home is one of the most significant financial decisions you’ll make, and having the right professional in your corner can make all the difference. With the right preparation, you’ll be ready to navigate this new real estate landscape and find the perfect home without unnecessary stress.
Contact Me to Discuss Your Next Steps
*Header photo courtesy of Katie Rawnsley’s website
