Changes to NAR’s Home Sale Commission Rules Go into Effect August 17

New rules to be implemented nationwide related to broker commissions in home sale transactions will go into effect on August 17, 2024. The changes to the decades-long model that left the seller typically using “their proceeds to pay a 5% to 6% commission” evenly split between the seller and the buyer agents is hoped by proponents to make it “easier for consumers to negotiate and put downward pressure on commissions and even home prices.” As part of the resolution of claims brought on behalf of home sellers related to broker commissions, under the National Association of Realtors (NAR) Settlement Agreement, while consumers will continue to have the option to consult with real estate professionals and negotiate commission payments, “offers of compensation will be prohibited on Multiple Listing Services (MLSs). The change essentially reverses the rules of the old system that required listing agents “to publish an offer of compensation to the buyer’s broker when listing homes on NAR-affiliated multiple listing services, or the MLS.” Although commissions were always negotiable, even if the listing agent offered zero dollars in the compensation field, “several antitrust lawsuits alleged the requirement to post an offer reduced competition and kept commission rates artificially high,” while others claimed that in instances where a 6% commission was already filled out, it left “buyers with even less power to bargain — finding their own representative’s payment preset by the other side of the transaction.” In addition, the new rules restrict buyer brokers from receiving more compensation at a later time than the buyer agreed to in the contract that buyers generally need to sign prior to getting an agent. Proponents of the changes “say that by not setting the rules of the game at the outset, buyers and sellers will have more transparency into how their agents are paid and more power to negotiate commissions down.” However, there are concerns that while sellers could save money if decided not to pay buyer broker commissions, it could prompt buyers to go without broker representation or potentially lose the home all together if saddled with the additional upfront costs they may not have at a time when housing has become unaffordable to the masses. As NAR’s policy changes are implemented, it will take time for the results to become apparent, leaving uncertainty about the full impact on all involved in home sale transactions.

Source:    https://finance.yahoo.com/news/real-estate-commission-rules-change-100045619.html