See photos and updates from listings directly in your feed
Share your favorite listings with friends and family
Save your search and get new listings directly in your mailbox before everybody else
Overview of the Lawsuit:
A recent lawsuit targeting the National Association of Realtors® (NAR) and other major real estate firms has reshaped how real estate agents are compensated. The lawsuit challenged practices around commission structures, leading to new rules that impact how agents are paid when properties are sold. If you’re a home seller or buyer, these changes are essential to understand as they directly affect how the real estate process works.
Key Changes to Be Aware Of:
- Two-Agent Transactions Are Common: In about 89% of home sales, two agents are involved—one representing the seller and the other representing the buyer. Only about 11% of transactions involve a single agent representing both parties. This structure is crucial to understanding how commissions have traditionally been split.
- Seller’s Agent Commission Is Negotiable: The commission paid to the seller’s agent has always been negotiable despite common misconceptions of a “standard” rate. Market trends may create an expectation of typical commission ranges, but sellers and agents can negotiate these terms until a final sales contract is signed.
- Role of the Multiple Listing Service (MLS): The MLS is a system where agents list properties for sale, paying a membership fee to access and share property details. This information is also made public through third-party websites, helping expose listings to a broader audience.
- Past Buyer Agent Compensation Practices: Historically, when a property was listed on the MLS, the seller’s agent would offer a commission to buyer’s agents who brought in potential buyers. This helped attract buyer agents to show the property, given that nearly 89% of transactions involve a buyer agent.
- New Rules for Buyer Agent Compensation: Under the new regulations, sellers can no longer offer commissions to buyer agents through the MLS. While not mandatory, sellers can still offer compensation to entice buyer agents, which could be key to generating more buyer interest.
- MLS Exceptions: Some MLS platforms, particularly those not affiliated with the NAR, may continue offering buyer agent compensation. However, this is now optional and not required across the board.
- Best Practices for Sellers: Sellers should have open discussions with their agents about the advantages of offering compensation to buyer agents. Offering a competitive commission can increase your property’s exposure, attract more potential buyers, and ultimately help you secure the best possible sale price.
Understanding these changes can help you make informed decisions when navigating the real estate market, whether selling or buying a home.
