What the NAR Lawsuit Settlement Means for Buyers, Sellers, and Agents

Background: The Burnett v. NAR Lawsuit

In Burnett et al. v. National Association of Realtors, a federal jury ruled in October 2023 that NAR and major brokerages conspired to inflate seller-paid commissions—typically around 5–6% of home sale prices—through a cooperative compensation rule. The jury awarded $1.8 billion in damages, tripling potentials to over $5 billion
In March 2024, NAR agreed to a $418 million settlement and committed to reforms, with final higher court approval granted in November 2024. Practice changes took effect on August 17, 2024

Key Policy Changes

1. No Offers of Buyer-Agent Compensation on MLS
   Listing brokers can no longer publish offers of compensation for buyer’s agents on MLS platforms. Sellers are now not required to offer buyer-agent fees upfront. Compensation must be negotiated separately and transparently

2. Written Buyer Agreements Before Home Tours
   Buyer’s agents must secure a signed, written agreement—including compensation terms—before any home showing, whether virtual or in-person. Open‑house interactions or initial inquiries are exempt

3. Enhanced Disclosure Requirements
   Agents must use objective compensation methods (e.g. fixed dollar, flat fee, percentage) and clearly disclose them to clients. Written agreements must affirm that commissions are negotiable and not mandated by law

What It Means for Sellers

• More Control Over Commission Offers
  Sellers decide whether (and how much) to pay buyer’s agents—potentially lowering overall transaction costs. However, offering no commission may deter buyer agents from showing their property

• Mandatory Disclosure and Approval
  Listing agents must formally disclose and receive seller consent for any compensation offered to buyer agents in writing

• Savings Not Yet Fully Realized
  After implementation, average total commission rates declined modestly—from ~5.64% to ~4.96%—as many agents continue traditional practices through off‑MLS communications

What It Means for Buyers

• Upfront Contracts & Transparency
  Buyers must sign a buyer‑agency agreement before touring homes. This contract outlines services and compensation terms clearly, promoting better-informed decisions

• Direct Negotiation of Agent Fees
  Buyers now negotiate (and may pay directly) their agent’s fees. While this can mean higher out-of-pocket costs, it also enables negotiating lower-than-traditional rates—some advocates recommend aiming below 2%

• A New Source of Bargaining Power
  Savvy buyers can shop for agents offering flat‑fee or reduced‑commission plans. Some, like the buyer in Business Insider’s example, used a brokerage offering a fixed fee to negotiate more effectively

• Economists Debate Market Impact
  Some studies suggest lower commissions could slightly raise home prices (by ~4–5%) as more funds stay in asset value; others argue buyers ultimately benefit from greater transaction cost transparency

• What It Means for Agents

• Shift Toward Fee-for-Service Models
  Agents must now clearly articulate their value proposition and negotiate terms individually. Some may offer à‑la‑carte service options or fixed‑fee structures to stay competitive

• Greater Competition & Client Expectations
  With compensation negotiable and public transparency high, agents must build trust and prove tangible value to justify their fees.

• Adaptation to a Changing Marketplace
  While long‑standing habits persist, agent resistance may delay further fee reduction, but ongoing reforms and consumer awareness are likely to drive broader shifts over time

Summary Table

Stakeholder Key Impacts

Sellers Choose whether to pay buyer agents; possible savings; needed disclosure.

Buyers Sign fee agreements before tours; negotiate/pay agent directly; potential for lower fees.

Agents Cannot advertise buyer-agent commission on MLS; must use written agreements; compete on pricing & service.

Final Thoughts

The NAR settlement marks a turning point in U.S. real estate—ending mandated buyer-agent commission sharing and enforcing greater disclosure and negotiation. While many market practices remain unchanged in the short term, increased transparency and consumer leverage will likely reshape the industry over time. For now, buyers and sellers have real opportunities to negotiate compensation—and agents must evolve how they justify and deliver their value

Disclaimer: The information provided in this post is intended for general informational purposes only and should not be taken as professional tax or legal advice. While every effort has been made to ensure the accuracy and reliability of the content, readers are encouraged to do their own research and consult with a qualified professional to address their specific needs and circumstances.