The recent NAR settlement over litigation is all over the news.

Let’s break down the impact of the settlement on Buyers (assuming it’s approved by the Court) which will go into effect in July of this year.

As a result of the recent NAR commission lawsuit settlement, Buyers purchasing homes in the future have several representation options to consider:

1. Is the 6% Commission Going Away at Clickbait Headlines Say? The settlement will create potential changes in commission structure: What do I mean by that? The NAR agreed to de-couple commission. That means each party will pay for their broker representation. As the BUYER, you will be required to execute a BUYER BROKER agreement with a Buyer’s Agent that governs his or her fee at the close of a sale of your home IF compensation is not offered directly by the SELLER. In the past, BUYER BROKER compensation was offered by the LISTING BROKER out of their broker compensation.

2. BUYER BROKER AGREEMENTS are like a Buyer’s version of a listing agreement: stating a specific term of the agreement, what are or properties are included in your representation from your Buyer Agent – and the fee YOU WILL PAY at closing of sale IF the SELLER does not offer to remit your BUYER’S AGENT broker fee. will be required to enter into a BUYER'S REPRESENTATION AGREEMENT with their Buyer’s Agent that will govern the compensation paid to the BUYER AGENT. In the past, both agents were paid from LISTING AGENT’S broker fees.

3. Now: the listing and Buyer Agents will still be paid for their representation, only from the party receiving the representation or if the Seller offers to pay a Buyer broker directly. This is just like two driving routes that reach the same destination.

4. GONE will be the MLS field indicating how much the Buyer’s brokerage is offered. Your Buyer's Agent will have to negotiate his or her fee upfront with the Seller. Keep in mind: the BUYER BROKER AGREEMENT can be broad, say homes in Vero Beach, FL – or stipulate specific properties. Your Buyer Agent will no longer know upfront the offer of compensation on any specific home for sale. IF THE SELLER DOES NOT offer to pay a Buyer broker separately or offer a Buyer at closing a credit of a flat fee or percentage of the purchase price toward your closing costs, the Buyer broker agreement will obligate you to pay your Buyer Agent out of pocket at closing in accordance with terms in your agreement.

5. Will I really have to pay for my own representation out of pocket? Potentially. Some Sellers may opt to pay Buyer’s Agents or offer closing cost credits to Buyers to maintain a competitive advantage. If not it’s important to discuss fees for EACH home you’re considering to understand the cost of acquisition.

6. Traditional Buyer's Agent Representation: Buyers can still choose to work with a traditional Buyer's Agent who represents their interests exclusively throughout the home buying process. With increased transparency about commissions, Buyers can negotiate the terms of representation and understand how their Agent is compensated.

7. Can’t I just call the Listing Agent to avoid the fee? If the Listing Agent is a member of NAR, this ruling would obligate them to enter into a Buyer representation agreement with you in order to represent you in the purchase of their listing. The fee the Listing Agent would charge you for representation is always negotiable and will depend if the Listing Agent’s listing agreement allows them to represent someone other than the Seller.

8. Do I really need a Buyer Agent? Limited service or discount brokerages already exist that offer specific, reduced services at a reduced cost that full service brokerage. While these brokerages may provide cost savings, Buyers should carefully review the services offered and ensure they receive adequate support throughout the transaction.

9. Don’t want to pay for Buyer representation at all? Buyers have access to online platforms and tools that facilitate home searches, offer virtual tours, and pricing history. While these platforms may not provide nuanced local knowledge or Buyer representation, they can be valuable resources for Buyers who prefer a more self-directed approach.

10. Can’t afford to pay for a Buyer Agent out of pocket or get a VA or FHA loan whose terms prohibit payment of commission? Talk to your trusted real estate advisor. Representation in the purchase of what’s probably your single biggest asset is in our judgment, essential. We hope underwriting guidelines for FHA and VA will change to reflect this new mandate, but in the interim, talk with your Buyer broker about strategies to pay for your Buyer broker fee to be sure you get the advocacy you deserve in the transaction.

11. Consulting Services: Some Buyers may choose to hire real estate attorneys or consultants on an hourly basis to provide guidance and support during specific stages of the home-buying process. This option allows Buyers to tailor their representation to their specific needs and budget. Be clear you understand what service you are getting and what you are not – e.g. this route probably would not include more than papering a contract – no negotiation, no in-person attendance at inspections and negotiating matters related to it that come up – but for some Buyers may become a viable option.

Overall, the recent NAR commission lawsuit settlement provides Buyers with increased transparency and flexibility in choosing representation options that best suit their preferences and objectives. Buyers should carefully evaluate their choices and consider their individual circumstances when selecting a representation model for their home purchase.

A good Buyer's Agent is not a chauffeur or a key opener -- but a trusted ally that helps find and secure your ideal house at a price and terms you may not have achieved otherwise, making their fee an investment that pays for itself in multiples.  

Discover The Daley Group Difference in how we’re helping our Buyers navigate the impact of the new NAR ruling.