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

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

The recent NAR litigation settlement has several implications for Sellers:

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 Seller, you will still have a listing agreement with a Listing Agent that governs his or her fee at close of a sale of your home.

2. BUYERS 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’S AGENT. This is just like two driving routes that reach the same destination.

3. In the past, the listing broker offered a Buyer Agent compensation out of THEIR broker fee. The new process will have the BUYER or the SELLER pay the BUYER’S Agent fee. There will be indications on any MLS of any offer of cooperative brokerage as had existed in the past. The listing broker will no longer pay the Buyer broker fee. Really what’s changing are the mechanics of who pays whom for representation.

4. Does this mean as the SELLER your closing costs go down? Potentially. The ruling gives Sellers options – pay nothing to BUYERS Agents or negotiate off the MLS to pay a fee to the Buyers Agent. The agreement to pay for the buyers Agent can be incorporated into a separate agreement at offer between the BUYER Agent and the SELLER – or include an upfront offer at listing to provide a flat fee or percentage of the BUYERS closing costs, including, a BUYERS out of pocket fee to pay for their BUYER AGENT.

5. So if the BUYER has to pay his BUYER’S AGENT why would a Seller ever consider paying that fee or offering a credit at closing? Talk with your trusted advisor about your house, your market and strategy about commission offers to the Buyer’s Agent. NOT offering to pay a BUYER’S Agent may put you at a competitive disadvantage, as selling is a numbers game in which the most eyeballs generally get you the highest price in the shortest amount of time. Opting NOT to pay a BUYER’S AGENT runs the risk of some Buyers who are unwilling or unable to pay that fee directly being unable to pursue your house, when they may have otherwise. A hot market may enable you to limit the fee you pay to a BUYER’S AGENT. A Buyers’ market may cause you to decide to offer to pay a BUYER’S BROKER fee.

6. The ruling could lead to changes in commission structures, such as flat fees or alternative pricing models, as Sellers seek to maximize their returns from the sale of their property. Different service and fee structures would give you as a Seller more options, though there are a plethora of limited service options available to Sellers now.

7. Competitive Pressure on Listing Agents: The settlement may lead to increased pressure on listing Agents to demonstrate their value proposition and differentiate themselves in the market.

8. Focus on Value and Service: In light of increased transparency and competition, Sellers may place greater emphasis on the value and service provided by Listing Agents. Agents who offer comprehensive marketing strategies, effective negotiate

Overall, the recent NAR litigation settlement has the potential to impact Sellers by influencing commission structures and agency relationships in real estate transactions. 

Sellers may benefit from carefully evaluating their options and working with Agents who offer competitive rates, high-quality service, and transparent representation.

The Bottom line: Buyer or Seller representation will still be paid for, either by the party being represented, or the Seller as part of their listing strategy.

Who you work with on both the buy and sell side matters immensely, and increased service options – from limited service to full-service brokerage – are a good thing for Buyers and Sellers!

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