NAR Settlement: What this means for Agents, Buyers and Sellers
I'm sure you've seen all over the news that the National Association of Realtors was recently involved in a lawsuit that has resulted in a settlement that will change the landscape of real estate for years to come. And the main concern? Home sellers paying the commission of cooperating buyer's agents.
Typically, in a real estate transaction, the seller pays the commission of the buyer's agent. Of course there is debate as to whether this should be an ongoing practice, so I thought now would be a great time to discuss why this became standardized. And let's be clear, it has always been negotiable. This lawsuit just brings seller cooperative compensation to the forefront of conversation.
By offering compensation to both the listing agent and the buyer's agent, sellers incentivize cooperation between agents representing both sides of the transaction. This collaboration can facilitate smoother negotiations and help expedite the sale process.
Brokers invite other brokers to cooperate in their sale in exchange for the guaranteed right to compensation. These benefit sellers by increasing exposure to their property and benefit buyers by providing equal access to all listings, thus minimizing the risk of exclusive practices, intentional or unintentional.
Seller cooperative compensation ensures that buyers have access to the services of a real estate agent without incurring additional costs. This means that individuals from all socioeconomic backgrounds, including those who may not have the means to pay for representation out of pocket, can benefit from the guidance and expertise of a real estate professional.
Real estate agents are bound by fair housing laws that prohibit discrimination based on factors such as race, ethnicity, religion, gender, familial status, disability, and other protected characteristics. By providing compensation to buyer's agents, sellers help ensure that all buyers receive equal treatment and representation in the home buying process, regardless of their background.
Seller cooperative compensation encourages real estate agents to show properties to a diverse range of buyers, including those from underrepresented communities. This helps promote integration and diversity within neighborhoods and ensures that all buyers have the opportunity to consider a wide range of housing options.
We as Realtors have long believed that it is in the interests of the sellers, buyers, and their agents to make offers of compensation — but using the MLS to communicate offers of compensation would no longer be an option.
There will continue to be many ways in which buyer’s agents can be compensated, including through offers of compensation communicated OFF MLS.
Quick guide to NAR settlement
