In March 2024, the National Association of Realtors (NAR) agreed to a $418 million settlement to resolve multiple lawsuits with sellers who said the organization artificially inflated selling fees — also known as commissions. Later in 2025, new rules will take effect and end long-standing rules about how real estate agent commissions are offered and disclosed.
Whether you’re planning to buy, sell, or have previously closed on a home, here’s what you need to know about the NAR settlement — and what it could mean for your wallet.
In this article:
In 2019, some home sellers in Missouri filed a class-action lawsuit against the National Association of Realtors, claiming antitrust violations and alleging that its practices inflated real estate agent commissions. In October 2023, a jury sided with the Missouri home sellers, awarding a $1.78 billion verdict against the powerful trade group representing about 1.5 million real estate professionals.
To settle this lawsuit (and a few others), the NAR agreed to pay $418 million to people who have sold homes in recent years. The group also agreed to two updates to the commission rules:
-
Removal of buyer’s agent commissions from MLS listings. When real estate agents list homes on the Multiple Listing Services (MLS) databases, they can’t post information about the buyer’s agent commission anymore.
-
Formal buyer-agent agreements. Buyers now must have written agreements with their agents that outline services and compensation.
The NAR denied any wrongdoing in settling the lawsuits. However, a federal court signed off on the agreement, and the new rules went into effect on August 17, 2024.
Historically, sellers paid all commissions, which could take a 5% to 6% chunk out of their sales proceeds. Under the new NAR settlement, buyers have new rules for advertising commissions and can take two different approaches to paying commissions on their sale.
Previously, agent commissions were listed publicly on all listings advertised through the MLS. Under the new rules, buyers can no longer publicize those commissions.
The new rule is designed to prevent buyers’ agents from steering buyers toward homes offering the highest commissions. Now, buyers’ agents need to negotiate those commissions directly with the seller and their agent — which could be paid by either the buyer or the seller.
Seller-paid commissions for the buyer’s and seller’s agents
If sellers choose, they can keep things as they’ve always been and foot the bill for all sales commissions. The benefit? Sellers incentivize buyers to choose their home over houses with sellers who aren’t offering to pay the buyer’s agent commission, thereby saving buyers some cash on the transaction. Another upside? Sellers could save even if they do decide to pay all commissions.
“If a seller received two comparable offers, the seller may choose the offer that pays less to the buyer’s agent,” said Scott Jensen, a financial advisor with wealth management firm Savvy Advisors, via email. This is something Jensen has seen firsthand.
“We’re selling a house right now and our Realtor negotiated down the buyer’s commission, saving us thousands of dollars on the transaction,” Jensen said.
If you’re selling in a highly competitive buyer’s market, you may not need to foot the bill for all the commissions. Instead, you could opt to only pay commission to your seller’s agent and make the buyer’s agent commission the buyer’s responsibility.
Is this a risk? Perhaps. You and your agent will need to read the current market trends in your area to see if this is a feasible path to pursue. In markets where homes — especially entry-level homes for first-time buyers — often receive multiple offers, it might work. It could also be effective for sellers in the luxury home market, since buyers tend to have more disposable cash.
The risk may be greater for those selling entry-level homes since those buyers tend to opt for low-cost, low-down-payment mortgages like FHA loans or VA loans. Having to pay buyer’s agent commissions could mean they can’t roll those costs into their mortgage if they push the sales price out of the lender’s approved loan-to-value (LTV) ratio.
Jensen said that the new NAR rules give sellers a lot to think about. He offers three tips for sellers to consider, which can also be smart considerations for buyers.
-
Talk about commissions up front. Commissions are one of the largest fees you’ll pay on a real estate transaction, and transparency can help you compare agents, services, and what you’re willing to pay to get the deal you want.
-
Consider different agent fee structures. Jensen said it’s worth considering whether a traditional commissioned agent or a flat-fee agent makes the most sense.
-
Look beyond the fees. Jensen emphasized that commission and fee structures aren’t the only thing to consider when choosing an agent. Finding one you enjoy working with who has a lot of experience in your home type and the local market is just as important as the agent’s compensation.
Dig deeper: Selling your house — How to prepare and make the sale
The new NAR settlement rules usher in a new era for home buyers — one that might be identical to the ways things have always been done or another that could see buyers pay more at the closing table. The real win, however, is transparency, said Sara Linton, a real estate broker at Chicago-based Baird & Warner, in an email interview.
“The increased commission transparency gives buyers and sellers more control and clarity about commissions and costs, which is a win,” said Linton.
Previously, buyers may have had agents who only showed them properties advertising the highest buyer’s agent commissions. This left doubts as to whether they were seeing the best homes for their needs or the best homes for their agent’s wallet. The new rules mean buyers experience transaction transparency in two key ways.
Before the NAR settlement, buyers and their agents typically had a handshake agreement: I show you houses, I get paid when you buy, and you don’t pay me a dime. The new rules mean that buyers and their agents must have a formal written agreement that outlines fees and services, giving buyers a clear scope of what to expect when working together.
For example, buyers (like sellers) can choose to work with a flat-fee agent — one who charges a set fee regardless of the transaction value — or an agent willing to negotiate on their commission to close the deal.
With buyer’s agent commissions removed from the MLS, buyers can have increased confidence that their agents aren’t selecting potential properties based on commission alone. Yet Linton cautioned buyers against thinking commissions are now out of the real estate equation.
“The settlement removed advertising commissions on the MLS. It did not remove commissions in the sales process,” she said.
Now, a buyer’s agent will have to speak directly with a seller’s agent to get the terms of sale and how the seller wants to approach commissions. From there, buyers and agents can devise a strategy together based on who’s paying the buyer’s agent commission.
Read more: The best mortgage lenders for first-time home buyers
-
Increased industry professionalism. Linton notes that the NAR settlement rules help buyers and sellers understand that they should interview multiple agents and openly discuss commissions.
-
Increased flexibility. With all parties able to negotiate commissions, buyers and sellers may be more satisfied with transaction costs.
-
Decreased “steering” perceptions. Both buyers and sellers now have more confidence that commissions are less of a factor in whether a home is shown.
-
Confusion about buyer commissions. Linton said that many buyers mistakenly think they now have to pay their agent’s commission out of pocket. This could lead to buyers delaying purchase plans because they think they need to save money to cover these costs, which likely isn’t true. “The reality is, many sellers are still covering full buyer’s agent commissions, even in competitive markets,” she said.
-
Buyers could try to avoid paying commissions. Linton recently sold a condo where two prospective buyers wanted to make offers without agent representation, leading to unsuccessful offers in both cases. Home buyers may risk losing out on a house they love because they want to save cash. Linton said that the seller in this case covered all commissions, meaning these two buyers could have had an agent involved at no additional cost.
To balance out the pros and cons, Linton offers this thought for all parties in a real estate transaction: “Most sellers recognize the value of working with well-represented buyers, especially regarding inspections, financing, and closing. The difference now is that sellers are no longer advertising commissions, but they’re still offering payment.”
Learn more: How seller concessions can help home buyers negotiate better
If you sold a home in the past several years (up to 11 years in some areas), you may be eligible to recoup some cash from the NAR class action lawsuit.
Eligibility dates depend on where your home was located. The details are vast, and your best bet is to visit the official website for the lawsuit, which has documentation that notes geographies and eligibility dates (see page 2). If your location isn’t noted specifically, you may still be eligible to file a claim if you sold a home between Oct. 31, 2019, and Aug. 17, 2024.
You can file a claim by visiting the official NAR settlement claims website or via mail at:
Burnett et al. v. The National Association of Realtors et al.
c/o JND Legal Administration
PO Box 91479
Seattle, WA 98111
Even if you file, however, you shouldn’t expect the big bucks to start flowing.
As is the nature of class action lawsuits, the members of the original class get paid first — after attorneys’ fees are deducted. Whatever’s left over goes to sellers who file claims. Linton puts her seller claim estimate at around $50. Other estimates put payouts at around $13 per person. Yikes.
The NAR settlement was an agreement in 2024 by the National Association of Realtors to pay $418 million to settle multiple lawsuits that said it conspired to keep commissions artificially high. As a result, new rules have gone into effect that dictate how sellers advertise commissions on a property, how buyers negotiate with their agents, and how previous home sellers bound by the lawsuit are compensated for damages.
The new rules for NAR commissions state that home sellers can no longer advertise buyers’ agent commissions on listings posted on the MLS. Buyers must now negotiate services and commissions with their agent through a written agreement before shopping for a home with a clear outline of services and compensation. These rules are designed to increase transparency, give buyers and sellers more control over costs, and encourage competitive pricing.
For most sellers, the eligible date range for the NAR real estate settlement is between late October 2019 and mid-August 2024. There are additional qualifying criteria, including the brokerage you used and where your home was located, that could extend the eligible date range and determine whether you qualify to make a claim.
Laura Grace Tarpley edited this article.
Add Comment