How the NAR Settlement Effects You

  You may have heard about the National Association of REALTORS® proposed settlement - along with plenty of rumors that aren't the whole truth. Let me simplify the ruling so you, a home buyer or seller, understand its effects.    First things first - let's clarify commissions, as that seems to be the hot topic regarding the settlement. Agent commissions have ALWAYS been negotiable. The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation. That offer can be of any amount, even zero. Compensation will continue to be negotiable and should always be negotiated between agents and their clients.    So, does a seller have to pay for the buyer's agent commission? No, and technically, they've never been responsible for this. However, not offering it can limit your pool of buyers. Buyers already have to bring a considerable amount of money to the closing table out of pocket. If they are presented with another financial hurdle of paying for their real estate agent, buying that home may not be plausible for them.    The NAR proposed settlement doesn't ban offers of compensation, but it does restrict the manner in which it is communicated. Previously, the MLS (Multiple Listing Service that real estate agents utilize to find homes for you or to list your home for sale) allowed for offers of compensation to be communicated through the system. It would be entered in a designated field in the same manner that the number of bedrooms or bathrooms for a property are. Once the settlement is approved, offers of compensation are no longer allowed to be communicated through the MLS, but can be pursued through negotiation and consultation with real estate professionals.    For buyers, before being allowed to tour a home, you will be required to enter into a written agreement with your real estate agent. This agreement can help you understand exactly what services and value will be provided and for how much.    Have more questions? Visit NAR's Settlement FAQ page.  

MORE