Is the NAR Settlement a Game Changer for Home Prices?

What is the impact of the NAR settlement for both buyers and sellers?


The real estate landscape recently went through a significant development due to the recent National Association of Realtors (NAR) settlement. Lately, I find myself contemplating these recent changes and how they can influence final home prices.

Over the past 25 years, since the establishment of buyer agency as a standard practice, commission payments have conventionally been shouldered by sellers. This is the reason for the class action lawsuit, where sellers feel like they are being overcharged.

However, it is important to recognize the fact that without the buyer’s transaction, the commission would not exist in the first place. In essence, buyers indirectly fund the commission. It is intricately tied into the home’s purchase price, making it invisible to them.

Now, with the NAR settlement stipulations, we are entering a new phase where commission information can no longer be displayed in the Multiple Listing Service (MLS), granting sellers the freedom to determine compensation for buyers’ agents. While this dynamic is not entirely new, it has the potential to change a lot of things. From my perspective, there’s a silver lining: should buyers assume responsibility for their agent’s commission, it may cultivate more appreciation for their agent’s efforts.

“With the NAR settlement stipulations, our industry is entering a new phase.”

Yet, this brings us to the crucial question: What is the true cost to buyers? I’m going to give you an example to make it easier to understand:

Imagine a home listed at $400,000, inclusive of a 5% commission. Under this arrangement, each side would receive a $20,000 commission, leaving the seller with a net of $380,000. However, should sellers recalibrate their expectations and aim for a net of $390,000 sans buyer agent commission, the house’s price to the buyer would ascend to $410,000.

Your insights matter. It’s not just about the undeniable value of a skilled buyer’s agent, but also about reevaluating the total cost to buyers, encompassing both home and agent fees. In case this pushes through, should the distribution of costs? I’ll be happy to hear what you think about it.

Feel free to share your thoughts via email at [email protected], or you can call or send me a text directly at (919) 759-6359. Together, let’s navigate these changes.