More on the NAR Lawsuit: Why Do We Have Buyer Agency Laws?

The origins of the NAR lawsuit go back to a case from the 1990s.


Do you have questions about the recent lawsuit against the National Association of Realtors? This decision could affect how home buying works in the future. To understand how we got here, I want to take a step back and see why the old buyer agency agreement existed in the first place.

The concept emerged from a class action lawsuit against Edina Realty in Minnesota during the early 1990s. Buyers and sellers took legal action because buyers working with agents from the firm were purchasing properties while other agents within the same company listed those properties.

This situation, known as dual agency today, was problematic because there was no distinct buyer agency at the time. Agents assisting buyers were technically sub-agents to the sellers, leading to issues with representation, rules, and disclosure. It was a chaotic situation.

In the end, Edina Realty had to pay a large settlement, and buyer agency laws were enacted state by state across the country to ensure buyers’ rights were protected in real estate transactions. 

“A competent buyer’s agent serves as a real estate consultant, general contractor, and project manager.”

So, how will the NAR lawsuit change things? It’s important to note that the recent NAR settlement does not alter buyer agency itself. However, it does affect how buyer agents will be compensated. Under the settlement, sellers have the option to offer a commission or cover closing costs to pay the buyer agent’s commission. 

If a seller opts not to offer any buyer agent compensation, buyers will need to cover their agent’s fees. It’s anticipated that many sellers may choose not to offer buyer agent compensation.

These changes may lead to some buyers not hiring agents to avoid paying commission fees. However, this could potentially recreate the issues of the early 1990s, when buyers were not adequately represented.

The key difference now is that buyers will be actively choosing to forego representation without fully understanding the implications of their decision. A competent buyer’s agent serves as a real estate consultant, general contractor, and project manager. They negotiate the best deals, ensure property functionality, guide clients through the transaction process, and manage expectations every step of the way.

A skilled buyer’s agent streamlines the homebuying process, allowing clients to focus on their daily responsibilities without added stress. If you are interested in buying a home or just have questions about this topic, don’t hesitate to schedule a meeting. I am always willing to help!