New Commission Laws Start July – How Will it Affect You?

In 2023, Missouri home sellers sued the National Association of Realtors (NAR) and major brokerages for antitrust violations. The NAR and RE/MAX settled before trial, paying $83.5 million and $55 million, respectively. The jury ruled against the industry, ordering NAR and two firms to pay $1.8 billion in damages. Keller Williams settled for $70 million. NAR agreed to pay damages and alter its practices. The NAR now prohibits brokers listing homes on affiliated databases from offering compensation to buyer’s agents. 

The Impact on Sellers:

Home sellers may refrain from covering buyer-agent commissions, leading to significant cost reductions. For instance, a seller paying a 3% commission instead of double that could save around $10,000. This settlement may prompt sellers to negotiate listing agent compensation more actively, yet they might still feel pressure to cover buyer-agent fees. The proposed rule change allows buyer’s agents to view compensation offers from their brokerage publicly. This will encourage agents to favor listings with upfront compensation offers, pressuring sellers to still offer buyer commissions.

The Impact on Buyers:

In the previous system, buyers had little say in negotiations, with sellers covering each agent’s 3% fee. Lawsuits argued this inflated commissions and incentivized agents to prioritize higher-paying listings. Now, buyers will negotiate directly with agents, specifying services in required brokerage agreements. The buyers commission cannot be financed, buyers must find an affordable agent and agree on compensation terms upfront. This added expense could strain buyers with limited finances, complicating their home search even more.

Bottom Line:

Sellers may still offer a buyers agent commission to incentivize buyers agents to show there home to their clients. If they don’t however, buyers are now required to negotiate and pay for their representation on the sale – which cannot be financed into the loan…continue reading