If you don’t know what is going on and have been living under a rock for the past week. Last week, a federal class-action antitrust lawsuit, Burnett v. NAR jury ruled in favor of the plaintiffs, agreeing that NAR and major brokerages colluded to artificially raise seller commissions!

The Burnett case represents just one of over 20 similar lawsuits filed by home sellers against NAR and several major brokerages. Sellers argued that the association’s regulations governing properties listed on its affiliated Multiple Listing Services (MLS) unjustly supported agent commissions.

The New Changes From Settlement

As part of the settlement, NAR agreed to no longer require a broker advertising a home for sale on MLS to offer any upfront compensation to a buyer’s agent. Moreover, MLSs must eliminate any fields indicating broker compensation, and agents cannot be compelled to join MLSs to transact or receive payment.

Under the settlement agreement, MLS members dealing with buyers must enter formal representation agreements with them, effective July 2024, to ensure homebuyers know what their agent will charge them for their services. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much.

While some analysts say that a major change resulting from the settlement is that homebuyer costs will be driven down significantly, others disagree. Brad Nix, CEO of Path and Post Real Estate, says, “I don’t expect housing to become more affordable. If costs are reduced, then sellers are likely to just pocket the extra savings.”

How Does This Affect You?

First-time buyers may have a more difficult journey. They have the least experience, often need the most help, and yet have the fewest resources to leverage. I advise consumers to research deeper and interview more to be confident you hire the right agent to help you on your journey.

According to NAR’s pre-existing “cooperative compensation” rule, in order to list a home on an MLS, the seller’s agents were required to make “blanket unilateral offers of compensation” to the buyer’s agents. By removing cooperative compensation, this “blanket unilateral” offer to pay buyer’s agents will no longer be permitted. Sellers will no longer stipulate the commission size for buyer’s agents. Instead, the responsibility for determining their agents’ compensation would fall on the buyers themselves.

Homebuyers could still ask a prospective home seller for a concession that includes money to help cover the buyer’s agent compensation. However, a home seller with multiple offers, for example, could refuse such a request, or opt to go with a bid from a different buyer who isn’t asking for such a concession. Conversely, sellers may stand to benefit by potentially avoiding payment for the buyer’s agent and assuming that portion of the commission themselves.