NAR Settlement: What Home Buyers Need to Know

Learn why Boston area home buyers must sign a buyer agent agreement before touring a home with a buyer agent as a result of the NAR settlement practice changes

The following is the transcript of the video above about the March 2024 settlement of class-action lawsuits between the National Association of Realtors and plaintiff attorneys. 

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The National Association of Realtors and plaintiff attorneys settled class-action lawsuits regarding real estate commissions in March 2024.

The agreement between the parties requires several real estate industry practice changes, but contrary to popular belief does not lower or set real estate commissions. In fact, the settlement makes it clear that real estate commissions are negotiable and not set by law.

The practice changes went into effect on August 17, 2024.

One change has to do with written agreements. Home buyers and buyer agents must sign a written agreement before touring a home in person or virtually. Buyer agent agreements are not new but were not required before August 17, 2024. You will not need a written agreement if you speak to an agent about a home or ask them about their services.

Before signing an agreement, you should ensure it accurately reflects the agreed-upon terms between you and your agent and that you understand what services will be provided and at what cost.

Speaking of costs, the buyer agent agreement must include four components concerning compensation.

First, the contract must include a specific and conspicuous disclosure of the amount or rate of compensation your real estate buyer agent will receive.

Second, the compensation must be objective, for example, a flat fee, a percentage, or an hourly rate. The compensation cannot be open-ended. For example, the compensation cannot be "buyer agent compensation shall be whatever amount the seller is offering to the buyer."

Third, the agreement must include a term prohibiting the buyer agent from receiving compensation for brokerage services from any source that exceeds the agreed-upon amount or rate in the contract with the buyer.

Fourth, the agreement must include a conspicuous statement that real estate agent fees and commissions are entirely negotiable and not set by law.

What hasn't changed is the prospective home buyers can still choose to work with the buyer agent of their choice, preferably one who is 100 percent loyal to home buyers.