NAR Settlement and Realtor Fees: How It Will Impact Your Home Sale or Purchase

Have you heard about the big shake-up in real estate that started in August 2024? The National Association of Realtors (NAR) settlement changed the way agent commissions work, and it affects both buyers and sellers. For buyers, you now need a written agreement with your agent before touring homes, and you may be responsible for paying your agent’s fee directly. For sellers, commission offers can no longer be advertised on MLS listings, which changes how you negotiate with buyers.

If you are buying or selling a home, especially for the first time, these new rules change how you plan, budget, and negotiate. Let’s break down what it means for both sides.

Before you tour any home listed on the Multiple Listing Service (MLS), whether in person or through a live virtual tour, you must sign a written buyer-broker agreement (BBA).

Here is what you need to know:

• Services defined: The contract explains exactly what services the agent will provide.

• Compensation spelled out: The agreement must list the fee structure clearly. It can be a flat fee, a percentage, or an hourly rate, but it cannot be open-ended.

• Negotiable fees: Broker fees are negotiable by law.

• Limits on payment: Agents cannot accept more than what is stated in the agreement unless you approve an amendment in writing.

• Other terms: Duration, exclusivity, termination rules, and dispute resolution terms are often included. Watch for clauses that make you pay the fee even if you never close on a home.

• No agreement needed: You do not need a BBA if you are only visiting an open house or asking general questions.

Action tip: Do not sign anything you cannot understand. If the contract feels confusing, step back. The Consumer Federation of America recommends refusing any agreement you find unclear.

Traditionally, the seller paid both their own agent and the buyer’s agent through the home price. Now the responsibility shifts. As the buyer, you may be directly responsible for paying your agent.

What this means:

Budget for it: A 2% fee on a $400,000 home equals $8,000 cash due at closing.

Negotiate smarter:

• Do your own research and negotiate a lower rate if you find homes yourself.

• Push for a flat fee or keep the commission at 2% or less.

• Ask sellers to cover part of your fee as a concession, even though they cannot advertise it on the MLS.

Excess offers: If a seller offers your agent more than the fee you agreed on, your agent cannot accept it without your written consent. You can ask for that money to be credited back to you or applied to the home price.

Action tip: Treat this like any other big financial decision. Negotiate. Put every detail in writing.

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Covering an extra fee can feel overwhelming. The good news is that financing rules allow flexibility.

• Conventional loans: Commissions can be covered by you or the seller, with no limit.

• FHA loans: Seller contributions are allowed as long as the fees are reasonable.

• VA loans: Veterans are now allowed to pay their own agent fees as of August 2024, after a long-standing restriction was lifted.

• USDA loans: Seller-paid commissions are excluded from the 6% cap on contributions.

If you have extra savings for a down payment, you can redirect some of it to cover the commission. If sellers contribute more than the agreed agent fee, you keep the extra funds as credit for your purchase.

Action tip: Work closely with your loan officer to structure this correctly.

Do you need an agent at all? That depends on how confident you are.

Why agents matter: They manage negotiations, contracts, inspections, and deadlines. For first-time buyers, this is often worth the cost.

How to choose:

• Interview multiple agents.

• Compare fees and services.

• Ask for recent sales data and reviews.

• Check if the agent is also a broker for added experience.

Alternative option: Hire a real estate attorney instead of an agent. Attorneys can review contracts and negotiate for a flat fee.

Risks without representation: Many listing agents refuse to deal with unrepresented buyers. You may also face pressure from agents who misrepresent the rules and push you to sign on the spot.

Action tip: Take control. Compare options and pick the professional support that matches your comfort level.

The new rules are important, but the core steps of buying a home remain the same.

• Get pre-approved: This shows sellers you are serious and tells you your true budget.

• Check your credit: Strong credit saves you money on loans.

• Save smartly: Plan for down payment, closing costs, inspection, insurance, and now agent fees.

• Research neighborhoods: Look at schools, commutes, and safety before touring.

• Do a final review: Before closing, read every document and check for hidden fees or errors.

The NAR settlement changes how real estate commissions are handled for everyone. Buyers must budget for agent fees upfront and negotiate carefully. Sellers need to adapt their pricing and concessions strategy since commission offers cannot be posted on MLS listings.

The key is preparation. Whether you are buying or selling, know what the written agreements say, understand the financial impact, and take advantage of the flexibility you have in negotiations.

So here’s the question: As you think about your next move in real estate, how will you approach commissions under the new rules-whether you’re on the buying or selling side?

The NAR settlement changes how homebuyers work with agents and pay commissions. You now face more direct costs but also have more negotiating power.

If you are a first-time buyer, the best move is preparation:

• Understand your contract.

• Budget for agent fees.

• Explore financing strategies.

• Choose your representation wisely.

• Stick to core home buying basics.

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