The National Association of REALTORS® (NAR) recently made headlines by reaching a settlement agreement in the Burnett vs. NAR class action lawsuit, pending court approval. This case challenges a common practice in real estate transactions where sellers hire agents for a fee and offer compensation to buyer agents to encourage the sale of their homes.
Since the settlement was announced, there’s been a flood of media coverage—some accurate, but much of it misleading. To help clear up the confusion, let's address some of the common misconceptions about what this settlement means for buyers, sellers, and the real estate industry.
1) Does the Settlement Force REALTORS® to Lower Their Fees?
False. The settlement doesn’t impose any restrictions on what REALTORS® can charge or the services they offer. Real estate fees have always been negotiable, with no standard rates set by any governing body. REALTORS® are independent operators who compete fiercely, offering a wide range of pricing and service levels. The comparison of U.S. commission rates to those in other countries often overlooks the fact that real estate professionals abroad may be salaried employees, while most U.S. agents earn their income solely through commissions.
2) Will Sellers No Longer Pay Buyer Agent Compensation?
False. There’s never been an obligation for sellers to pay buyer agent fees. The settlement simply changes how these fees are referenced in MLS systems, not whether they can be offered. Even before the settlement, sellers had the option to list properties without offering buyer agent compensation, and that option remains.
3) Will Sellers Be Prohibited from Paying Buyer Agent Commissions?
False. The decision to compensate a buyer’s agent remains entirely up to the seller. Many sellers choose to offer these commissions as an incentive to attract buyer agents and ensure their property is shown to more potential buyers. The settlement doesn’t change this practice; it only clarifies that sellers have the choice.
4) Will Sellers Be Free from the Financial Burden of Buyer Agent Fees?
False. While sellers can choose not to pay buyer agent fees, they may still encounter this cost indirectly. Buyers might request that sellers cover these fees as part of the offer, or ask for other financial concessions. So, even if the fees aren’t directly paid by the seller, they could still impact the overall negotiation.
5) Will the Settlement Reduce the Overall Cost of Real Estate Transactions?
False. If sellers opt to pay only their listing agent, buyers will need to cover their own representation costs. This doesn’t reduce the overall transaction cost but rather shifts the responsibility. Real estate services have value, and whether one or both parties pay, the total cost of services remains similar.
6) Will the Settlement Lower Real Estate Prices and Improve Affordability?
False. Real estate prices are primarily driven by supply and demand, not commission structures. Even if commissions decrease slightly, it’s unlikely to make a significant difference in home affordability. For example, a 1% reduction on a $500,000 home lowers the price by just $5,000—not enough to drastically impact affordability.
7) Is the Settlement a Major Win for Buyers Who Can Now Negotiate Representation Fees?
Questionable.While buyers may now negotiate their agent’s fee more openly, many have historically preferred that sellers cover this cost as part of the transaction. This arrangement allows buyers to finance the commission through their mortgage, which is particularly helpful when cash reserves are tight. Some loan programs, like VA loans, even prohibit buyers from paying commissions, so this change may not benefit all buyers.
8) Will the Settlement Result in Significant Compensation for Consumers?
False.The settlement amount may seem large, but when divided among eligible consumers, it equates to only a small payout per person. The real beneficiaries here are the attorneys involved, who stand to collect millions in legal fees.
I’ve worked with countless dedicated REALTORS® who go above and beyond for their clients. While no industry is without its flaws, the majority of agents I’ve known prioritize their clients’ needs, often taking on additional roles and responsibilities to ensure smooth transactions.
The real estate industry has always adapted to change, and it will continue to do so in the wake of this settlement. However, it’s crucial for consumers to separate fact from fiction when evaluating these changes and their impact on the market.
THE BOTTOM LINE
Long story short, you will be required to sign a “buyer agency contract” with an agent PRIOR to them being allowed to show you a home. The details of this contract should be discussed with you before you sign, however this contract will likely commit you to working with this person moving forward amongst many other things.
What does this mean? STOP clicking buttons on Zillow, Realtor, and other platforms that connect you to a RANDOM agent. You may inadvertently commit yourself to that agent without knowing a single thing about them, just for the sake of “seeing a house”.
Are the details of this contract being correctly and thoroughly explained to you prior to signing?
Now more than ever is the time to ask your friends and family for direct recommendations. Have you bought or sold a house? Who did you use? Tell me about your experience. Read reviews. Interview your agent before signing anything. It’s a serious relationship centering around the biggest purchase of your life!
Happy House Hunting
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