Understanding the NAR Settlement: How It Impacts Buyers and Sellers

On August 17, 2024, the real estate world shifted. The long-awaited NAR settlement officially took effect, altering how homes are bought, sold, and represented across the United States. Gone are the days of assumed commissions, handshake agreements, and vague buyer-agent relationships. In their place are new rules, stricter guidelines, and crystal-clear contracts that redefine how professionals—and clients—navigate the marketplace.

Let’s break down what this means, how it changes the game for buyers and sellers, and why this is much more than just a legal update. It’s a structural shake-up of how American real estate works.

A Quick Overview of the NAR Settlement

The National Association of Realtors (NAR) reached a nationwide class action settlement that addressed longstanding practices involving agent commissions and buyer representation. This agreement now directly impacts all residential real estate transactions nationwide—including right here in Cincinnati.

The central outcomes of this settlement?

1. Buyer representation agreements are now mandatory before touring homes.

2. Buyer-agent commissions can no longer be displayed or marketed in the MLS.

These are massive changes that affect nearly every aspect of how real estate professionals interact with clients and each other. Let’s dig into how it affects each side of a transaction.

What Buyers Need to Know

1. A Signed Buyer Agency Agreement Is Required—No Exceptions

Want to tour a home? You now need to hire your real estate agent first.

That means putting pen to paper and signing a buyer agency agreement that outlines:

• Duties of your agent

• How they will be compensated

• The length of your agreement

• What is expected from you as the buyer

What once felt optional is now a legal requirement. It’s a shift that formalizes what was often an informal relationship.

The result? Mutual clarity, commitment, and protection.

In practice, this protects both parties. Buyers know their agent is working on their behalf—not just collecting a check. Agents, in turn, can confidently invest their time and expertise knowing their client is fully on board.

Some buyers may be hesitant. But this change reflects professional standards that most industries already require. Think of it as hiring a lawyer, consultant, or financial advisor. You now hire your agent up front—with full transparency.

2. MLS Listings No Longer Show Buyer-Agent Compensation

Traditionally, a home’s listing would display compensation offered to a buyer’s agent—often 2.5–3% of the sales price—paid by the seller.

That practice is now gone.

You won’t see buyer-agent fees on Zillow, Redfin, or the MLS anymore. Not publicly. Not privately. Not anywhere.

This doesn't mean buyer agents are working for free—it just means how they’re compensated must be decided up front between the agent and the client.

Here’s how payment can now work:

• Buyer pays their agent directly at closing

• Agent negotiates compensation into the offer (e.g., seller pays part or all)

• A hybrid approach, depending on the offer terms

The important takeaway? These conversations must happen early. Buyers need to understand what their agent charges, how they plan to get paid, and how that affects the offer.

What Sellers Need to Know

The changes may feel even more jarring for home sellers. For decades, sellers were conditioned to believe they must pay both the listing agent and the buyer’s agent—with those fees often baked into their net proceeds.

Not anymore.

1. You Now Choose Whether to Offer Compensation to a Buyer’s Agent

Sellers are no longer required—or even expected—to offer compensation to a buyer’s agent. In fact, that compensation cannot be listed on the MLS anymore.

Instead, it’s a strategic choice, made during your listing agreement conversation with your real estate agent.

Yes, it may seem counterintuitive: “Why would I pay someone representing the buyer?”

But the smarter question is: How does that decision affect demand for your home?

Here’s a hypothetical:

• You list your home at $400,000 and offer 0% buyer-agent compensation

• A competing home across the street offers 2.5% buyer-agent compensation

• The buyer (already paying a down payment and closing costs) now must pay their agent out of pocket to buy your home—but not the one across the street

Which house do you think they choose?

In this new environment, buyers are scrutinizing every dollar. Offering a reasonable buyer-agent credit can increase interest in your property—and maybe even your final sales price.

2. This Is the Decoupling of Commissions

For years, agents said, “My services are free to the buyer.” That was never quite accurate. Sellers paid both agents, but that cost was passed on in the purchase price.

The NAR settlement ends that illusion.

From now on, commissions are separate, negotiable, and transparent. Every party now negotiates their own agent’s compensation.

For sellers, this means you’re no longer automatically on the hook for both sides—but you must understand the trade-offs when deciding what to offer.

The Big Picture: What This Means for Real Estate

This is a massive cultural shift, not just a legal one. And like any change, it comes with both friction and opportunity.

The Pros:

• Clearer contracts and more transparent relationships

• Empowered consumers, both buyers and sellers

• A more competitive agent landscape, where true value shines

The Cons:

• Higher upfront costs for buyers in some cases

• Confusion for clients unfamiliar with the new rules

• Potential slowdown in transactions—at least temporarily

Advice for Buyers

• Expect to sign a buyer agency agreement before touring any homes

• Have a direct conversation with your agent about their fees and payment methods

• Understand how compensation may affect your offer and cash-to-close

Advice for Sellers

• Work with a professional who can clearly explain the strategy behind offering (or not offering) buyer-agent compensation

• Focus on net proceeds, not just commission percentages

• Know your competition. If others are offering buyer-agent fees and you're not, it may affect demand

Why It All Matters

For decades, real estate operated on invisible handshakes and unclear expectations. The NAR settlement changes that.

It ushers in a new era of intentional relationships, defined agreements, and greater consumer empowerment. It may take time to adjust. But it’s a step toward modernizing an industry that’s been due for it.

And while there may be growing pains, there’s also immense opportunity—for buyers to be better informed, for sellers to make strategic decisions, and for agents to truly earn their value.

Final Thoughts

The new rules are real, and they are here to stay. Whether you're buying, selling, or both, the NAR settlement redefines the playing field—and everyone needs to understand the implications.

It’s no longer enough to show up. You need to show up informed.

Ask questions. Read the paperwork. Talk openly about compensation. And hire professionals who don’t just follow the new rules—but help you navigate them with clarity and confidence.

The future of real estate just got sharper. Let’s make the most of it.