Post NAR lawsuit, what commission options does a Seller have?
As you may have heard, there was a major lawsuit involving the National Association of Realtors which revolved around commissions paid by Sellers in real estate transactions. The outcome of the litigation resulted in changes taking effect in August of 2024. It seems complicated but really, the end result is similar to what the industry practices were prior to the lawsuit, we are just arriving at the agreed upon commissions/ concessions in a different way than before.
Commissions have always been and continue to be negotiable. Some agents charge more than others, and I’m a firm believer that you truly do get what you pay for. I wouldn’t go to the cheapest doctor, lawyer or mechanic for the simple reason that typically price, professionalism and competence are usually synonymous. Of course, there are exceptions and I do acknowledge that, but generally speaking, I believe most people prefer quality over securing the cheapest price, if they have an option.
Post lawsuit, Sellers still have the option to choose whatever agent they would like (or sell on their own) and they and their listing agent will agree on what the seller will pay the Listing Agent as a commission. The big difference now is that the buyer’s agent commission used to be assumed and negotiated right along with the Listing Agent commission, and there really wasn’t an option to refuse to pay a buyer’s agent. Typically it would be a 50/50 split.
Further, because the commission rates were required to be disclosed in the Multiple Listing Service (MLS), agents could shop around to find the listings that were paying the highest commission. Obviously this is highly unethical because real estate agents do have a fiduciary duty to their client, and that doesn’t include getting themselves the highest commission.
Fast forward to August of 2024 and now the MLS does not allow ANY mention of commission or concessions to a buyer in the Multiple Listing Service, not one word or even a vague suggestion of it. The Seller still can offer the buyer concessions to help pay their agent’s commission, or contribute to closing costs, etc., but this information is not published in the MLS. However, any agent can call and ask if a seller is offering concessions, and that is absolutely allowed, so that information is still available for the asking.
I do believe that most sellers still believe that their home is more attractive and easier to sell if they consider offers from buyers that request some concession money to help them pay their agent or closing costs. What seemed like a super complicated lawsuit really ended up in a settlement that essentially just changed the process and paperwork associated with how we arrive at and document commissions and concessions offered by or agreed to by Sellers, and that’s it, in a nutshell.