The 2024 NAR Agreement: Important Changes in Real Estate Transactions

On August 17, 2024, new rules went into effect requiring real estate agents to have written agreements with buyers before showing homes listed on Multiple Listing Services (MLS). These changes make real estate transactions more transparent and ensure buyers clearly understand agent compensation before starting their home search.

The settlement affects approximately 1.5 million NAR members across the United States, implementing two major changes that reshape traditional real estate transactions. These changes aim to increase transparency and alter long-standing commission structures that have dominated the industry for generations. In March 2024, the National Association of REALTORS® (NAR) reached a settlement that changed how real estate agents work with homebuyers. This agreement brings more clarity to real estate transactions and makes sure everyone understands the costs involved from the start.

The first significant change requires buyers to sign a formal contract with real estate agents before viewing any properties. While this practice was already standard in many states, it now becomes mandatory nationwide for NAR members. This agreement will clearly show:

• How much you’ll pay your agent
• What services you’ll receive
• Fees are negotiable
• The exact compensation terms

Perhaps the most transformative aspect of the settlement involves agent compensation. Historically, sellers typically paid around 6% of the home’s sale price in commissions, split evenly between the listing agent and buyer’s agent through the Multiple Listing Service (MLS) system.

Starting August 17, 2024, this long-standing practice ends. The settlement prohibits the advertising of commission splits on MLS platforms, fundamentally changing how buyer’s agents receive compensation.

This shift could mean:

• Buyers may need to pay their agent’s commission out of pocket
• Commission structures become more flexible and negotiable
• Some buyers might choose to proceed without agent representation
• New financing considerations for homebuyers

For Homebuyers

• Required written agreements before viewing properties
• Direct negotiation of agent compensation
• Potential additional out-of-pocket expenses
• More transparent fee structures

For Real Estate Professionals

• New contractual requirements
• Modified compensation negotiations
• Adjusted business practices
• Enhanced transparency requirements

For Home Sellers

The new rules change how seller offers of compensation work:

• Compensation offers can’t be posted on MLS
• Sellers can still offer compensation outside MLS
• Buyer concessions can still be listed on MLS
• All fees remain negotiable

As these industry changes take effect, DSLD Mortgage remains committed to:

• Understanding how these changes affect borrower needs
• Adjusting loan programs to accommodate new costs
• Providing guidance through the modified process
• Ensuring smooth transitions under new regulations

For guidance on how these changes affect your homebuying journey, contact DSLD Mortgage. Our team stays current with industry changes to provide the most relevant and helpful assistance in your home purchase process.

Note: This article reflects changes effective August 17, 2024. Consult with legal and real estate professionals for specific guidance about your situation.