What Is the NAR Settlement?

Buying a home is a huge milestone, and if you’re new to the process, it can feel a bit overwhelming—especially when big industry changes like the recent National Association of Realtors (NAR) settlement come into play. If you’ve been hearing about this and aren’t sure how it affects you as a homebuyer, don’t worry. I'm here to walk you through exactly what this settlement means, how it impacts the homebuying process, and why having a professional real estate agent on your side is more important than ever.

Let’s break it down in simple terms so you feel informed and confident as you begin your homebuying journey.

What Is the NAR Settlement?

The NAR is the largest real estate trade group in the country, representing real estate agents and brokers nationwide. The recent lawsuit against the NAR revolved around how real estate agents are paid, specifically the commission structure.

Traditionally, when a home is sold, the seller covers the cost for both their agent (the listing agent) and the buyer’s agent (the one helping you, the buyer). But the lawsuit argued that this system wasn’t transparent enough for buyers, and as a result, home prices might be inflated to cover these commissions without buyers fully understanding what they were paying for.

To put it simply: the lawsuit questioned whether buyers were paying more for homes because of how agents were being compensated, and if those costs were being hidden in the price of the home.

This led to a settlement that’s expected to shake things up in the way real estate commissions work moving forward.

How Does the NAR Settlement Affect You as a Homebuyer?

Now, let’s talk about what this means for you, as someone who might be thinking about buying a home in the near future. The settlement is going to bring some important changes, which could affect how much you pay and how commissions are handled.

1. More Transparency in Fees

The biggest shift you’ll notice is that there will be much more transparency about commissions. In the past, the commission for the buyer’s agent was baked into the home’s sale price, and many buyers didn’t realize that they were indirectly covering this cost. Now, it’s likely that agents will need to be more upfront about their fees and who’s paying for them.

As a buyer, this is a good thing! You’ll have a clearer picture of what you’re paying for and how those costs are broken down. This kind of transparency empowers you to ask questions and even negotiate, which brings me to the next point…

2. Possible Changes to Who Pays the Buyer’s Agent

With more transparency comes the possibility that the responsibility for paying the buyer’s agent may shift. Currently, the seller usually covers both agents’ commissions, but after this settlement, buyers might be asked to cover their agent’s fees directly.

This change could go two ways:

• More negotiation power for you: If you’re responsible for paying your agent directly, you’ll have the opportunity to negotiate their fee based on the level of service they provide.
• Potentially higher upfront costs: While traditionally these fees were rolled into the home’s purchase price, you might now need to budget for them separately, so it’s something to be aware of when planning for your purchase.

Why Most Buyers Aren’t Paying the Commission Directly

While the settlement sparked concerns that buyers might start paying their agents directly, this hasn’t become the norm, and here’s why: Asking buyers to cover that commission upfront would disqualify a large portion of the buyer pool.When you think about it, the vast majority of buyers are already stretching their budgets to cover down payments, closing costs, and moving expenses. If they were also expected to pay their agent’s commission out of pocket, it could be financially impossible for many, and that’s not in anyone’s best interest.

For sellers, this would be a disservice. Disqualifying 90% of potential buyers by adding extra upfront costs could severely limit the number of offers they receive, which ultimately could affect how much their home sells for. Sellers want as many qualified buyers as possible, and keeping the traditional structure where the seller covers the commission for both agents helps maximize the buyer pool.

It’s Still a Conversation Worth Having

While things haven’t changed much in practice, the NAR settlement has brought more awareness to the conversation around commissions. Most of the time, buyers and sellers don’t need to worry about who’s paying the commission because it’s already built into the sale price. However, it’s still worth discussing with your agent—especially if the topic does come up or if you’re working with a seller who might be negotiating commission costs.

Rest assured, though, in most cases, buyers aren’t asked to pay those costs directly, and there are even options to wrap the buyer’s agent commission into the loan in certain situations. Some loan programs are starting to recognize the potential shifts in commission structures and are developing ways to accommodate these costs so that buyers can still qualify for their loans without additional upfront expenses.

Why It's More Important Than Ever to Hire a Professional Real Estate Agent

So, with all these changes, do you still need to hire a real estate agent? The short answer is absolutely yes. Here’s why:

1. The Homebuying Process Is Complex

Even with more clarity on commission structures, buying a home is still a complex process. From negotiating offers to understanding contracts, handling inspections, and navigating all the paperwork, there’s a lot to juggle. An experienced agent will guide you through every step, ensuring that you’re making informed decisions and not leaving anything to chance.

2. An Agent Advocates for Your Interests

One of the most valuable roles an agent plays is as your advocate. With changes in the way commissions are handled, you need someone who is fully focused on protecting your interests. A skilled agent will ensure that you’re not overpaying for the home, help you negotiate the best possible deal, and walk you through every decision.

3. Expert Negotiation Skills

There’s more to negotiation than just settling on a home price. You’ll also be negotiating closing costs, contingencies, and, of course, commission fees in this new landscape. A good agent knows how to approach these conversations and will work to get you the best terms possible.

4. Local Market Knowledge

When it comes to real estate, each market is different. Having a local expert who knows the ins and outs of your specific area is invaluable. They’ll know what’s happening in your local market—whether it’s Utah or beyond—and help you navigate the best time to buy, what homes are really worth, and how to position yourself for success.

Stay Informed and Protected

The NAR settlement has set the stage for some pretty significant changes in how real estate commissions are handled. For homebuyers, this means more transparency, potential shifts in who pays your agent, and ultimately more opportunities to understand and control your costs.

But even with these changes, the homebuying process is still a big deal, and having a professional by your side will ensure you’re protected every step of the way. A real estate agent is there to look out for your interests, handle the details, and make sure you’re getting the best deal possible.

If you’re thinking about buying a home, I’m here to help. I’ll make sure you understand all the changes, guide you through the process, and advocate for you every step of the way. Let’s chat about how I can help make your homebuying journey as smooth and successful as possible!