We understand that the recent settlement involving the National Association of Realtors (NAR) may raise questions for buyers, sellers, and real estate professionals alike. This FAQ page is designed to provide clear, straightforward answers to help you navigate the changes and understand how they may impact you. Whether you’re seeking details on the settlement’s implications or how it affects real estate transactions, you’ll find the information you need right here.

1. How does the settlement affect home sellers and home buyers?

This settlement would preserve the choices consumers have regarding real estate services and compensation. After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers cannot be communicated via a Multiple Listing Service(MLS). MLS Participants acting for buyers would be required to enter into written agreements with their buyers before touring a home. These agreements can help consumers understand exactly what services and value will be provided, and for how much.

2. Does this mean buyer brokers may have to work for free?

No. We have long believed that it is in the interest of the sellers, buyers, and their brokers to make offers of compensation—but using an MLS to communicate offers of compensation will no longer be an option. The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to: Fixed-fee commission paid directly by consumers; Concession from the seller; Portion of the listing broker’s compensation; Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent

3. Will this prohibition save money for sellers or buyers?

As NAR has maintained throughout the litigation, nothing in NAR’s current policies (including the MLS Model Rule) has increased costs for buyers or sellers. This settlement would preserve the choices consumers have regarding real estate services and compensation. After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via an MLS. The settlement expressly provides that sellers may communicate seller concessions—such as buyer closing costs—via an MLS provided that such concessions are not conditioned on the use of or payment to a buyer broker.

4. What should I tell home buyers and sellers they need to know about these changes?

Consumers should know that after August 17, 2024: If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much. Written agreements are required for both in-person and live virtual home tours. You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services. Agent compensation for home buyers and sellers continues to be fully negotiable. When finding an agent to work with, ask questions about their services, compensation, and these written agreements.

5. Does the settlement change access to mortgages for buyers?

No. Under the settlement, buyers still have the same options when it comes to compensating their real estate representatives. That is, the listing brokers can compensate the buyer broker, the seller can compensate the buyer broker, or the buyer can compensate their broker directly. Buyers will still be able to get financing from Fannie Mae, Freddie Mac, and the FHA under these scenarios. The FHA confirmed this in a letter after NAR sought to affirm our interpretation of existing guidance. Likewise, Fannie Mae and Freddie Mac published explicit confirmations that commissions for buyer brokers paid by the seller would not count against the buyer. However, none of these agencies will allow the buyer to finance a commission into the mortgage at this time.

6. What about VA loans and the prohibition on buyers paying commissions directly?

The Department of Veterans Affairs (VA) recently announced that it has temporarily lifted its ban on buyers paying for real estate agent representation. Veteran buyers now have more options, ensuring they can have professional access to representation in their home buying process. The VA’s policy takes effect on August 10. The VA is evaluating the need for a formal rulemaking process on this issue. NAR has strongly advocated for this change as we want to ensure veterans maintain access to the VA home loan program, which has been a significant tool in helping service members achieve the American dream of homeownership. NAR recently submitted a letter to VA urging them to make this revision to their policies.

7. Can real estate commissions be financed?

No. Financing commissions is not feasible under the current structure of the residential mortgage finance system, and there is no clear short-term legislative or regulatory fix. Banks would treat such a loan as a personal loan that would have higher rates and they would limit access to those loans to borrowers with better credit profiles. That personal loan would add to the buyers’ liabilities and make it harder to qualify for the mortgage they are seeking. Fannie Mae, Freddie Mac, and the FHA do not allow commissions to be added to the balance of the mortgage. Several rules that make up the foundation of mortgage finance would need to be changed by the regulators and Congress to make this change.