The National Association of REALTORS® (NAR) reached a landmark $418 million settlement in March 2024 that fundamentally changed how real estate agents are compensated and how consumers work with buyer's agents. These changes took full effect in August 2024, and their impact continues to reshape the industry in 2025 and beyond.
Understanding the NAR Settlement
The settlement resolved antitrust lawsuits claiming that NAR's rules artificially inflated agent commissions and limited competition. The key allegations focused on:
- Buyer agent commission offers in MLS: The requirement that listing brokers make offers of compensation to buyer brokers through the MLS
- Steering: Concerns that agents would steer clients toward properties offering higher commissions
- Lack of transparency: Consumers weren't always aware they could negotiate commission rates
The Major Changes
1. No More Commission Offers in MLS
The most significant change: Listing brokers can no longer advertise buyer agent compensation on the MLS.
Before the Settlement:
- Sellers typically offered 5-6% total commission (split between listing and buyer agents)
- Commission offers were visible in MLS listings
- Buyer agents could see upfront what they'd earn on each transaction
After the Settlement:
- Commission offers cannot be published in MLS
- Buyer agent compensation must be negotiated separately
- Sellers can still offer to pay buyer agent commissions (but not advertise it publicly)
- Compensation can be communicated directly between brokers outside of MLS
2. Mandatory Written Buyer Agreements
Buyer agents must now have a written buyer representation agreement before showing properties.
What This Means:
- Buyers must sign an agreement specifying agent compensation before touring homes
- The agreement must clearly state how much the buyer will pay their agent
- Buyers can negotiate the commission rate and services provided
- Agents must clearly explain their value proposition upfront
Important Note
Even with these changes, sellers can still choose to pay buyer agent commissions as part of their closing costs. The key difference is that this offer is no longer publicly advertised on the MLS.
Impact on Real Estate Agents
For Buyer's Agents
The changes have created new challenges and opportunities:
Challenges:
- Must clearly articulate value before showing properties
- Need to discuss compensation upfront (uncomfortable for some)
- Risk of buyers being shocked by commission costs
- More negotiation required on every transaction
- Potential for reduced or no compensation on some deals
Opportunities:
- Differentiate through superior service and expertise
- Build stronger client relationships with upfront agreements
- Ability to offer tiered service packages at different price points
- More professional, consultative approach to business
For Listing Agents
Listing agents have seen changes too:
- Need to help sellers understand the new rules
- Must educate sellers on the pros/cons of offering buyer agent compensation
- Marketing approach may need adjustment
- Potential for more FSBO (For Sale By Owner) attempts
Impact on Consumers
For Home Buyers
Buyers now have more transparency but also more responsibility:
Benefits:
- Clear understanding of agent costs upfront
- Ability to negotiate commission rates
- Option to choose service levels based on needs
- More control over the transaction process
Challenges:
- May need to pay agent directly if seller doesn't offer compensation
- Additional costs to budget for when buying
- Need to understand agent value before committing
- More paperwork and agreements upfront
For Home Sellers
Sellers have gained flexibility:
Benefits:
- Can choose whether to offer buyer agent compensation
- Potentially lower total commission costs
- More control over transaction costs
Considerations:
- Not offering buyer agent compensation might limit buyer pool
- Need to understand market norms in their area
- May affect how quickly home sells
How Commissions Work Now
Common Scenarios in 2025
Scenario 1: Seller Offers to Pay Buyer Agent
- Seller agrees to pay 2.5-3% buyer agent commission (negotiated)
- This is communicated directly between brokers (not in MLS)
- Buyer's agent receives payment at closing from seller's proceeds
- Buyer pays $0 directly to their agent
Scenario 2: Buyer Pays Their Agent
- Seller offers limited or no buyer agent compensation
- Buyer has signed agreement to pay their agent 2.5%
- Buyer pays this fee at closing or separately
- This is in addition to down payment and closing costs
Scenario 3: Hybrid Model
- Seller offers 1.5%, buyer's agent fee is 2.5%
- Buyer makes up the 1% difference at closing
- Most common in competitive markets
Strategies for Agents to Thrive
1. Master the Value Conversation
Agents must clearly articulate their value proposition:
- Market knowledge and expertise
- Negotiation skills that save/make clients money
- Access to off-market and coming-soon properties
- Transaction management and problem-solving
- Network of trusted professionals (lenders, inspectors, attorneys)
2. Offer Tiered Service Packages
Consider creating service tiers at different price points:
- Essential Package: Basic MLS search and showings (1-1.5% commission)
- Professional Package: Full service with negotiation and transaction management (2-2.5%)
- Premium Package: Concierge service with market analysis, off-market access, staging consultation (3%)
3. Build a Referral-Based Business
Many agents are pivoting to referral models to avoid these challenges:
- Generate leads from your network
- Refer qualified buyers/sellers to active agents
- Earn 20-35% referral fees without direct client management
- No buyer representation agreements or commission negotiations
Consider a Referral Model
With the added complexity of buyer agreements and commission negotiations, many agents are choosing referral-based businesses. RE|known's $295/year Referral Agent Plan lets you earn referral fees without the challenges of direct representation.
What the Future Holds
As the industry continues to adapt, we're seeing several trends emerge:
Short-Term Trends (2025-2026)
- Continued education for agents and consumers
- Regional variations in how commissions are handled
- More buyers paying their agents directly
- Increase in flat-fee and discount brokerages
- Technology platforms emerging to facilitate compensation negotiation
Long-Term Predictions
- Greater variety in service models and pricing
- Stronger focus on agent expertise and professionalism
- Potential for further commission compression
- More agents specializing in specific niches
- Rise of referral-based and part-time agents
Key Takeaways
For Agents:
- ✅ Embrace transparency and upfront communication
- ✅ Clearly articulate your value proposition
- ✅ Be prepared to negotiate compensation
- ✅ Consider alternative business models (referrals, tiered services)
- ✅ Focus on expertise and professional development
For Consumers:
- ✅ Understand you may need to pay your buyer's agent
- ✅ Don't be afraid to negotiate commission rates
- ✅ Interview multiple agents before signing representation agreements
- ✅ Ask about service levels and what's included
- ✅ Factor agent costs into your home buying budget
Conclusion
The NAR settlement represents the most significant change to real estate compensation in decades. While it creates challenges, it also opens opportunities for agents who embrace transparency, demonstrate clear value, and adapt their business models to meet evolving consumer expectations.
The agents who will thrive are those who focus on expertise, professionalism, and clear communication. Whether you choose to continue as a traditional buyer's agent, pivot to a referral model, or offer tiered services, the key is understanding these changes and positioning yourself for success in this new landscape.
The old way of doing business is gone. The new way rewards those who deliver exceptional value and can clearly communicate that value to clients. Are you ready to adapt?
