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Buyer Representation in Real Estate

After the National Association of Realtors (NAR) lawsuits that resulted in multi-million dollar settlements against most all of the big-box brands in real estate, buyer representation will never be the same. The settlement, valued at $418 million, resolves a series of lawsuits alleging anticompetitive practices in broker commissions, particularly focusing on how buyer broker commissions were traditionally set up through Multiple Listing Services (MLS).

Under the terms of the settlement, significant changes are set to be implemented:

  1. Prohibition on MLS Compensation Offers: NAR has agreed to stop listing brokers from offering buyer broker compensation through MLSs. This means that compensation offers will not be displayed on MLS platforms, which traditionally helped to standardize commission rates across the industry​.

  2. Mandatory Buyer Representation Agreements: Buyer agents will be required to have written agreements with buyers that clearly state the compensation they will receive. This aims to make compensation negotiations more transparent and tailored to the services provided rather than being dictated by a standard rate.

  3. New Compensation Structures: Compensation could now be negotiated directly between buyers and their agents, paid upfront by homebuyers, included as a concession from the seller, or deducted from the listing broker's fee. These changes aim to increase competition and reduce overall commission costs. ​.

These reforms are intended to increase transparency and competition in the real estate market, potentially leading to lower commission rates and giving consumers more flexibility and choice in how they engage real estate professionals​. These changes are expected to begin taking effect in mid-July 2024, marking a significant shift in how real estate transactions are conducted in the U.S.​ 

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