The real estate industry was set for a major shift when the National Association of REALTORS (NAR) implemented a new policy that was supposed to change how commissions are handled. But now, seven months later, has anything actually changed?
Let’s dive into the reality of what has happened since this lawsuit was introduced and what it means for buyers, sellers, and real estate professionals.
What Was Supposed to Happen?
Before the lawsuit, when a seller hired a listing agent, the agent negotiated their commission along with the commission for the buyer’s agent. Typically, this amounted to a 5-6% total commission, split between the listing agent and the buyer’s agent.
The new rule removed the ability for listing agents to negotiate the buyer’s agent’s commission. Instead, buyers were expected to directly compensate their agents. This was supposed to disrupt the industry by making buyer-paid commissions the norm.
What Actually Happened?
Despite all the expectations, the reality is that almost nothing has changed. The vast majority of sellers are still paying the buyer’s agent commission. Here’s why:
- Escrow Data Confirms It: After interviewing multiple escrow companies, it became clear that sellers are still covering the buyer’s agent fee in nearly 100% of transactions.
- Buyers Are Not Paying: While the law technically allows for buyers to pay their agents, in practice, this isn’t happening. The expectation that buyers would suddenly start paying agent commissions has not materialized.
- MLS Data Is Inconclusive: Although real estate agents are supposed to report who paid the buyer’s commission upon closing, many listings either leave this field blank or fill it out inconsistently.
What Does This Mean for Sellers?
Sellers should not assume that they will automatically save money on commissions due to this lawsuit. While they technically have the option to refuse to pay a buyer’s agent commission, most still choose to do so in order to attract buyers and close deals smoothly.
Additionally, sellers should be aware that:
- If they refuse to pay a commission, they may receive fewer offers from buyers.
- Buyer’s agents are still negotiating their fees, but now directly with sellers instead of through listing agents.
- The real estate transaction process still involves numerous negotiations, and agent incentives remain a key factor.
What About Buyers?
Buyers who expected to pay less or eliminate agent commissions may not see any actual changes. In most cases:
- The seller is still covering commission costs.
- No buyers have had to pay a commission out-of-pocket.
- Buyer representation remains as important as ever, particularly in complex transactions.
The Bottom Line
Seven months after the NAR lawsuit, the anticipated disruption has not happened. The real estate market continues to function largely as it did before, with sellers still paying commissions and buyers rarely taking on these costs themselves.
While the lawsuit has introduced new paperwork and formalities, the fundamental structure of agent compensation remains unchanged.
