Washington, DC – The settlement announced by the National Association of Realtors suggests that listing and buyer agency compensation will be completely uncoupled.  This settlement over time will benefit home sellers and buyers greatly, eventually lowering agent commissions by tens of billions of dollars a year and helping align agent compensation and services rendered.  Increasingly this compensation will reflect agent competence, experience, and the effort they make on a sale.

Home buyers will still be able to request a concession from sellers that includes funds to help cover buyer agent compensation, but this will be after they have had the opportunity to comparison shop and negotiate buyer agent rates.  The settlement will also encourage more sellers to negotiate the compensation of their listing agents.

Required buyer agent contracts will demand that buyer agents discuss their compensation with their buyer clients.  These discussions alone will tend to lower buyer agent compensation.  But as CFA’s February 15, 2024 report on these contracts explained, they have been written mainly by attorneys for state Realtor associations for the benefit of agents and brokers, and contain many anti-consumer features.

The residential real estate marketplace will take some time, perhaps several years, to fully process the implications of this settlement.  But over time more agents will feel free to offer different types of compensation, and more consumers will comparison shop and negotiate commissions in a more transparent marketplace.

The industry has raised concerns about first-time home buyers.  They will have the opportunity to request a concession from home sellers that helps cover buyer agent compensation.  But the real solution is for the industry to work to remove regulatory barriers that make it difficult for buyers to include this compensation in their mortgages.  We are fairly confident that the industry will pursue this issue in part to preserve buyer brokerage.  Without the option, more buyers will contact listing agents, losing fiduciary representation though also potentially lowering their costs.