NAR Settlement - FAQ

The real estate industry in California and across the country is evolving to adapt to changes happening with the industry's business practice. These changes are reshaping the dynamics of home buying and selling. To help our members frame and practice potential conversations with their buyer clients about these changes, C.A.R. is providing some questions that buyers and/or sellers may have:

Seller/Buyer: The real estate industry is experiencing a lot of change. Can you provide me with more details?

Agent: Earlier this year, a legal settlement involving the National Association of REALTORS® (NAR) and some large real estate brokerages imposed new requirements that change the way real estate transactions are conducted. The changes provide more transparency and are intended to improve discussions between licensees and their clients regarding their representation.

Seller/Buyer: What are the new requirements, and what are the potential improvements?

Agent: The settlement includes two main changes that will go into effect by August 17, 2024. First, buyers working with an agent must sign a written agreement before touring a home with an agent. This agreement will outline the agent's role, services, and fees. The second change is properties listed for sale in MLSs will no longer be able to include an offer of compensation to the buyer's agent. While these changes make the homebuying process different than in the past, buyers can focus more on the services their agents provide and see them as trusted advisors working alongside them on what very well could be the most significant purchase of their lives. More transparency and clearer communication can lead to more informed decisions and a smoother home-buying process.

Buyer: If the offer of compensation has been removed, who pays the buyer's broker?

Agent: There are several ways for buyer's brokers to be paid, including but not limited to, the buyer paying; the buyer negotiating for the seller to pay the compensation that the buyer owes the buyer's broker as part of the offer, and the buyer's broker can contract directly with the seller if the seller is unrepresented.

Buyer: What if I don't have the funds to pay my agent?

Agent: Your agent can negotiate with sellers and their REALTORS® about whether they are willing to compensate a buyer's agent or what concessions, such as buyer closing cost credits, they may be willing to entertain as part of the buyer's offer.

And if a seller or buyer is not willing to compensate the agent directly, the buyer might have to consider other homes instead.

Buyer: Do I need to sign a buyer representation agreement if I just want to see a live virtual home tour?

Agent: Written agreements apply to both in-person and live virtual home tours.    Prospective seller: Is there anything else I should consider?

Agent: REALTORS® are here to help you navigate the process of selling your home and are ethically obligated to work in your best interest.

Compensation for your agent remains fully negotiable, and if your agent is a REALTOR®, they must abide by the REALTOR® Code of Ethics and have clear and transparent discussions with you about compensation. When finding an agent to work with, ask questions about compensation and discuss your representation.

You have choices. Work with your agent to understand the full range of these choices when selling your home, which will help you make the best possible decision for your needs.

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