How the NAR Settlement Affects Home Sellers: What You Need to Know

As of August 17, 2024, significant changes are coming to the real estate market due to the National Association of Realtors (NAR) settlement. These changes, aimed at increasing transparency and fairness, will directly impact home sellers. Here’s a brief overview of how these changes will affect you if you’re planning to sell your home.

Mandatory Buyer Representation Agreements

One of the key changes is that all MLS participants working with buyers must enter into a written agreement with the buyer before they can tour any homes. This ensures that buyers are represented under a formal agreement, leading to more informed and prepared buyers and smoother transactions for sellers.

Clear Compensation Structures

The settlement outlines specific ways buyer agents can be compensated, which may alter negotiations. Sellers should be aware that:

  1. **Buyer-Paid Compensation**: The buyer may pay their agent directly.
  2. **Seller-Paid Compensation**: The buyer may negotiate for the seller to pay the buyer’s agent.
  3. **Cooperating Broker Compensation**: The seller’s broker may pay the buyer’s agent.
  4. **Direct Agreement with Seller**: If unrepresented, the seller can contract directly with the buyer’s broker for payment.

Our Team’s Compensation Structure

To ensure sellers that list with the Kei Group still receive the highest price for their home, we have developed a tailored compensation structure. This structure effectively navigates the new rules, protecting and prioritizing our sellers’ interests.

Impact on Negotiations

With these new rules, sellers might face more scenarios where buyers negotiate for sellers to cover their agent’s fees. Sellers should understand these potential negotiations and plan accordingly with their listing agent.

Broker Involvement Requirements

For a buyer’s agent to earn compensation, they must demonstrate “broker involvement” with the property, such as showing the property, submitting offers, or conducting market analysis. This ensures that only engaged and active buyer agents will likely be involved in transactions, reducing less serious offers.

Cancellation and Protection Periods

The buyer representation agreements can be exclusive or non-exclusive, affecting cancellation terms and compensation rights. Sellers should be prepared for situations where an agent may still be entitled to compensation even if the representation agreement is canceled, provided there was prior “broker involvement.”

Beware of Higher Listing Commissions with Reduced Buyer Side Commission

Sellers should be cautious about listing with realtors who continue to charge a 2.5% or higher listing commission while only cutting the buyer side commission. This practice can reduce the pool of potential buyers, lead to fewer offers, and result in a lower sale price. In some situations, offering a competitive commission to buyer agents can lead to multiple offers and a higher final sale price.

Preparing for the Changes

As these new rules take effect, it’s essential for home sellers to stay informed and work closely with their real estate agents. Understanding these changes can help sellers prepare for negotiations and ensure successful transactions.

The Kei Group is committed to guiding our sellers through these changes with expertise and personalized strategies. By leveraging our innovative compensation structure, we aim to maximize a home’s sale price and ensure a smooth transaction.

Our principal, Kevin Chiao is a licensed California Attorney and is happy to chat about any questions you may have about the new rules.

For more detailed information and guidance, please reach out at 408.472.4127 or

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