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  • Writer's pictureNancy Bennett

MARKET UPDATE: Home sellers could save thousands under proposed NAR settlement

Woohoo! That was the initial reaction from home sellers this month as the National Association of Realtors (NAR) lawsuit regarding real estate commissions has been announced!

Can you imagine saving 3% commission on a $1,000,000 home sale? OMGosh, that’s like an extra $30k in your pocket right away! (Assuming a seller has agreed to a 6% commission that is split 50/50 with their listing agent.) 

Some comments from the internet read like this: “Those agents don’t do anything, just drive homebuyers around in their car and write up purchase contracts. Or they wait until their buyers visit an open house by themselves over the weekend and then punch in some numbers into a pre-written contract (fill in the blank) and send it over to the seller. For a $30,000 paycheck?”

Over this past weekend, I had was asked by a handful of folks just what this whole thing means? While the details are being worked out and the settlement has not been approved just yet, here are some points to consider:

  1. For the past few decades, and for the most part, home sellers have paid the entire amount of commission when a home is sold (check your final closing statement and you’ll see the full amount comes off the seller side).

  2. But do they really?

  3. Didn’t the buyers make the offer that includes the purchase of your home, which would be sold free and clear of any liens (mortgages, HELOC, solar, etc.), and any other seller costs to selling, like commissions?

  4. It could be argued that the buyers are really paying the commission via their offer price, yet it comes off the seller’s side.  Sellers: Why pay for a buyer’s agent?

  5. You’re going to sell your highest asset and you only want to pay your agent and save a lot of money!

    1. OK, fine – who will represent the buyer?

      1. Because I don’t know many, if any realtors that want to work for free.

      2. Maybe some buyer’s agents will work for less. 

        1. Of course, the old saying “you get what you pay for” comes to mind. 

      3. BTW, how are those discount brokerages working out right now?

        1. Many are failing or already out of business, so that model of saving money on the sale of your home has been proven not to be a great solution at the end of the day. 

    2. Oh, the buyer will represent themselves.

      1. Nightmare! And the lawyers will have a field day suing everyone, again!

    3. Or your listing agent will represent both you as the seller AND the buyer?  

      1. Dual representation or double-ending the transaction?

      2. The fiduciary responsibility changes dramatically, and not in a seller’s favor. 

      3. Try negotiating with yourself when repairs or credits are requested by the buyers, as the ONE agent in the middle of both parties cannot provide guidance, only communicate the requests back and forth. Here’s an example of a conversation:

Agent: They’re asking for $10k in credits for the roof “repairs.” Seller: Tell them no.

Agent: Buyers then come back and ask for $5k in credits

Seller: Tell them no. Agent: Buyers have cancelled the contract.

Seller: Wait, what?

Agent: Yep, you’re back on the market and I’ll be holding your home open again this weekend, so please leave for the day, and take your pets with you. Since it took 24 days to get this first contract, make sure you block out the next four weekends, too.

I attached an article that just came out from another realtor that outlines some of the details. Remember, these changes are new to everyone, and the final terms will not be approved until July. We all have many questions on how this will work, so hang with me as this unfolds over the next few months.

What the NAR settlement means for buyers and sellers

by Vanessa Bergmark, realtor, Red Oak Realty DRE #01388291

There has been significant media coverage of a recent legal settlement regarding the real estate industry. Last week the National Association of Realtors entered into a settlement agreement in the Sitzer-Burnett case, agreeing to pay a $418 million fine. In this month's newsletter we wanted to clarify what this means for home buyers and sellers.

First, note that the settlement is pending approval by the courts, and if approved won't go into effect until mid-July. Thus, it has no immediate impact. If it goes into effect, buyers and sellers will likely see brokerages and agents adopting new policies nationwide.

Historically, sellers have paid for the buyer agents' commissions. This settlement will, in short, encourage buyers to pay for - and negotiate - compensation with their agents. Here's how this will likely affect buyers and sellers:


  • The seller does not have to offer compensation to the buyer's agent. This has always been the case and has not been affected by the settlement. There is no pre-set amount; it can be set at the initial marketing of the property or negotiated directly with the buyer's representative prior to ratifying a sales contract. There are strategic implications to consider when taking either approach and how they may impact the value, timing and logistics of the sale. 

  • A seller will still be able to offer compensation for an agent who brings a buyer to the property and facilitates the sale for that buyer. The compensation amount, however, will no longer be published in the MLS, which feeds to all major portals like Zillow and and is the de facto platform for searching available properties. Cooperating commissions can still be shared publicly on brokerage marketing materials including flyers, websites and social media. 

  • Sellers have always been - and will continue to be - able to negotiate commissions with their agent based on the exchange of services that agent is offering.

  • There will be changes made to California Association of Realtors contracts and forms to clearly delineate not only the amount, but how, when and where offers of compensation will be exchanged. 


  • By mid-July, before touring any properties, buyers will be required to enter into a written agreement with their agent representative (if that agent is a participating member of the MLS), which clearly defines the compensation that will be due in exchange for their agent's service.

  • The compensation may be paid by the buyer, offset in the future by a seller willing to cover the amount, or covered within the loan structure in the form of a seller concession as part of the terms of the sales contract. There are limitations to the concession percentage allowance determined by the loan based on the buyer's down payment that could impact the overall amount received.

Buyer compensation has historically been folded into the purchase price; as these changes go into effect, it remains to be seen how payment will be applied. Furthermore, it is unknown if and how these changes will impact home prices, particularly given the historically low supply and high demand in our competitive market.

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