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The NAR Settlement: Let’s Talk About It

Posted by Paul on March 21, 2024
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In light of the recent news & the media that you, the consumer, are receiving your information from (in the context of the real estate industry and our profession), I encourage you to get your information correct, & I hope to be a resource for that correct information.  Our world, our society, our generation, and our industry is drowning in information, while also starving for wisdom. Many will get it wrong, and many will still get it right. 

Myself, as the managing broker & owner at Lou Realty Group, I wear many different hats at our independently owned brokerage. First and foremost, I am a working Broker. I am in the field like each of our other agents. I am on the same playing field, in the same trenches, & battling the same issues. This is important to me to maintain, as I feel It enables me to be the best version of myself as the broker, and be of best service to all the agents at LRG when it comes to strategizing, advising, and leading. Experience & consistency will always be extremely important to us.  We are constantly learning, evolving and growing our inherent qualities we stress at the brokerage. We have always been passionate about providing more value than we take in payment. The value we bring to our clients with representation, negotiation & consultation of a real estate transaction – we are confident exceed the cost that is paid. Our profession is & has been, most commonly ONLY paid upon the result -when a sale is procured  & closed, and when profits are disbursed to our client. I assure you, I will continue to conduct in this manner, and I will make every effort & means necessary to protect our agents in doing the same. Our process won’t change. “Under all is the land”  and we plan to support the American dream, home ownership, and the necessary representation from Realtors, in doing so.  

As reflected in NAR’s release about the proposed settlement agreement, NAR has agreed to put in place some new practices. If you, as the consumer, thought there were “standard” commissions, or that a listing agent’s commissions or buyer’s agent commissions were “required”- you were either misinformed, or have misinterpreted information you should be educating yourself on. Of these new proposed practices, one of which is including a new MLS rule-prohibiting offers of broker compensation to be stated on the MLS. This may be the most misunderstood changing practice.  Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers. Another practice, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. A practice we have always supported, and believe necessary in providing the best & most adequate service to the client.

A few key points:

  • Commissions remain negotiable, as they always have been. This doesn’t mean compensation isn’t offered to the cooperating buyer’s agent, it may simply mean that it will not be stated in the MLS as to what it is. 
  • The broker’s compensation for services rendered in respect to any listing, is solely a matter of negotiation between the broker and their client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement.
  • The compensation paid by a listing broker to a cooperating broker in respect to any listing is established by the listing broker and is not fixed, controlled, recommended, or maintained by any persons other than the lister broker. 

NAR does not set commissions, nor have they previously – commissions have always been negotiable. There is not a standard commission structure. A standard, and “standards” are different. This does not mean that an agent is negotiable on their offered commission structure.  It means the commissions are negotiated between buyer & agent, and seller & agent. Negotiable- means they will be negotiated between the parties. NEGOTIATED BETWEEN THE TWO PARTIES IN WHICH ARE CUSTOMERS and then eventually CLIENTS of said agent. IT DOES NOT MEAN an agent will be NEGOTIABLE TO a different rate, in which they have determined they are valued for, and are willing to work for, and provide.

Say two restaurants buy a piece of meat- a filet cut, if you will. Restaurant A & Restraunt B  prepare the filet differently than one another. They may spend days, months, years, determining how they will prepare it, how they will cook it, the different ways to season it, plate it, serve it, and the experience they are going to provide with it. When Restaurant A & B prepare their menu, they (as you can guess) may have entirely different pricing on what they value their end product for.   

In a real estate transaction, a consumer’s main goal should be to ensure you are engaging with someone that becomes a partnership with your goals, and is not just a professional, but an expert in the transaction. 10% of a real estate transaction may be securing a buyer for a property, or securing a property for a buyer. This may mean hours, days, months of preparation, & countless communication- phone calls, texts, emails throughout all hours of the day. 

In cases of a BUYER, when selecting and hiring an agent- it means negotiating their minimum commissions required to the brokerage at the time a home is secured, and a sale procured. It means that WHEN AND IF a source of compensation is offered by a LISTING AGENT, that meets or exceeds the MINIMUM REQUIREMENTS set forth, in which the buyer and brokerage have already negotiated and agreed to, the agent will accept this compensation. When it does not meet the minimum requirement, the buyer will be responsible for the difference. In circumstances where the agent & brokerage is WILLING to accept less than the minimum required commission already negotiated in the buyers agency, and the brokerage/agent is willing to NOT enforce the buyer to pay the difference- no further compensation from the buyer is due. It has also been, and not uncommon, for a buyer’s agent to negotiate commissions directly with the listing agent, when the source of a unilateral commission offered, is less than the brokerage’s required minimum commission. 

Beginning with a buyer consultation, continuing with preparing you in best practices for a home search, communication with potential lenders, set up on MLS services (so you are not navigating only 3rd party sites like Zillow,, Redfin, etc). Finding and sending you properties of interest, providing details on the properties of interest, securing information like seller disclosures, and other supplements, helping you and assisting you in interpreting this information- only to be interested or not interested in it. Then scheduling showings, multiple showings, on a given time of day that works with YOUR schedule, seeing multiple properties in any given setting and time. Opening up these doors, and lockboxes to give you a guided tour, what to look for, what to ask questions on, communicating with the seller and/or listing agent on information related to the properties, and offers currently on the properties of interest. Then discussions of offers, understanding a contract, contingencies, risks, likelihoods, and consequences of contingencies.  Educating a consumer on costs associated with a home and a transaction, navigating through financing options, referrals of contractors, professionals, etc. It is early mornings, evenings, weekends of communicating at all hours to secure questions to important answers- that could mean either securing a desired property, or not. This doesn’t mean 10% of this process is any maringal amount of hours. We’ve worked for and with buyers for YEARS before a sale is actually procured, or perhaps never procured at all. The discussions, strategy, education of the best offers- how to secure homes, pricing analysis, what a home is worth to the market, and what the home is worth to YOU as the consumer. ALL of that and more, is a craft- a craft we have worked TIRELESSLY ON to ensure we are absolutely as perfect as can be in this role. All the time spent in doing this doesn’t stop here, and whether or not this process took a month, or year(s), that doesn’t stop us, or slow down our service provided.  Additionally, once a property is secured,  it means strategizing & writing offers, negotiations, & resolving conflict. It could mean several offers put fourth- hours, days, weekends, months, years, of writing and making offers.  The remaining 90% of a transaction is taking you from the “offer”- to the contract- to the closing. This process we have worked on crafting for over a decade in making as SEAMLESS of a process as possible. We are a well oiled machine inside this process, and it is our fortè. From the moment of contract, delivery of earnest money, scheduling of inspections, educating you on each of these steps and the importance of them. The negotiation, the contractual duties of writing amendments, corresponding with your title company, your lender, your financial institution, even movers, utility companies, etc. ALL of this is just a fraction of the things we do in front and behind the scenes- to bring you home.  

In cases of a seller and a listing, when selecting and hiring an agent-  this means it is an agent and seller negotiating a TOTAL COMMISSION PAY OUT to the brokerage that WILL BE APPLICABLE AT THE TIME A BUYER & SALE IS PROCURED. OF A TOTAL COMMISSION STRUCTURE, the said listing agent may (And SHOULD in MY OPINION) pay out a portion of their total commission to a cooperating broker that brings a buyer for this listing, makes an offer, and represents a buyer in the transaction. The listing agent determines and SHOULD be discussing with the seller what the commission pay out to a cooperating broker is going to be offered at. 

When taking on a listing, we are meeting for a consultation at the respective seller’s home, which include- touring the property, discussing how the property should best present itself, things to do, things not to do, preparing a strategy on the market. We are analyzing the home, and the market, and we are preparing a strategic timeline for the property’s sale. We are completing a THOROUGH market analysis on the property, what the property is valued at, what the property could be worth, what it could be worth to one buyer vs another, and the audience we expect to have. We are referring contractors, meeting contractors, assisting in staging, photography, municipality requirements, and communication between ALL parties. Listing the property on the MLS,  getting it in front of buyers and agents, conducting open houses, tours of the property, helping vet the right buyers. Reviewing offers, navigating through contingencies presented, communicating with the other side, negotiating offers, negotiating inspections, assisting with necessary repairs, and improvements. Assisting you the entire time in conveying you correctly out of your property. 98% of our listings are sold by cooperating agents working with respective buyers- and providing the service we mentioned above. Payment to a buyer’s agent for this? YOU BET. I am happy to pay a portion of my already negotiated commission to the agent bringing a buyer and conducting a service as mentioned above. If there isn’t a cooperating agent being paid? I am assisting & participating in nearly the exact same service to now navigate the buyer’s side in this transaction to successfully convey my client, the seller, out of the property- all while working in the best interest of the seller. I will conduct in the same manner I have been. 

 If you take this lightly, or take this with “I will do it on my own” I highly encourage you to do so. Search for properties, pick up the phone and call listing agents and sellers to find an appointment time that works for the BOTH of you, then ask for seller disclosures to review and receive those in a timely manner, then get to the property- and do this with the several different properties, with several different listing agents. Then start understanding and pulling analysis to determine is the home good value for your money? Then start deciding and educating yourself on that offer you are writing- what contingencies are important to protect your interest? Call and schedule inspections, find the companies reputable, and professionals to perform those, then attend them. Then begin negotiating from those and find resolution. Ensure you are working with a reputable title company to examine & provide title insurance, correspond with them as frequently as needed. If the property, and transaction doesn’t come to fruition, figure out a mutual release to be done in a timely manner, and start that search all over again.  

You want a professional representing you & your interest in every step of this process- one decision made could cost or gain you the amount of “commissions” owed to your agent. 

All of these services we provide, have not, and will not be free from us. Value to both our clients- buyers and sellers, depending on which we are representing within the transaction,  will not be compromised. This is a service, a profession, a career- that like anything else, we work to craft and be the absolute best we can be for those who hire us. 

Unfortunately, agents who have not been able to articulate their value proposition, nor add value for the buyer or seller in today’s market- have been, and are still an alternative to any seller or buyer to work with.  If a consumer is able to negotiate an agent’s commissions quickly and substantially below what the agent has proposed their value is- what you did may confirm that you just hired the least effective negotiator for one of your most valuable assets currently being considered to be purchased or sold.  A consumer that has either been poorly informed, misinformed, or misled- unfortunately we can not dictate how every industry professional acts, or transacts- like any profession and any industry- you don’t get the same filet at every restaurant that provides a steak dinner.

-Lucy Feicht

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