A major shakeup is coming to the real estate industry, and it’s set to impact how realtors across the U.S. do business. These changes are part of a $418 million settlement reached in March between the National Association of Realtors (NAR) and several plaintiffs. The settlement aims to overhaul the commission system that has long been a cornerstone of the real estate business.
What’s Changing?
Beginning August 17, 2024, new regulations will fundamentally alter the way agents are compensated for helping clients buy and sell homes. Under the new rules, the longstanding practice of home sellers covering the commissions for both their agent and the buyer’s agent will be significantly altered. For years, the industry has operated under an informal system where home sellers typically paid a 6% commission fee, which was split between the seller’s agent and the buyer’s agent. This structure meant that sellers were often responsible for large commission payouts—sometimes tens of thousands of dollars on a single transaction. For example, on a $500,000 home, a seller could be paying out $30,000 in commissions.
Critics have long argued that these commissions were built into the asking prices of homes, which may have contributed to inflated housing prices. The upcoming changes aim to create a more transparent and competitive environment, potentially reshaping how real estate agents operate and get paid.
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