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NAR Settlement: What It Means For Buyers And Sellers

Written by Paul Esajian

The recent $418 million settlement agreement between the National Association of Realtors (NAR) and a class of home sellers is poised to revolutionize the real estate industry. At the heart of this seismic shift is the lawsuit Burnett v. National Association of Realtors et al., which culminated in a landmark decision challenging longstanding commission structures. The NAR settlement not only marks a pivotal moment but also sets the stage for transformative changes in how homes are bought and sold.


NAR, with over 1.5 million members, has long been influential in the real estate sector. The crux of the legal challenge was the association’s cooperative compensation rule, a policy critics argued artificially inflated commission rates by mandating seller’s agents to offer compensation to buyer’s agents. Ultimately, this practice has cost home buyers and sellers more money through inflated commissions. This lawsuit, among others, accused NAR and various large brokerages of conspiring to uphold these commission structures, leading to the landmark settlement.

The Settlement Decision

Under the terms of the NAR settlement, NAR agreed to pay $418 million in damages and to repeal its commission-sharing policy, which has been central to the litigation. This move not only addresses the immediate lawsuits but also signals significant shifts in the industry’s approach to commission rates. The immediate reactions within the real estate community ranged from relief to concern, reflecting the complexity and potential ramifications of this agreement.

Impact on the Real Estate Market

The NAR settlement is expected to usher in a new era for commission structures in real estate transactions. Key changes include:

  • Reduced Commissions for Sellers: The abolition of mandatory commission-sharing means sellers could potentially save thousands in commissions, making home selling more lucrative.

  • Empowerment of Buyers: Buyers will now have the opportunity to negotiate their agent’s compensation directly, introducing a level of flexibility and personalization previously unseen in the industry.

  • Market Adaptation: The transition period leading up to the new rules taking effect in mid-July may be marked by uncertainty. Both sellers and buyers, along with their agents, will need to navigate these changes, potentially altering the dynamics of home listings and sales.

What Buyers and Sellers Need to Know

For sellers, the post-settlement landscape offers a chance to negotiate lower commission rates, directly impacting their bottom line. It’s crucial for sellers to understand their newfound leverage in these negotiations and to seek out agents willing to work within these new parameters.

Buyers, on the other hand, face a landscape where they can directly influence how much their agents are paid. This could mean exploring different compensation models with their agents, such as flat fees or hourly rates, ensuring that the services provided align with their expectations and financial plans.


The NAR settlement is more than just a legal resolution; it’s a harbinger of change in the real estate market, affecting everyone from first-time homebuyers to seasoned sellers. By dismantling the old commission structures, this settlement paves the way for a more transparent, fair, and competitive real estate landscape. As these changes take effect, staying informed and adaptable will be key for all parties involved in the buying and selling of homes.

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