On August 17, 2024, substantial new rules created by the National Association of Realtors (“NAR”) related to real estate commissions went into effect.  NAR is the largest broker association in the country.  The new rules now specifically require that before a Buyer’s broker can represent a Buyer or show them any properties, the Buyer must now sign an agreement with their broker where the Buyer’s commission is specifically spelled out (including how much the Buyer’s broker will be paid and by whom).

These new changes were implemented as a result of a settlement of a number of class action lawsuits that were filed by homeowners that accused NAR brokers (often referred to as “Realtors”) of price fixing to keep their commissions high.  This scheme, according to the lawsuits, was based, at least in part, on how brokers listed how much Sellers were willing to pay Buyers’ brokers.  According to the lawsuits, Sellers were forced to offer a cooperating commission of 2.5–3% on the Multiple Listing Service (“MLS”) or Buyers’ brokers wouldn’t even make their clients aware of the listings.

It is still not clear exactly how these new rules will impact the overall cost of real estate commissions (since brokers are likely to still be aware which Sellers are cooperating at the 2.5-3% commission rate and which are not), but time will tell. In the meantime, expect more/new paperwork when engaging a broker.