NAR Settlement Explained: How Buyer Commissions Really Work Now (2025 Update)

What is the NAR Settlement and When Did It Take Effect?

The NAR settlement timeline: From announcement to full implementation

On March 15, 2024, the National Association of Realtors agreed to pay $418
million to settle antitrust lawsuits that challenged how real estate agent
commissions were set and paid. The settlement, which took effect on August 17,
2024, fundamentally changed how buyer agents get compensated.

The Core Changes:

1. MLS Compensation Removal: Offers of compensation to buyer agents can no
   longer be communicated via the MLS

2. Written Agreements Required: Buyers must sign representation agreements
   before touring homes with an agent

3. Direct Negotiation: Buyers now directly negotiate and agree to their
   agent's compensation

4. Transparency Mandate: All compensation arrangements must be clearly
   disclosed upfront

5. Competition Enhancement: These changes aim to increase competition and
   transparency in real estate

What Didn't Change:

• Sellers CAN still pay buyer agent commissions (just not through MLS)

• Buyer agents CAN still be compensated at similar rates

• Professional representation remains valuable and recommended

• Commission rates are still negotiable (as they always were)

• Most transactions still involve dual agent compensation

How Has Buyer Agent Commission Changed After the Settlement?

Commission structure evolution: Pre and post-NAR settlement comparison

Before NAR Settlement (Pre-August 2024):

The Old System:

• Sellers typically offered 5-6% total commission

• MLS showed buyer agent compensation (usually 2.5-3%)

• Buyers rarely knew what their agent was paid

• "Standard" splits were assumed but not required

• Limited transparency in compensation discussions

After NAR Settlement (Post-August 2024):

The New Reality:

• No MLS Display: Compensation offers removed from MLS

• Buyer Agreements: Written contracts required before showings

• Multiple Payment Options: Various compensation structures emerge

• Upfront Negotiation: Terms discussed before relationship begins

• Clear Documentation: All arrangements in writing

Current Payment Methods:

1. Seller Concessions (Most Common - 73%)

   • Negotiated as part of the offer

   • Similar to closing cost assistance

   • Included in purchase agreement

   • Paid at closing from proceeds

2. Direct Buyer Payment (Growing - 18%)

   • Buyer pays agent directly

   • Can be flat fee or percentage

   • May be financed in some cases

   • Full control over amount

3. Hybrid Models (Emerging - 9%)

   • Combination of buyer and seller contributions

   • Performance-based adjustments

   • Graduated commission scales

   • Creative financing arrangements

What Do Buyer Representation Agreements Include?

Mandatory Elements:

1. Compensation Structure

   • Specific percentage or flat fee

   • Payment timing and method

   • Who is responsible for payment

2. Service Scope

   • Geographic areas covered

   • Property types included

   • Specific services provided

   • Excluded services

3. Agreement Duration

   • Start and end dates

   • Renewal terms

   • Extension options

4. Termination Provisions

   • How either party can exit

   • Notice requirements

   • Penalty clauses (if any)

5. Legal Disclosures

   • Agency relationships

   • Dual agency policies

   • Conflict of interest statements

Negotiable Terms:

• Commission percentage or fee amount

• Length of agreement (can be per showing)

• Geographic scope

• Service levels and packages

• Performance guarantees

• Termination conditions

How Should Agents Explain Commission to Buyers?

The 5-step transparent commission disclosure process

The Value-First Approach:

Step 1: Education Before Numbers "Let me explain how buyer representation
works today and the value I bring to your home search before we discuss
compensation..."

Step 2: Demonstrate Expertise

• Share market analyses showing savings achieved

• Provide case studies of successful negotiations

• Show technology tools that find hidden opportunities

• Highlight vendor networks that save money

Step 3: Present Options "I offer three levels of service to match different
needs and budgets..."

Step 4: Explain Payment Sources "There are several ways my compensation can
be handled, and in most cases, we can negotiate for the seller to cover it..."

Step 5: Document Everything "Let's review the agreement together so you
understand exactly what you're getting and how payment works..."

Sample Scripts:

For First-Time Buyers: "I know this might be new to you. Think of me as your
advocate and advisor throughout this process. My fee is typically X%, which
we'll work to have the seller pay. If they won't, we have other options. My
average client saves 5-10 times my fee through better negotiation and market
knowledge. Let me show you how..."

For Experienced Buyers: "You've bought before, so you know the value of
professional representation. The main change is that we now discuss and document
compensation upfront. This actually gives you more control. Here's how I
structure my services and fees..."

For Price-Conscious Buyers: "I understand budget is important. That's
exactly why professional representation matters more than ever. My job is to
save you money—both on purchase price and throughout the transaction. My fee
typically pays for itself several times over. Here are specific examples..."

What Are the Real-World Results of the Settlement?

Agent adoption rates and client satisfaction metrics post-settlement

Market Impact (October 2025 Data):

Commission Rates:

• Average total commission: 5.5% (down from 5.8%)

• Buyer agent commission: 2.4-2.7% (relatively stable)

• Regional variations: ±0.5%

• Luxury market: Higher rates maintained

Agent Behavior:

• 89% now use written buyer agreements

• 67% offer tiered service packages

• 73% report improved client relationships

• 42% say value discussions are easier

Buyer Response:

• 81% still use buyer agents

• 62% appreciate transparency

• 71% successfully negotiate seller-paid commission

• 15% choose limited service options

Strategies for Success in the New Commission Landscape

For Buyer Agents:

1. Lead with Value

• Create detailed value propositions

• Quantify your impact with data

• Share success stories prominently

• Build strong online presence

2. Leverage Technology

• Use AI for instant property matching

• Provide market analytics dashboards

• Offer virtual tour capabilities

• Automate routine communications

3. Develop Service Tiers

 Essential (1.5-2%):

• Property access and showings

• Basic negotiation support

• Transaction coordination

 Professional (2.5%):

• Everything in Essential

• Advanced market analysis

• Vendor network access

• Moving assistance

 Premium (3%):

• Everything in Professional

• Daily property monitoring

• Investment analysis

• 1-year post-purchase support

4. Master the Conversation

• Practice value articulation

• Prepare objection responses

• Use visual aids effectively

• Follow up systematically

For Buyers:

1. Interview Multiple Agents

• Compare service offerings

• Evaluate track records

• Assess communication styles

• Check references

2. Negotiate Thoughtfully

• Understand market norms

• Consider value not just price

• Get everything in writing

• Know your options

3. Understand Your Agreement

• Read every clause

• Ask about termination

• Clarify all fees

• Know your obligations

Common Myths vs. Reality

Myth 1: "Buyers always pay out of pocket now"

Reality: 73% of transactions still involve seller-paid buyer agent
compensation through negotiations.

Myth 2: "Buyer agents are becoming obsolete"

Reality: 81% of buyers still use agents; professional representation remains
valuable.

Myth 3: "Commissions are plummeting"

Reality: Rates decreased only 0.3% on average; many agents maintain or
increase earnings through value demonstration.

Myth 4: "The old way was better"

Reality: Transparency benefits both agents and clients; top performers are
thriving.

Myth 5: "Small buyers can't afford agents"

Reality: Multiple financing options and assistance programs help first-time
buyers access representation.

FAQs About NAR Settlement and Buyer Commissions

When did the NAR settlement take effect?

The settlement took effect on August 17, 2024, with full implementation
continuing through 2025.

Can sellers still pay buyer agent commission?

Yes, absolutely. It's just negotiated as a concession rather than advertised on
MLS.

Do I need a signed agreement for one showing?

Yes, but it can be a limited service agreement specifically for that showing.

Are buyer agreements exclusive?

They can be exclusive or non-exclusive, depending on what you negotiate.

Can I terminate a buyer agreement?

Most agreements include termination clauses. Review these carefully before
signing.

How long do buyer agreements last?

Duration is negotiable—from single showings to several months.

What if the seller won't pay my agent?

You have options: negotiate other concessions, adjust offer price, pay directly,
or explore hybrid arrangements.

Are commissions tax deductible for buyers?

Consult your tax advisor, but commissions may be added to your home's cost
basis.

The Path Forward: Thriving in the New Normal

The NAR settlement represents evolution, not extinction. Agents who embrace
transparency, demonstrate clear value, and adapt their business models are
finding success. Many report:

• Easier value conversations with clients

• Stronger client relationships through transparency

• Better qualified, committed buyers

• More professional industry perception

• Improved negotiation outcomes

For buyers, the changes mean:

• Greater control over agent relationships

• Clear understanding of services and costs

• More options for representation levels

• Improved agent accountability

• Better overall experience

Your Action Plan

This Week:

1. Update buyer presentation materials

2. Create service tier descriptions

3. Draft agreement templates

4. Practice value conversations

This Month:

1. Implement technology solutions

2. Develop success story library

3. Train on new processes

4. Track conversion metrics

This Quarter:

1. Refine service offerings

2. Optimize pricing strategy

3. Build referral systems

4. Measure client satisfaction

The Bottom Line

The NAR settlement changed the mechanics of buyer agent compensation, not the
fundamental value of professional representation. Successful agents are adapting
by embracing transparency, leveraging technology, and clearly demonstrating
their worth. Buyers benefit from more clarity and control. The market continues
to function effectively with most transactions still involving professional
representation on both sides.

Change creates opportunity for those willing to evolve.

Ready to thrive in the post-NAR settlement era? Contact US Tech Automations to
implement systems that demonstrate your value, streamline buyer consultations,
and maintain strong commissions through superior service. Transform industry
change into competitive advantage.