Here are my thoughts regarding the recent settlement between homeowners and the National Association of Realtors (NAR) that has been much publicized in the media.

• It is important to understand that neither NAR nor any state or local Realtor associations ever set a standard commission. They definitely do not encourage their members to charge a minimum commission. In fact, the NAR rulebook explicitly says that Realtors cannot claim their commission rates are “the norm” or “typical for the area.”
• Commissions have always been negotiable, and they remain negotiable.
• The NAR rule in question was that a listing agent entering a property for sale into an MLS had to state in the listing what commission the seller was offering to pay to the buyer’s agent. NAR never stated or suggested what that commission should be.
• The settlement still allows sellers to offer a commission to the buyer’s agent. However, the amount of the commission can no longer be shown in MLS.

What has come out of the lawsuit is that Realtors will now be required to enter into contractual agreements with buyers before showing them any properties. And that agreement will state the buyer’s agent commission.

If you’re planning to purchase a home soon, you need to find out from your agent if the seller is offering compensation to the buyers agent. If not, you will be responsible for any commission not paid by the seller.

It is still advisable for people to use an experienced agent — someone who will help guide them through every step of their purchasing or selling process.

Houlihan & O’Malley is here to help you with your real estate needs and questions.

Joe Houlihan