Buyer Agency After the NAR Settlement: What You Need to Know
The NAR lawsuit settlement has reshaped how buyer-agent compensation works in residential real estate. Listing agents can no longer advertise buyer-agent commission in the MLS, and buyers must sign a representation agreement before touring homes.
Here's what that means in practice.
How the NAR Settlement Changes Buyer Agency
What's changing?
Listing agents can no longer advertise buyer-agent compensation in the MLS. Additionally, buyers must sign a buyer representation agreement before an agent can show them properties.
What's staying the same?
Buyers can still have their agent's commission paid by the seller—it's just negotiated as part of the purchase offer rather than advertised upfront. Sellers can still choose to offer compensation; they just can't broadcast it on the MLS.
Do I have to sign a contract before I see a house?
Yes. The agreement can be property-specific (covering one showing), non-exclusive (allowing you to work with other agents), or exclusive for a set period. The key is that both parties understand the terms before touring homes.
Three Ways Buyers Can Compensate Their Agent
1. Seller Pays (Negotiated in the Offer)
The buyer requests in their purchase offer that the seller pay the buyer-agent commission (e.g., 2.5% of the purchase price). The seller can accept, counter, or decline like any other contract term.
2. Buyer Pays Directly
The buyer pays their agent's fee out of pocket, separate from the home purchase. This is more common with for-sale-by-owner (FSBO) properties or new construction where builder policies vary.
3. Seller Pays Via Closing Credit
The buyer pays their agent, then requests a seller credit at closing to offset that cost. For example, on a $300,000 home, the buyer might request a $7,500 seller credit to cover a 2.5% buyer-agent fee.
Why Buyers Still Need Representation
What does a buyer's agent actually do?
A buyer's agent represents your interests, not the seller's. That means:
- Showing you homes across the market, not just listings where they're getting paid
- Writing offers with proper contingencies (inspection, appraisal, financing)
- Recommending qualified inspectors and interpreting inspection reports
- Negotiating repairs, credits, or price reductions after inspection
- Coordinating appraisal, title, and closing logistics
- Connecting you with trusted lenders, attorneys, and contractors
What if I'm relocating and don't know the area?
That's when a buyer's agent is most valuable. You don't know local market conditions, which neighborhoods have issues, or which service providers are reliable. A local agent does this every day and can guide you through a process that would otherwise be high-risk.
Can't the listing agent just help me write an offer?
The listing agent's fiduciary duty is to the seller—to get them the highest price with the fewest concessions. Even in a dual-agency scenario, their primary obligation is to the seller, not to you. You need your own advocate.
What Sellers Need to Know
Should I still offer to pay a buyer's agent?
Many sellers will, because it's still a competitive advantage. Offering compensation makes your home more accessible to buyers whose agents are working under a representation agreement. It's a marketing decision, not a legal requirement.
How do I offer compensation if I can't advertise it in the MLS?
You and your listing agent can communicate it privately to buyer's agents during showings, or you can wait for it to be negotiated in purchase offers. Your listing agent will help you structure this based on your goals.
What's the benefit of paying a buyer's agent?
You're marketing your home to pre-qualified, serious buyers who are working with professionals. Those buyers are more likely to close smoothly than someone scrolling social media who hasn't taken steps to secure financing or understand the process.
What Agents Need to Know
What's the first step when a buyer says they can't afford to pay me?
Explain how representation works. Walk them through the roles of a buyer's agent vs. a seller's agent, what services you provide, and the three ways compensation can be structured. Most buyers assume they'll have to pay out of pocket, when in reality most transactions will still involve seller-paid compensation negotiated in the offer.
Should I use property-specific agreements or exclusive agreements?
It depends on the buyer. If they're a lead from Realtor.com responding to a single listing, a property-specific or non-exclusive agreement makes sense—it's low-pressure and gets them in the door. If they're serious about buying and want full representation across the market, an exclusive agreement protects both of you.
How do I explain my value to a buyer who's never worked with an agent?
Focus on what they don't know: contract structure, inspection red flags, negotiation leverage, financing pitfalls, title issues. Ask them, "If you were moving to a state you'd never been to and had two days to buy a house, would you go unrepresented?" That usually clarifies the stakes.
Key Takeaways
- Buyer-agent compensation is no longer advertised in the MLS, but it can still be negotiated in purchase offers.
- Buyers must sign a representation agreement before touring homes.
- Buyers have three main options for compensating their agent: seller-paid (via offer), buyer-paid (direct), or seller-paid (via closing credit).
- The value of buyer representation hasn't changed—only the mechanics of how it's structured.
- Sellers can still choose to offer buyer-agent compensation as a competitive advantage, even if they can't advertise it upfront.
The industry is adjusting, but the fundamentals remain the same: buyers need professional representation when making the largest financial decision of their lives, and sellers benefit from making their homes accessible to serious, pre-qualified buyers working with agents.