How the Recent NAR Lawsuit Affects Buyers and Sellers

By Max Folkers

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Buyers can save money by asking the seller to cover the buyer’s agent fees.

Are you feeling overwhelmed by the recent changes in real estate commissions? The fallout from the Real Estate Commission class action lawsuit was settled back in August, but I’m not here to give you the nitty-gritty details of the lawsuit. Instead, let’s focus on what these changes mean for you as a buyer or seller and how they could impact your experience when you enter the market.

Commissions between listing agents and buyer’s agents are now separated. In the past, when a seller listed their home, they agreed to a total commission that was split between the buyer’s agent and the seller’s agent. Now, when you sign a listing agreement with your listing agent, you get to decide what commission you’re comfortable paying them.

For buyers, this means you need to have a contract with your agent before you even step inside any homes. But don’t worry—you don’t need to sign anything if you decide to go to open houses. This is why we’ve seen a lot more activity there lately.

What does this change in commission structure mean for you as a buyer? If you’re working with a buyer’s agent, you need to commit to paying them, let’s say, around 2.5%. But what if you’re a VA or FHA buyer and you don’t have that extra cash? Here are a few strategies we can do:

1. Seller concessions. You can ask the seller to cover your agent’s commission. It’s totally allowed, but it just can’t be advertised. So, when you submit your offer, you can request that the seller pick up that cost.

2. Increase your offer. Another approach is to increase your offer price. For instance, if the home is listed at $1 million, you might offer $1,025,000 and ask the seller to credit you back that extra $25,000. We’ve done this to close costs many times.

3. Lender credits. If you have some money but not enough, consider asking your lender for a credit. Instead of going for a lower interest rate, you could opt for a higher rate and ask for a credit toward closing costs or your agent’s commission.

4. Direct payment. More buyers are paying their agent’s commission directly, especially those making large down payments or cash offers. For example, if you’re making a $1 million offer without asking for any concessions, that can make your offer way more appealing to sellers compared to someone who might ask for 2.5% or 3% for their agent.

While the real estate landscape is still adjusting to new rules and processes, things are gradually being sorted out as these changes settle in. If you have any questions about buying or selling, or if you need help understanding these new rules, I’m here for you. Feel free to call me at (619) 977-8364 or send an email to team@maxvolkers.com. I enjoy discussing strategies and finding the best ways to make these changes work for you.