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  • Joel Votolato

Understanding the Implications of the National Association of Realtors Case Settlement on Residential Buyers and Sellers

You have likely seen reports regaridng the settlement reached in the case of Sitzer v. the National Association of Realtors (“NAR”). This settlement has far-reaching implications for residential buyers and sellers across the country, reshaping certain practices within the industry. In a nutshell, the days of a standard 6% commission paid by Sellers, and split between buyer’s and seller’s agents, are finished.


The National Association of Realtors, the largest trade association in the United States representing real estate agents, was under investigation for alleged anti-competitive practices. The case revolved around NAR's rules regarding the display and sharing of property listings and the commissions offered to buyer agents. The plaintiffs in Sitzer argued that these practices stifled competition and resulted in inflated costs for consumers. Over the weekend, the parties reached a tenantive settlement which will become final once approved by a federal judge. Once approved, the changes will go into effect in July of this year.


Key Provisions of the Settlement:

  1. Greater Transparency: One of the significant outcomes of the settlement is the mandate for increased transparency in the real estate market. This includes changes in rules related to the sharing and display of property listings, ensuring that consumers have access to a broader range of information when making purchasing decisions.

  2. Flexibility in Commissions: The settlement also addresses concerns regarding the structure of commissions offered to buyer’s agents. Under the new provisions, there is more flexibility for sellers to negotiate commissions, potentially leading to lower costs for consumers.

  3. Enhanced Competition: By removing certain barriers to competition, the settlement aims to foster a more competitive environment within the real estate industry. This could benefit both buyers and sellers by offering them more choices and potentially better deals.


Implications for Residential Buyers:

  • Access to Information: With increased transparency in property listings, residential buyers can make more informed decisions about their purchases. They have access to a wider range of listings and can compare properties more effectively.

  • Potential Cost Savings: The flexibility in commission structures may translate into cost savings for buyers. Sellers now have more room to negotiate commissions, which could result in lower overall transaction costs.

  • Buyer’s Agent Commissions/Fees: Buyer’s should be prepared to pay their agent’s fees and commissions out of their own pockets and will need to budget for the same, if they choose to use a buyer’s agent at all.


Implications for Residential Sellers:

  • Broader Market Reach: The changes in listing rules enable sellers to reach a broader audience of potential buyers. This increased visibility may lead to faster sales and potentially higher selling prices.

  • Commission Flexibility: Sellers now have the ability to negotiate commissions with their agents, giving them more control over their expenses and potentially maximizing their profits from the sale. Listing agents often realized only half of the 6% commission paid by the Seller, with the other half being shared with the buyer’s agent. Sellers can now save up to 3% on the purchase price of their home by negotiating and insisting that they are not compensating the buyer’s agent. The average cost of a home in the US is $417,000, so that 3% could equal over $12,500 in savings.


The settlement in the National Association of Realtors case marks a significant milestone in the evolution of the real estate industry. By promoting transparency and competition, it aims to create a more level playing field for residential buyers and sellers. With access to more information and greater flexibility in transactions, consumers stand to benefit from a more efficient and equitable market. However, it's essential for individuals involved in real estate transactions to stay informed about these changes and understand how they may impact their buying or selling experience. As always, consulting with a qualified real estate attorney, before signing a purchase and sales agreement, can provide a sense of security as well as valuable insights and guidance in navigating these developments.

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