The Truth Unveiled: Real Estate Commission Lawsuit Explained!

The Truth Unveiled: Real Estate Commission Lawsuit Explained!


Hey there, fellow homebuyers and sellers! If you've been keeping an eye on the real estate market lately, you might have heard about the National Assosiation of Realtors lawsuit settlement regarding how buyer representatives are paid. It's been making waves in the industry, and it's important for both buyers and sellers to understand what it's all about. So, let's dive in and unravel the mystery behind the real estate commission lawsuit.

Understanding the Real Estate Commission Lawsuit

The real estate commission lawsuit has been brewing for some time now, and it's got everyone in the industry talking. Essentially, it revolves around allegations of unfair practices and lack of transparency in the way real estate commissions are structured and disclosed. Whether you're buying or selling a home, understanding the implications of this lawsuit is crucial as it could impact your real estate transaction.

You see, the lawsuit challenges the traditional model of how real estate agents are compensated, particularly through commissions. There are claims that this model may not always serve the best interests of consumers, making it essential for both buyers and sellers to grasp its implications.

Implications for Homebuyers and Sellers

So, how does all of this affect us, whether we're buying or selling a home? Well, for starters, it's essential to recognize that any changes resulting from the lawsuit could impact how real estate transactions are conducted. It might mean greater transparency in how real estate agents disclose their fees, which is definitely a win for consumers, as well as higher cost for home buyers. 

Moreover, understanding the real estate commission lawsuit empowers both buyers and sellers to make more informed decisions. For sellers, it's crucial to understand how changes in commission structures could impact their bottom line. For buyers, it's about ensuring transparency and fairness throughout the homebuying process as well as helping you plan for expenses you will have that weren't typical for buyers in the past.

What Is Changing

Due to the settlement there will be some significant changes as to how real estate commisions are handled. Here are some of the key changes you need to be made aware of:

  1. Buyer agent commission (BAC) will no longer be advertised in the MLS. In the past this was a requirement and helped the buyers agent to see how they would be compensated for their efforts. 
  2. Buyers agents will now be required to have written representation agreements with buyers whom they show homes to. Although a best practice, this was loosely followed by most agents. It is in the best interest of consumers as it creates a legal, fiduciary relationship where the agent is held to a high standard for representation
  3. These, and other changes, are set to go into effect in July of 2024

Implications For Home Sellers

As a homeowner who is selling their home, one of your biggest concerns will be how much money you will make from the sale. With there no longer being an expectation to offer commission to the buyers agent, sellers will see this as an opportunity to save money. And at face value that makes sense...However, the following should be taken into consideration:

  • 90% of homes sold have a buyer representative - offering $0 compensation could significantly reduce the amount of buyers who will want to see your home if they are on the hook to cover their agents commission.
  • Not alll buyers, especially first time and low income buyers will have the funds to pay a buyer agent commission, which will limit your buyer pool if you are not offereing to pay it. 
  • Not paying a commission to a buyers agent might not necessarily result in savings. Knowing that you are not covering this cost could encourage buyers to negotiate harder for a better sales price. 

Implications for Home Buyers

At face value this may seem unfair and cause you to feel that you are priced out of home ownership due to having to pay a buyer agents commission. Here are some things for you to consider:

  • You may be able to get the seller to cover the commission through a seller credit towards your closing cost. 
  • Seller's are not prohibited from paying your agents commission, they just cannot advertise it in the MLS
  • If your agent is able to negotiate a good enough deal for you, it may be worth it to cover the cost of commission if your overall savings exceeds that amount. 
  • Protection and peace of mind matter - Having a trusted advocate through the home buying process can be a priceless advantage. 


There are some changes coming to the real estate market and overall it looks to be a win for consumers. It will be more important now than ever to make sure you are partnered with the right agent. Here are some things to look for when making your selection:

  • Experience level (in transaction count, not years)
  • Client Savings Data (how much does the agent, on average, save their clients in a deal)
  • Negotiation Sklills
  • Support System
  • Communication Reputation
  • Total Value They Bring To You! 

6% commissions are not dead, just the advertising of a buyer agent commission through the MKLS is. It is likely that the seller of your next home will still pay a commission, it will just be brought forth in a different way. No more just looking with any old agent will do, you will be required to have a broker representation agreement with an agent. Choose wisely and be cautious of agents who offer little to no value and do not have a proven track record of excellent service. 

If you would like to interview any of The Smith Team agents, fill out the contact form below and we will get you paired with a perfect fit! 

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