New NAR Compensation Rules: What Buyers & Sellers Need to Know
The National Association of Realtors (NAR) has introduced new rules (effective Aug 2024) to bring more transparency and fairness to real estate transactions. While agent compensation has always been negotiable, these updates clarify how commissions are handled.
What’s Changed?
1. Buyer Agent Compensation Is No Longer Advertised in the MLS
→ Sellers can still offer compensation to the buyer’s agent, but it won’t be displayed in the MLS.
2. Buyers Must Now Sign a Buyer Representation Agreement
This is a legal contract outlining:
- The agent’s services & responsibilities
- The buyer’s obligations
- How much the buyer’s agent will be compensated
How This Affects Buyers
- Previously, buyers worked with their agents based on a handshake agreement. Now, a signed Buyer Representation Agreement is required.
- How agent compensation is covered varies from property to property. In most cases, the seller offers compensation that covers all or most of it. At our initial consultation, I’ll explain exactly how it applies so there are no surprises.
→ If you’re wondering what I charge and how my compensation works, I break it all down here: How Much Does It Cost to Hire the Conejo Valley Guy?
What Happens When Sellers Don’t Offer Full Buyer Agent Compensation?
It depends on the property and the terms of your Buyer Representation Agreement. If there’s a gap, we can often adjust the price to make up the difference.
For example:
- Home price: $1,000,000
- Buyer-Broker Agreement: 2.5% commission
- Seller offers: 2.0% commission
→ The buyer could adjust their offer to $995,000 to make up the 0.5% difference.
Over 80% of buyers work with an agent. Offering compensation helps attract more buyers and streamlines the sale.
Top Benefits for Sellers:
- More Buyer Interest – Buyers are more likely to view and consider your home.
- Easier for Buyers to Afford – Including agent compensation in the sale price means buyers don’t have to pay out-of-pocket.
- Fewer Unqualified Showings – If buyers must pay their agent separately, they may overestimate their budget.
Seller Advantage:
→ Offering buyer agent compensation upfront helps attract serious, qualified buyers and gives you a clearer picture of your net proceeds from the sale.
Wondering What This Means for You?
Agent compensation can be confusing, especially with all the changes.
I’ve put together a simple breakdown of what I charge, how compensation works for buyers and sellers, and what you can expect when working with me.
Agent Compensation FAQs
Not necessarily. Buyers are required to have a written agreement with their agent that explains how their agent will be compensated. In most of the transactions I see, the seller offers compensation that covers all or most of it.
No. Sellers are not required to offer buyer agent compensation. It’s ultimately the seller’s decision, and I discuss the pros and cons with my sellers before deciding what makes the most sense.
Yes. Sellers can still offer compensation to the buyer’s agent. The main difference is that the offer of compensation is no longer displayed in the MLS.
It depends on the property and the terms of your Buyer Representation Agreement. In some cases, we can structure the offer to ask the seller to cover the difference, including adjusting the offer price when it makes sense. Before you write an offer, I’ll explain exactly how the compensation works for that property so you know what to expect.
Yes. Real estate compensation is negotiable. The amount and how it’s paid should be discussed upfront so everyone understands the terms before moving forward.
Offering buyer agent compensation can make it easier for more buyers to consider your home, especially buyers who may not have the extra cash available to pay their agent out of pocket. My goal is to remove unnecessary obstacles and give your home the best opportunity to attract serious, qualified buyers.
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I’m Michael Rice, the Conejo Valley Guy. I share practical insights about buying, selling, and living in the Conejo Valley based on 25+ years helping clients navigate this market.
If you find this kind of local perspective helpful, you can get future posts and my monthly market update by email.
