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  • Writer's pictureJonathan Anderson

How the Recent NAR Settlement Could Shift The Price Of Your Next Home

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The cost of selling a home should drop significantly after the recent events that occurred with National Association of Realtors (NAR). In March of 2024, the NAR agreed to pay a settlement of $418MM for practices that go against a negotiable commission fee. 

While it was not a law, typically a realtor charges the seller a 6% fee to sell a home. This fee is usually split between the seller and buyer agent; however, it is the home seller that pays the full amount. It is also typically built into the sales price of the home. So, a $400,000 home would net the seller $368,000 a substantial difference. While the practice according to the NAR was negotiable, it was never presented to sellers as negotiable. The United States is the only country that has fees this high. Europe typically has a 1-3% commission fee on residential mortgage transactions. 

With the growth of companies such as Redfin (2% commission standard) the NAR has been under heavy scrutiny about this practice for years. They argue that the fee is negotiable. However, if you look at any real estate contract, the 6% is a given. Essentially tricking the seller into thinking this fee is non-negotiable. 

With this lawsuit that was levied against the NAR, now sellers can take the power back from these greedy real estate agents. Why lose so much on the sale of your home. Especially in a very tight and hot market. The argument is that the real estate agent plays a role in the transaction. These days, with lines of people waiting to purchase your home, you really only need a title company once a contract is signed. A contract you can easily download off the internet. The legal aspects will all be conducted by the title/settlement company and the banks involved. 

As this new law comes into effect, it means a potential 30-50% reduction in costs associated with selling your home. You will have more buyers because you do not need to add on the 6% of your home. Using the $400,000 as an example. Lets say you have 10 buyers at $400,000. This will net you $368,000. Well, you negotiate with your realtor a 3% fee, or you say you do not need one. They agree to 3%. Now you can sell your home at $390,000, open up to 25 buyers and still make more than you would have. That 3% of $390,000 is $11,700. This will net you $378,300 a +$10,300 difference, have a stronger buyer pool, and only pay 3%. 

Realtors are the ones for years that have been raking in huge fees for doing nothing during a hot market. Often times selling a home the day it is listed. Imaging, making $16,000 for simply listing a house. There were no repercussions. Buyers were overpaying because of these fees and sellers were not getting their fair share of the value of the home. That is all about to change. The industry as we know will put more money into the pockets of the buyers and sellers due to the reduction in inflation caused by this fee. The 3% is only an example. 

This lawsuit will change the way home buying and selling through an NAR realtor forever. The interesting piece of all this is every real estate agent has to be a member of the NAR. So, when they tell you they are a member, it is necessary. They would not be a realtor if they are not part of this association. They brag about this, but in actuality it is like an accountant who is a CPA. They have to be. Realtors do not tell you this and they think because they are part of the NAR, they are guaranteed a 6% fee. Well not anymore. 

If I were selling my home, I would ask the realtor what he/she does to earn that money. Often, they cannot answer the question because homes sell so fast for them to do so. Keep that money for yourself. Tell the agents you are paying 2%. If they say no, list your house on MLS (which you can do) or simply put a for sale sign in your yard, and a buyer agent will contact you. They will get the full 2% and take care of all the paperwork for their client. Having 2 realtors involved is pointless. Each one does the same thing and up until now, it has cost you 6%. If a buyer’s agent is not willing to work for 2%, contact the buyer and tell them their realtor is screwing them and you will reduce the home price by an additional 1% and pay for closing and contact your local settlement office. The banks collaborate directly with them, and title and even more money are put into your pocket. 

Jonathan Anderson is a contributor for Degen Magazine. His interests lie in real estate, the economy, cooking, interesting things, and the market. Follow him on Twitter for more: @I_am_stockchef

Disclaimer: The information provided here is for general informational purposes only and is not intended to be a comprehensive analysis of the subjects mentioned. All information, opinions, and forecasts contained herein reflect the author's personal views at the time of writing and are subject to change without notice. This information should not be construed as financial advice, investment advice, a recommendation, or an offer to buy or sell any securities or related financial instruments. Investors should conduct their own research or consult with a qualified financial advisor before making any investment decisions. The author and publisher of this content are not responsible for any losses, damages, or other consequences that may result from the use of the information provided. Investing in stocks, including those mentioned here, involves risks, including the risk of loss.

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