Regions Mortgage: What Homebuyers Should Know About the NAR Settlement

This March, the National Association of Realtors (NAR) settled a series of class action lawsuits alleging that NAR violated federal antitrust law by conspiring to require listing agents to pay the buyer’s agent’s fees resulting in home purchasers paying inflated commissions.

The lawsuit claims centered around NAR’s requirement that all listing brokers make an offer to pay buyer broker compensation when listing a property on a Multiple Listing Service (MLS). Prior to the settlement, in exchange for access to the MLS, NAR required that agents listing properties on MLS must agree that home sellers will pay the commissions for both the listing agent and the buyer’s agent. The court granted preliminary approval of the settlement on April 24, 2024. Although various practice changes described in the settlement agreement took effect on Aug. 17, 2024, the settlement remains subject to final approval after a hearing on Nov. 26, 2024.

We asked Keith Smith, who began his mortgage career in 1986 and currently manages the West Region for Regions Mortgage — an area including Texas, Louisiana, Mississippi, Arkansas, Missouri, Iowa, Illinois, Indiana, Kentucky and portions of Tennessee — what homebuyers need to know most about the settlement and its impact.

How will the settlement impact the ability for homebuyers to secure home financing?

Smith: We don’t expect any impact on someone’s ability to secure financing. As far as home prices, the settlement won’t have an impact unless a buyer is able to negotiate a lower fee with their buyer’s agent and therefore make a lower offer than another buyer who would be paying more to their buyer’s agent. Otherwise, there shouldn’t be much impact on home prices.

The settlement talks a lot about buyer’s agreements and the relationship between agents on both ends of a home transaction. What are you telling your customers at Regions Mortgage?

Smith: That we will continue to work closely with you the buyer (our borrower) and your buyer’s agent. That’s because we both work for, and with you. We will discuss with every homebuyer the agreement they will be required to sign with the buyer’s agent and ask for a copy of it. It is very important that borrowers understand the agreement says THEY will pay the buyer agent’s fee unless it’s specified and included in the document. Typically, most buyers will be advised by their buyer’s agent to ask the seller of the property to pay their fee in their offer. That way, they do not have to pay any money out of pocket. It’s critical to get that language into the contract since it will help determine how much money the buyer will need to have for closing.

What has changed when it comes to the role of the buyer’s agent?

Smith: There’s really no change here except the buyer’s agent’s “agency” — the term used to describe who they are representing and working for — is being declared up front in the agreement reached between all parties before the prospective homebuyer looks at the property. This should be comforting to prospective buyers knowing the role both agents will play and the associated compensation.

Typically, we expect — and are seeing — that the fee for the buyer’s agent is negotiated into the contract of fees to be paid by the seller since this agreement is executed before the buyer even begins to look at a home and therefore before the contract. That said, the buyer’s agent’s fee is the buyer’s expense if it is not addressed and covered in the contract — another reason we’re helping our customers make sure to review these agreements very carefully.

What are some of the most important factors home sellers and buyers need to keep in mind about these changes?

Smith: Clear communication and understanding of what each side expects financially tops the list. When someone offers their home for sale they do so with a price in mind. When a buyer makes an offer, the purchase price is only one of many components. For instance, one buyer can offer the seller their full asking price but include in the offer the requirement that the seller pay all their closing costs. Another buyer could make an offer $5,000 lower than the asking price on the same home, and the second buyer’s offer may be better financially to the seller if the buyer’s closing costs would exceed $5,000. The NAR settlement simply separates the commissions for the listing agent and buyer’s agent, and requires their payment to be addressed separately.

The bottom line is that the seller will now have to review the offer for the buyer’s agent commission terms and consider the financial impact of that amount, too. In most cases, we expect the sales contract will ask the seller to pay both the listing and buyer’s agent commissions. The net result, after the settlement, should be minimal change with regard to the final numbers.

But … the important thing is there will be instances where the terms are unusual. So everyone will need to slow down and make sure the numbers are clear. Our Mortgage Loan Officers are well-versed in these nuances and there to help customers through every step so they have the necessary support to give them confidence in making one of the most important financial decisions of their lives.