Real Estate Commission Sharing Lawsuit | What Happens Next?

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1.     Don’t panic.  The judge has not yet ruled on what changes will be made to how Buyer Agency works.  This case, as well as several more, will take months to be finalized. For most agents and brokers, there are no immediate changes to be made.  Check with your broker and your own MLS to see if any modifications have been made.

2.  Do the brokerages and NAR have the money to pay?  The actual amounts will likely be smaller, due to the fact that not everyone in the class action will participate in the settlement.  Additionally, there will be appeals that could change the ultimate outcome of these cases as well as settlement figures.

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3.   What will happen as a result of these lawsuits and settlements?

The most likely outcome:

The listing contract will change to be more transparent. The seller will have a choice of what to pay the listing agent and what to pay the buyer’s agent.  There will be two different places to fill out on the contract.  Some listing agreements are already like this.  

Hopefully, everyone (buyers, sellers, buyer’s agents, and listing agents) will still agree that Buyer Agents have value.  Because everyone is used to splitting commissions and sellers paying for both sides, there may not be any appreciable change to how things are done.

Note: In July of 2022, The NorthWest MLS (NW as in 26 counties in the Seattle area) did exactly what we just mentioned: It made it very clear that sellers had flexibility in how much commission they would offer to buyer’s agents.  They made it more obvious in the contract, and in the MLS, and gave agents the ability to create their own custom commission agreements depending on the situation.  It also prohibited the ability to search listings based on commission.

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What happened with that?

Elite Coaching Client Brian Side (Seattle) explains it this way:

 “In most cases, sellers continue to pay the lion’s share of the buyer’s broker’s compensation, however, that will be tested.  Buyer brokers must be able to articulate a clear value proposition or their compensation will be grossly and immediately devalued.

Some sellers have already offered zero compensation to buyers brokers in luxury properties based upon the attitude that if a buyer can afford an expensive property, then they can afford to compensate their broker, as well.  Frankly, being prepared for all discussion points without fear, but rather facts, will win the day.  Brokers must have multiple variations of the Seller Net Proceeds, and have actual evidence via the published MLS closed sales, failed sales, and time-on-market, that demonstrate the risk of low or no offered compensation.  There is so much to know and do…”

Another possible outcome, not as great for Realtors: The contract changes and sellers decide they might not want to pay the buyer side commission at all, pay a smaller percentage, or pay a flat fee.  This would be a major pivot and potential disruption.  It might not happen uniformly throughout the country. Some markets might stick to the old model, like NW MLS largely has, but some might be more fluid.

This could create a situation where we have a mixture of 0% buyer-side co-op, on up to the traditional 2 to 3%, or maybe a flat fee in some cases.

This creates several questions and issues.

a) Buyers will have to pay for their representation out of pocket versus having it baked into the price and paid by the seller.

b) Buyers agents will have to use a Buyer Presentation which ideally results in a signed, exclusive buyer agency agreement where the buyer agrees to cover the buyer side commission if it’s not paid by the seller.  There will probably be new forms to fill out and attach to a purchase offer where the buyer is requesting commissions to be covered by the seller.  Buyers may ask for buyer commissions to be paid as a seller’s concession.  You will need to provide a few different Buyer Net Sheets based on how the transaction could go for full disclosure to your Buyer prospects.

Note: Currently, seller concessions can equal up to 3% of the purchase price for conventional deals and up to 6% for FHA and VA.  

Example: A buyer wants to purchase a $300k home.  they ask for 3% seller’s concessions to pay their buyer agent.  They offer $309,000 so the seller pays the commission and still gets the full list.  The home has to be appraised for $309k, but this usually not a problem in a market where homes are still appreciating more than 3% yearly.  It won’t, however, work if that same buyer needs that $9000 for closing costs.  

FHFA *may* make it so buyers can finance the buyer side commission into the mortgage. NAR may lobby for this.  

b) Some buyers will simply be unrepresented because they can’t or won’t agree to the risk of having to pay the buyer-side commission themselves.  This will potentially put them at a disadvantage in finding inventory, negotiating, choosing the right lenders, home inspectors, and so on.  It also will cause you to have fewer buyers you’re working with.

FHA, VA, First-time buyers, and buyers with smaller down payments will naturally be more likely to go unrepresented due to not having the funds to cover their down payment, closing costs, out-of-pocket expenses, AND a buyer’s agent.  

Buyers may see and appreciate your value, but not be able to afford you.  Affordability is already a major issue between accelerated home prices and higher mortgage interest rates.  Now add an additional expense, and some buyers are simply not going to have the funds.

There could be a movement toward a flat fee of $1500, $2500, $5000.  Buyer’s agents need to make money and buyers need representation.  These fees may be collectible up front by the buyers’ agent, similar to an attorney’s retainer fee.  Again, new forms will probably be required.

Some upper-end buyers may also opt to be unrepresented because of the sheer cost of a 2 or 3% commission.  If a $500,000 buyer has to pay $15,000 for representation, will they really do that?  Would paying a real estate attorney to represent them be cheaper?  Will they just go directly to the listing agent?

Yes, of course, the easy-button move for buyers will be to go directly to the listing agent.  And that will create a whole new set of questions and concerns.  


Dual Agency will be affected.  It may be eliminated altogether and already has been by some brokerages.

Buyers Agents shouldn’t be choosing what to show based on what commissions are offered.  Some MLSs are removing the ability to sort by commission offered like the NW MLS did.  This is also against Buyer Agency which states agents will do what’s right for the buyer, not put themselves first by seeking commission dollars.

If Buyer-side commissions do become unpredictable, no longer guaranteed or variable, BUYERS will prioritize listings to see based on the fact that they will NOT have to pay their buyer’s agent commission.  (Doesn’t this put us right back where we are today with how things work?)

Result: Listings that pay buyer-side commissions will sell faster due to more showings, more competition, etc.  Isn’t that what we’re already doing?  This is what we think will happen.

Why does buyer agency exist?

– Consumers want it.  We know this because it’s been market-tested for decades.

-Buyers need representation not just to negotiate on their behalf, but to find the right house in the first place, understand different mortgage products and deal with home inspections, appraisals, and closing details.

Will the need for buyer agents increase or decrease?

– Is real estate becoming easier or more complicated to understand? There are more intricate market nuances now than ever. People will need agents now more than ever. 

4.   What should you do NOW?

a) Be the Listing Agent as frequently as possible. The Listing Agent ALWAYS wins.  Buyers will potentially go directly to the listing agent, and you can only sell the home once, so you’ll end up with more leads! This is a good thing.  Listings = leverage.

b) Become comfortable using a Buyer Presentation that explains Agency, Exclusive Agency, how commissions work, how YOU work, and what your value is.  Make this part of your skillset immediately.  Closing for and getting a signature is easy, appropriate, and professional when you use the Buyer Presentation.  The definition of ‘closing’ is : the logical ending to a great presentation.  If a buyer won’t sign the agreement, find out why, overcome the objection if possible, or refer them to another agent.

c) Be flexible, be educated, and pivot as the rules and practices pivot.  Offer maximum value on both the listing side and the buyer side.  Have your presentations polished and proven.  Get help when you need it!  Monitor what your broker, your MLS, and your state and local associations are deciding to change.




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