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Essential Guide to Understanding the New Buyer Compensation Agreement in Real Estate


Buyer Compensation Agreement

Paul Kaplan

I've made it a professional goal to be known as a leader in the Real Estate industry in the Palm Springs market for the past 20+ years...

I've made it a professional goal to be known as a leader in the Real Estate industry in the Palm Springs market for the past 20+ years...

Jul 1 3 minutes read


On March 15, 2024, the National Association of REALTORS® (NAR) reached a settlement agreement to end litigation concerning broker commissions. This agreement includes significant changes to real estate transactions effective August 17, 2024, ensuring consumers retain choices regarding real estate services.

Key Changes

Written Agreements

Real estate agents using a Multiple Listing Service (MLS) must now enter into written agreements with buyers BEFORE touring homes

These agreements must clearly disclose:

  1. Compensation Details: The specific amount or rate of compensation the agent will receive, or how this amount will be determined.
  2. Objective Compensation: Compensation must be definite (e.g., a flat fee, percentage, or hourly rate) and cannot be open-ended.
  3. Prohibition on Excess Compensation: The agent cannot receive compensation from any source that exceeds the agreed amount or rate with the buyer.
  4. Negotiable Fees: A statement that broker fees and commissions are negotiable and not set by law.

Communication of Offers

  • Real estate professionals can no longer communicate offers of compensation on MLS platforms.
  • Sellers can still offer compensation off an MLS and offer buyer concessions on an MLS, such as covering buyer closing costs.

Implications for Home Buyers and Sellers

  • Written Agreements: Buyers must sign written agreements with their agents before touring homes, ensuring they understand the services and costs.
  • Virtual Tours: Written agreements are required for both in-person and virtual home tours.
  • Initial Consultations: No written agreement is needed for initial inquiries at open houses or when discussing services.
  • Negotiability: Agent compensation remains fully negotiable.


These changes aim to foster transparency and clarity in real estate transactions, protecting consumer interests and promoting fair business practices. For more details, visit What the NAR Settlement Means for Home Buyers and Sellers 

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