Confusion Reigns as Realtors and Consumers Adjust to New Homebuyer Rules

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The real estate world shifted for realtors and consumers earlier this year after the National Association of Realtors (NAR), representing 1.5 million members, settled multiple class action lawsuits, resulting in changes in how real estate is sold. However, the changes, which took effect on Aug. 17, have resulted in more questions than answers, with confusion reigning in the homebuyer market.

“Every real estate firm handled it differently. A lot of agents were blindsided, and it also takes two to tango, so the consumer also needs to understand it,” Jason Haber, a real estate broker with Compass in New York City, told The Epoch Times. “They’re all confused.”

The legal settlement forged by the NAR shifted how homes are bought and sold. In the lawsuit, the NAR was alleged to have benefited unfairly in giving buyers’ agents compensation that was not disclosed to the home sellers. The ruling said the practice exhibited an antitrust method of real estate transactions, in turn reducing competition and artificially inflating commissions. The NAR, in turn, paid a $400 million damage settlement.

Confusion Over New Rules

However, the settlement not only affected the NAR financially but also changed the home purchase process.

According to the NAR, sellers are no longer obligated to pay the buyer’s agent’s commission. Buyers can negotiate compensation with their agent and sign a contract outlining the terms of compensation before being shown any homes. Listing agents are also prohibited from advertising a set buyer’s agent commission on their clients’ homes on the Multiple Listing Service (MLS).

More than a month after the changes took effect, Jim Haisler, a real estate broker and CEO of the Heartland Realtor Organization in Illinois, says calling the settlement and new rules confusing is an understatement.

“I think there’s a lot of education in this industry that’s needed for agents, brokers, and the buying public,” he told The Epoch Times. “The NAR settlement confused everybody, and media information has been inaccurate.”

He said that he’s personally conducted training sessions with his 40 offices.

“Most people hear about this and think the settlement says they no longer have to pay a buyer’s agent. The truth is that the agents must now disclose to clients what the fees are.”

“Compensation for your agent remains fully negotiable and is not set by law,” the NAR settlement FAQ states.

A new Sept. 23 study from Clever Real Estate shows a slight change in agents’ perceptions of the new rules. Sixty-four percent oppose the commission structure changes, down from 70 percent against them in an April 2024 study.

“Confusion is the word of the day here,” said Clever Data Writer Nick Pisano, who told The Epoch Times that buyers’ agents are still not asking clients to sign an agreement.

“Seven out of 10 people looking to buy are telling us that they are still being shown homes without an agreement.”

In the Clever survey, a little more than a quarter of homeowners or potential buyers (26 percent) said they have a strong understanding of the lawsuit and settlement rules, compared to 40 percent who either don’t understand the implications of the changes at all or haven’t even heard of the lawsuit.

From the agents’ perspective, 72 percent believe the NAR settlement and subsequent rule changes will negatively impact the real estate industry, compared to 20 percent expecting a positive result.

In a written statement to Realtors, the NAR stated it has always encouraged buyers’ agents to have written agreements.

“NAR has long encouraged its members to use written agreements with buyers because they help consumers understand exactly what services they have agreed to, the roles and responsibilities, and the amount. For this reason, several states already have laws requiring buyer agreements,” the statement reads.

Pisano said that the most surprising aspect of the Clever survey was that most buyers are not planning on embarking on the home purchase journey without agent help.

“The vast majority of people are still going to use a Realtor (71 percent) even though this is all adding extra work for buyers to be fully aware of the changes,” he said.

“But we found it was originally a big worry for Realtors (that they would lose clients) but not so much anymore.”

Potential for a NAR Alternative

In addition to paying damages related to the class action lawsuit, the NAR has been beset with internal issues, resulting in numerous changes at the top. Last year, its president, Kenny Parcell, resigned after allegations of sexual harassment.

Haber said he has launched a new competing organization, the American Real Estate Association, and is attempting to get it off the ground.

“Before the lawsuit, I was active in the NAR accountability project because I thought no one else was,” he said.

He said that the aftermath of the lawsuit settlement and the rule changes left a bad taste in his mouth about the organization’s future and realtors being forced to align with the NAR.

“It was a Faustian bargain where the NAR would save itself, and everyone else was going to have to save themselves. Now, agents are questioning mandatory dues and why their business practices are changing.”

The NAR did not respond to a request for comment by publication time.

Despite the turmoil, few agents are leaving the industry or the NAR, according to Haisler, who says the organization has too many benefits for its members.

“We’ve seen a few dropouts, but not higher than usual,” he said.

“The NAR still does an incredible job in a number of things and is an incredible advocacy organization, including fighting for property rights for consumers. I may drink the Kool-aid, but I truly believe the NAR works hard for consumer rights.”

Haber said he remains an NAR member.

“I have no choice or else I lose access to the MLS,” he said.