Six months after NAR changes
How it's going / Market update
It’s been six months since August 17, 2024—the date major industry changes were implemented by the National Association of Realtors (NAR). Leading up to last August, I wrote a series of posts about the changes; here’s the promised follow-up post: “How it’s going.”
Changes to standard forms
Every real estate board across the country had to update a plethora of standard forms to comply with the new rules. Some released and began using their new forms well before August; my Honolulu Board of Realtors released our new forms one week prior. We agents scrambled to learn the two most-used contracts: the Exclusive Right-to-Sell Contract for listings and sellers, and the Purchase Contract for buyer offers. Another new requirement was for buyers to sign a written agreement before going out on showings—a huge change of practice.
How it’s going: The changes and revised forms have impacted our conversations and practices with our clients and fellow agents. There was confusion at first—the usual gamut of agents who had done their homework, agents in the dark, and differing interpretations of the new rules. With every new client we begin working with, we agents are still fielding many questions and solidifying how we explain the changes and forms.
Options for Sellers
The catalyst for these changes were several class-action lawsuits by disgruntled sellers against the NAR and major realty companies. They felt the 100-year practice of sellers paying both seller and buyer agents to be unfair; the court and jury agreed with them and the NAR settled.
Since August, sellers can dictate if and how much commission they pay the buyer broker. They can either state up front what they will pay, or wait for offers and negotiate the buyer broker commission at that time. Even if a seller states an amount up front, they can still change their mind during an offer negotiation.
The amount of commission to the buyer broker is up to each seller. This was the whole goal of the NAR lawsuit: seller’s choice.
How it’s going for me: When I meet with a seller and we discuss the buyer broker commission, I explain the history and benefits of paying it but also their new option not to. I’ve had 13 listings since August and all but one of my sellers indicated they will pay “something” to the buyer broker but waited/are waiting to decide until reviewing offers. One seller had a set commission price from the beginning. We received an offer with the buyer broker asking for a higher commission, but successfully countered it down to what my client had wanted.
My company does not require our sellers to pay any certain amount to the buyer broker, it’s truly the seller’s choice. When a buyer agent inquires what my seller has agreed to pay them, my standard reply is, “The seller is open to paying you! Please submit an offer and we will review that along with the rest of your buyer’s offer.”
How it’s going for other brokers: When I have a buyer and inquire with listing agents, I have not yet come across a seller who refuses to pay the buyer broker anything. I also see other listing agents clearly stating up front (before receiving any offers) their seller is paying X to the buyer broker. These agents (or their companies?) may be convincing (requiring?) their sellers up front and using that to entice buyer agents. There are industry pundits advocating it’s in our self-interest to perpetuate buyer brokers getting paid. I am not privy to see other brokers’ listing agreements with their sellers; each company is free to make their own policies and business decisions.
As before, sellers can compare various listing companies to find out what they charge for their listing services—and now sellers can also ask each broker if they have any requirements about paying the buyer agent commission.
The reality (at least here on O`ahu) is that sellers are still offering to pay the buyer broker. Sellers who are refusing to pay anything to the buyer broker are rare.
Market conditions since August
As market conditions change, how much sellers pay buyer brokers may also change: in a strong seller’s market, sellers may feel less inclined to pay buyer broker commissions. Conversely, if there is a glut of inventory in a buyer’s market, motivated sellers may decide to pay the buyer broker more. So, reviewing the market conditions these past six months is relevant to this discussion.
From August 2024 to February 2025, interest rates have persisted in the 6.5% to 7.0+% range. Many buyers continue to be sidelined, especially if they have to sell before buying—they are reluctant to trade in their current sub-3% mortgage. Consequently, the inventory of listings is still relatively low—but has been steadily rising year over year. This article from Redfin (my former company) reports that this January, many areas across the country came the closest to a buyer’s market since 2019. (A buyer’s market is defined when the inventory of homes for sale is four months or more of supply.)
Here on O`ahu, we see a dichotomy between single family homes and condo/townhouse activity—the chart below says it all! It’s still a seller’s market for single family homes (green line)—there are quick sales and multiple offer situations for the best and correctly-priced homes. But the market is not anywhere near as hot as in 2020-2021 that sellers are refusing to pay anything to the buyer broker.
The condo side, however, is hurting from rising HOA fees due to steeply rising insurance premiums. On top of elevated maintenance fees, we very often see special assessments to cover the increased insurance costs for the HOA. In the case of condo sellers, some may entice buyer agents with an attractive buyer broker commission. Here’s the January 2025 Honolulu Board of Realtors’ chart for Months of Inventory; you can see the yellow line for condos is around 5.5 months of supply!
Changes in the MLS and agent conversations
Another change—that listings may no longer advertise the buyer broker commission on the MLS—had agents panicking prior to August 17. This change accommodates how sellers may choose to defer their decision about paying the buyer broker until the offer stage. It also prevents any commission-motivated buyer agents from filtering listings based on their compensation.
How it’s going: Listing agents have found alternative ways to tell buyer agents what their seller will pay: it can be listed on the flyer at the property, or an escrow company can include it in an e-blast. Many buyer agents simply call or text to ask if and what commission the seller will pay. It may be their buyers are requesting the info; it may be the buyer agent double checking what they’ll get paid or if their buyer will have to pay.
We agents strongly recommend buyers not let any stated or unstated buyer commission amount stop them from seeing a home or making an offer. Buyer agents usually write their full desired commission on the offer, and it’s up to the seller to accept, counter, or reject.
My sellers have accepted or countered the buyer broker commission based on the offer price, other terms, and on how motivated they are. The buyer broker commission has not been a deal-breaking point in any negotiation so far, and I am not aware of any buyer who didn’t submit an offer because of it.
Changes for Buyers
For buyers, the biggest change has been the requirement to sign either a standard form known in Hawaii as the “Buyer Representation Contract,” or similar written agreement with their buyer agent.
Each realty company or agent can set their buyer fee which the buyer must agree to before seeing any properties together. (Buyers who haven’t committed to an agent yet can still freely visit open houses.) Companies can created their own form as long as it adheres to the new NAR requirements: the form must show the company’s buyer fee and state that if the seller doesn’t pay the fee, the buyer would be responsible to pay for their agent’s services.
This is a radical change for buyers to possibly be on the hook to pay for their agent’s services. It also opens up a world where a buyer can shop around for different brokers’ fees. If a seller is only paying a small (or no) commission to the buyer broker, a buyer broker charging a lesser fee would save the buyer from paying out of pocket.
Are buyers paying their broker?
How it’s going for me and my buyers: I have not had any problems having a dozen buyers sign my written agreement. Most of these buyers are still in the search stage and have not made offers. I’ve had two buyer closings since August and neither paid any part of my commission. In fact, for one of my buyers, the seller was offering to pay more than my fee with my buyer. I wrote the offer for my lower amount, and this sweetened our offer: we competed against six others and my buyer got the home.
How it’s going for other brokers: From my own experience and from casual conversations with brokers large and small, there are two patterns whenever the seller isn’t paying the buyer broker’s full fee:
1. The buyer broker modifies the original buyer agreement and eats the difference.
2. The buyer pays the difference, per the buyer agreement.
It may be case-by-case depending on the price point or how firmly a company sticks to their fee. In the end, if a buyer signed the written agreement that they would pay any difference, they are bound to that.
Buyers: When making an offer, or receiving a counteroffer from the seller, review the buyer broker commission before signing. Make sure you understand if and how much you will be responsible for paying. This could be a juncture for you to negotiate with the seller or your broker, or a juncture to accept the overall cost to buy this home.
TL:DR Summary
Generally, sellers are still paying buyer brokers, but each seller, buyer, and their agents must review their situation case by case and possibly negotiate. Many more conversations are needed as compared to pre-August 2024. For now, with the current market conditions here on O`ahu, most buyers have not needed to pitch in to pay their own agent. If they have, it’s a small portion and not the full buyer broker commission.
If you’re a broker, seller, or buyer, I would love to hear if your own experiences or examples differ from mine! Please feel free to comment or message me (be sure not to mention any specific numbers!).