The NAR Settlement & Your Seller Costs: What Changed in 2024 (and What Didn't)

The August 2024 NAR settlement fundamentally shifted how commissions work in real estate transactions. The short answer: sellers are no longer automatically paying the buyer's agent commission. Post-settlement, listing-agent commissions and buyer-agent compensation are negotiated separately, giving sellers more flexibility to explore options. However, the structure of that offer—including whether to offer buyer-agent compensation at all—affects your buyer pool and final proceeds. Understanding these trade-offs before you sign your listing agreement is key.

What the NAR August 2024 settlement actually changed (listing agent vs. buyer agent compensation structure)

For decades, the typical arrangement was straightforward: seller paid one commission to the listing agent, who then shared a portion with the buyer's agent. The NAR settlement (effective August 17, 2024) broke that chain.

The rule change: listing agents can no longer advertise buyer-agent compensation on the Multiple Listing Service (MLS). Instead, buyer agents and their clients must negotiate compensation directly and privately. This means:

• •Sellers are no longer in the middle of paying the buyer's agent automatically
• •Buyer agents must have a signed agreement with their buyer client before showing properties
• •The compensation structure is now decoupled—your listing-agent fee is separate from any offer to pay a buyer's agent
• •Compensation to the buyer's agent (if offered at all) is no longer publicly displayed on the MLS

The intent behind the change was to introduce competition and transparency to buyer-agent compensation. Whether it achieves that in practice continues to unfold, but the mechanics are clear: the old "seller pays both sides" assumption is gone.

Why sellers DO NOT automatically pay buyer-agent commission anymore (and what that means for your negotiating power)

Post-settlement, you have a critical new negotiating lever: you can choose whether to offer buyer-agent compensation at all, and if so, how much.

Under the old model, it was standard practice for the listing agent to offer a percentage of the sale price to the buyer's agent—typically 2.5% to 3%. That happened almost automatically, baked into the listing agreement and visible to every buyer's agent reviewing the listing.

Now, you can:

• •Offer no buyer-agent compensation and let the buyer's agent negotiate directly with their client
• •Offer a smaller amount than historical norms
• •Offer a flat fee instead of a percentage
• •Negotiate this separately from your listing-agent fee

What does this mean for you? More control, but also more complexity. Offering nothing or very little can save you money—but it may also reduce the number of buyer's agents willing to show your home, which could shrink your buyer pool and potentially lower your final sale price. It's a trade-off worth understanding before you sign the listing agreement.

How to negotiate your listing-agent commission (it's now even more negotiable than before)

The settlement didn't require listing-agent commissions to drop, but it did open the door wider for sellers to negotiate them. Because the old commission structure is now in flux, many agents and brokers are more willing to discuss flexibility on their fee.

When you meet with listing agents, ask:

• •Is your commission negotiable? (Spoiler: yes, they usually are, and now more explicitly than before.)
• •What does your fee cover? (Marketing, transaction coordination, legal/closing coordination, photography, staging, etc.)
• •Are there any fee reductions if I'm not offering buyer-agent compensation, or if I'm offering a flat fee instead of a percentage?
• •What is your broker's policy on commission flexibility?
• •How will offered buyer-agent compensation (if any) appear in writing?

Post-NAR, some brokers and agents have introduced flat-fee, tiered, or performance-based commission models. Others still charge by percentage but are more willing to negotiate the rate. The key is to have this conversation early and get the terms in writing in your listing agreement.

Note: if an agent says their commission is "non-negotiable" or "set by the MLS," that's not accurate post-settlement. Commissions have always been negotiable by law, and post-settlement they're more openly discussable.

The trade-off: lower commission might mean less buyer-agent compensation offered, which could reduce buyer pool—real risk/reward

This is the thorny part that deserves honest framing. If you negotiate your listing-agent commission down or decide to offer minimal buyer-agent compensation, you're making a bet: that the money you save now will outweigh any reduction in showings or offers.

Here's the mechanics: buyer's agents are in business to serve their clients. If your listing offers no buyer-agent compensation, a buyer's agent has to ask their client to pay out of pocket. Some will, some won't. Some buyer's agents may focus their time on listings that offer compensation, as their clients may prefer not to pay out of pocket. This shift in attention could mean:

• •Fewer showings (not zero, but fewer)
• •Fewer offers or lower offers (if fewer qualified buyers see the home)
• •A longer time on market
• •A lower final sale price that more than wipes out your commission savings

Conversely, if you offer competitive buyer-agent compensation, you're paying more today to potentially attract more buyers and offers, which could drive up the sale price.

The math on this varies by market, property type, and season. In a hot seller's market (low inventory, high demand), you can probably get away with lower or no buyer-agent compensation. In a balanced or buyer-friendly market, the cost of reduced exposure may exceed what you save. Discuss the potential impact on your buyer pool and timeline with your listing agent, who can advise on local trends and comparable homes to inform your decision.

What 'offered compensation' means post-settlement and how it appears (or doesn't) on the MLS

One of the biggest changes is what's no longer on the MLS: buyer-agent compensation figures.

Before August 2024, the MLS listing included a field (or fields) showing what the listing agent would pay to a buyer's agent—say, "2.5% buyer cooperation." Buyer's agents could see this instantly and assess whether they'd show the home.

Now, buyer-agent compensation is typically negotiated offline, outside the MLS. Here's what that means:

• •The MLS listing focuses on the property details (beds, baths, price, location, photos) but does not display buyer-agent compensation
• •Any offer you make to compensate a buyer's agent must be communicated separately—often through direct conversation between agents, or spelled out in a separate document
• •Buyer's agents have to ask, or they have to counsel their buyers to expect to pay for representation out of pocket
• •Some MLSs have added new fields or workarounds to display or note 'offered compensation,' but these vary by market; there is no national standard

In Tennessee and most markets, the standard purchase agreement still allows for commission clauses, so if you and a buyer's agent agree to compensation, it typically appears in the sales contract or a side agreement—not on the public MLS. This is one area where real estate is moving toward more private negotiation and less public price discovery.

Practical: how this affects your net proceeds and why clarity matters before signing the listing agreement

When it's time to close, your net proceeds depend on several variables, and post-NAR, more of those are negotiable upfront.

Your listing agreement should spell out:

• •Your listing-agent commission (or fee structure): percentage, flat fee, or tiered
• •Any offer to compensate a buyer's agent, and the amount/percentage
• •Your broker fee (if separate from the agent's commission—some brokers charge a separate transaction fee, typically $300–$500, though this varies and may be absorbed at closing)
• •Who pays closing costs, prorations, and other seller concessions (negotiated per transaction)
• •Any broker or title insurance fees

After the sale closes, your proceeds look like this (roughly):

Sale Price – Loan Payoff – Closing Costs – Listing Commission – Buyer-Agent Offer (if any) – Broker Fees – Title Insurance & Prorations = Your Net

Post-NAR, you have more say in that equation. If you negotiate your listing-agent fee down by 0.5% and offer minimal buyer-agent compensation, that could add 1–1.5% to your net proceeds—which on a $400,000 sale is $4,000–$6,000. But if that trade-off causes you to sell for $10,000 less or sit on market two weeks longer, the math flips.

Before you sign, ask your listing agent to run a pro-forma closing statement showing what you'll net under different commission and buyer-agent compensation scenarios. This clarity upfront helps you make an informed choice about what trade-offs make sense for your situation.

A final note: Tax, legal, and financial specifics

Commissions and proceeds have tax implications (e.g., if you're selling in Tennessee, there's no state income tax on the sale itself, but the federal home-sale capital-gains exclusion—up to $250,000 for individuals or $500,000 for married couples—may apply to your situation). Every seller's tax picture is different, so consult a CPA or tax attorney for your specifics. Similarly, if you have questions about how to structure an offer to a buyer's agent or whether a particular incentive is fair-housing compliant, talk to your real estate attorney.

This is educational context, not advice. The Will Johnson Team is here to help you navigate these options and connect you with the right professionals.