2024 NAR Settlement: Essential Real Estate Changes Retirees Must Know

What’s Happening with the 2024 NAR Settlement?

Recently, you might have heard rumblings about the 2024 NAR Settlement that will change the real estate industry forever. But you might still be wondering what it is, what it means, and how will it affect you? We are happy you asked because we are here to break it down for you. In this blog, we will give you an overview of the settlement and discuss what it means for homebuyers.

Overview of the Proposed Settlement

In short, the NAR settlement is a class action lawsuit that has been making waves in the real estate world. This case challenges the core of real estate transactions as we know them. Some have accused real estate companies and the National Association of Realtors (NAR) of price fixing. It goes without saying, that is explicitly not allowed. Because of this, a settlement of $418 million along with a few key changes have been proposed.

MLS Changes: Beginning this month, July 2024, the Multiple Listing Service (MLS) will no longer list whether a seller’s agent is cooperating with a buyer’s agent to pay the buyer’s agent’s commission.

Buyer’s Broker Agreement: A Buyer’s Broker Agreement will now be mandatory. This form, also known in other states as a Buyer Representation Agreement, Buyer Agency Agreement, among other names, outlines the relationship between a buyer and their agent. This includes duties, responsibilities, and compensation for the buyer’s agent if they find a home.

Potential Impacts of the 2024 NAR Settlement on Retirees

We feel that these changes could lead to two paths. One with minimal changes, and one with much more significant changes. Here are the possibilities:

Path 1: Minimal Change

The first path is that hardly anything changes and the real estate landscape stays mostly the same. Buyers still get representation for ‘free’, and the seller still pays the buyer’s agent’s commission, which remains up for negotiation. The main change here is sightly more paperwork to sign and increased transparency—something we wholeheartedly support.

Path 2: Buyer Pays Commission

The second path is slightly more dramatic. Buyers would now be responsible for paying their agent’s commission instead of the seller covering it. This would require an increase in a buyers budget to account for the added financial responsibility. This would make the homebuying process especially difficult for those with limited cash, such as first-time homebuyers. It could lead to a reduction in the number of buyers able to afford agents to represent them, potentially putting them at a disadvantage in negotiations and the overall homebuying process.

Home Prices and Commission Rates

What about home prices? Will they drop because sellers no longer have to pay commission? Our answer: no. Home prices are not going to drop because of the NAR settlement. Prices are not set because of commission rates; they are set by market conditions. How do Explore55Plus agents determine the price of a home? They set prices based on comparable sales on the MLS, focusing on the sold prices of similar homes, not what’s currently for sale.

The Value of a Buyer’s Agent

There are truly so many reasons to use a professional agent to represent you in buying a home. Especially if you’re buying in an area you’re unfamiliar with or you haven’t bought a home in years. Navigating the variety of 55+ communities throughout Florida can be daunting. We know this probably isn’t your first rodeo when it comes to buying a home. One of the most valuable things an Explore55Plus agent can offer is extensive, nuanced knowledge an expertise, from understanding areas and communities, to handling inspections and negotiations.

Explore55Plus’ Take on the Changes

We keep getting asked about our thoughts on the impact the 2024 NAR Settlement changes could have. Honestly? We think they are a good thing! They are a positive shift towards an increase in transparency and honesty between agents and clients. While we feel that the overall impact will be small, we are still monitoring how lenders will adapt to some of these changes. We encourage you to do the same, and to do as much research as you can when selecting an agent to represent you in buying a home. Knowledge is power!

Ready to Navigate the Real Estate Landscape?

If you’re ready to start searching for a new home, let us know! Explore55Plus works with some of the most phenomenal and knowledgeable agents specializing in Florida’s 55+ communities. If you’re retiring soon, or just planning for the future, we’re here to help make you’re homebuying journey smooth and stress-free. Reach out today to get connected!

Disclaimer: With so much up in the air regarding this settlement, its full impact remains uncertain. We're simply sharing our opinions and insights. We may be wrong, we may be right, but only time will tell!