What Sellers Need to Know About the NAR Settlement and Buyer Agent Compensation

The NAR settlement has introduced significant changes to how real estate transactions are structured, particularly regarding buyer agent compensation. While the focus often falls on buyers, these changes have important implications for sellers, especially in competitive markets like Colorado Springs. Here’s what you need to know and how it impacts you as a seller.

No More Advertised Cooperative Compensation

In the past, the Multiple Listing Service (MLS) displayed the commission percentage or flat fee that a seller would offer to a buyer’s agent. This cooperative compensation was a tool for making a property more appealing to buyers.

Under the NAR settlement, cooperative compensation is no longer advertised in MLS listings. While this doesn’t stop sellers from offering to pay the buyer’s agent success fee, it does require more intentionality in structuring your real estate transaction. Most sellers are continuing to offer buyer agent fees because it keeps their homes competitive, especially in markets where buyers are now more aware of these costs.

Sellers Are Still Covering Buyer Agent Fees

Despite the changes, most sellers are still opting to cover the buyer’s agent’s fees, and for good reason:

• Keeping Your Home Competitive: Buyers already face rising interest rates and tight budgets. If they’re also responsible for paying their agent out-of-pocket, they may be less likely to make an offer on your home.
• Standard Practice in Contracts: The Contract to Buy and Sell Real Estate in Colorado now has section 29, where the buyer can pick how they are going to request that their agent fee be paid, keeping the transaction process smooth and seamless. 29.1 requests that the seller pay the buyer agent directly, 29.2 offers for the buyer to pay their agent, and 29.3 (which I believe will go away) is where the buyer and seller's brokerage firms go into a separate agreement for compensation. Buyers can mark one, two or all three sections, allowing for more flexibility.
• Attracting More Buyers: Offering to cover the buyer’s agent fee helps maintain a larger pool of interested buyers, which can ultimately lead to higher offers and a faster sale.

How This Impacts Your Listing Price

Some sellers worry that these changes mean they need to lower their listing price if they choose not to cover buyer agent fees. However, this may not be the case:

• Market-Driven Pricing: Home prices are determined by market value, comparable sales, and demand—not commission structures.
• Sellers Are Incentivized to Pay Fees: Most sellers continue to cover buyer agent fees to ensure their homes remain competitive, knowing that a lack of buyer interest could ultimately cost them more in price reductions or longer days on the market.

Transparency and Negotiation

The settlement has introduced more transparency into the transaction process, which benefits both buyers and sellers:

• "Clarity" for Buyers: Buyers now sign agreements with their agents that clearly outline their agent’s fees. While this makes buyers more aware of these possible costs, it makes the actual cost obscured until negotiations have finalized in the Contract to Buy and Sale for the home their offer on.
• Flexibility for Sellers: Sellers can still offer to cover buyer agent fees as a negotiating tool.

Why This Matters for You as a Seller

• Increased Buyer Awareness: Buyers are more informed than ever about agent fees, and many are looking for sellers who are willing to cover these costs.
• Maintaining a Competitive Edge: Offering to pay buyer agent fees shows you’re serious about selling your home and can help attract motivated buyers.
• Negotiation Power: As a seller, you still hold a strong position in determining how commissions are handled, which can be used to your advantage in structuring a deal that works for all parties.

The Bottom Line for Sellers

The NAR settlement introduces new rules, but it doesn’t change the fact that covering buyer agent fees remains a smart strategy for sellers. This practice keeps your home attractive to buyers, ensures a smoother transaction, and helps you get the best possible price in today’s competitive market.

If you’re planning to sell your home, I’m here to guide you through these changes and help you structure a deal that aligns with your goals. Let’s work together to make your home stand out in Colorado Springs!

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