NAR Settlement: What Home Builders Need to Know

NAR Settlement and what Home Builders need to know.

How home builders market homes is going to change. In April 2024, a federal judge approved the NAR settlement – details on it at the National Association of Realtors site. This will create sweeping changes in how homes in the U.S. are bought and sold, but don’t panic; as a home builder, what you need to do moving forward isn’t that complicated.

Why the lawsuit in the first place?

According to the suit, home sellers didn’t know that commissions were negotiable and were overpaying due to an alleged standard offer to buyers. Buyers thought their agent’s services were free and were being steered away from homes based on offers of compensation. Furthermore, the suit stated that buyers should only pay for the services they want. The Department of Justice states that no broker or seller should offer up front to pay the buyer’s agent or broker.

Some housing experts fear the settlement will drastically change the current real estate business model. At present, home sellers pay the full commission (typically 5% to 6%), and this commission is shared between the seller’s agent and the buyer’s agent.

What does the NAR settlement do?

The settlement, which goes into effect on August 17, 2024, is expected to end most of the lawsuits. NAR will cover most of the settlement payments over several years.

The new “rules” for home buying and selling:

  • New MLS rules and requirements for participating brokers.
  • No offer of broker-to-broker compensation through an MLS.
  • Buyers must agree to what their agent may earn. They will need to sign a compensation agreement before touring homes.
  • Disclosures to sellers and buyers about compensation.

There will be much more discussion about how buyers and sellers pay agents and more paperwork to complete.

The New Realtor/MLS Process

Sellers can not include their commission in the price of the home entered into the MLS or mention commission on any MLS site. However, home sellers can advertise commissions on other places, such as websites, blogs, flyers, social media, newsletters, etc.

 Home Builder Marketing Post NAR Settlement

As a home builder, you can’t include what you will pay a buyer’s agent in commission in your MLS. However, you can put it everywhere else.

Advertise that your home building company still pays a 3% commission everywhere. Some marketing ideas:

  • Add it as a pop-up on your home builder website.
  • Create a social media campaign to promote it.
  • Launch a Realtor-focused campaign to share that their commission is intact.
  • Write a blog post explaining how commission works for your buyers.
  • Include commission in your advertising on Google, Meta, ad networks, etc.
  • Create a flyer or eblast for Realtors.

Need a home builder marketing agency that understands the nuances of marketing to today’s buyers? Denim Marketing is an award-winning public relations agency working nationwide for home builders and developers; contact us to find out how we can fulfill your marketing needs.

Denim Marketing is a home builder-focused marketing agency. Our advice is not intended to replace advice from your trusted real estate attorney.

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