What the 2024 NAR settlement actually changed (in plain language)
On the rule changes that took effect in August 2024, what the year since has actually looked like at the kitchen table, and the conversation buyers and sellers should be having now.
Last spring I sat at a kitchen table in Downtown Ventura with a young couple, both teachers, who had saved for four years to buy their first house. I had a one-page agreement in front of me and I was walking them through it line by line. The wife asked, gently, "Wait. So we might have to pay you out of pocket?" I told her the honest answer, which was: probably not, but possibly yes, and we needed to talk about both.
Two years ago I would not have had that conversation before showing them a single property. I would have toured them through six houses, helped them write an offer, and the question of how I got paid would have been answered invisibly, in the back end of the deal, off a number the listing agent had posted on the MLS. That changed in August 2024, and the changes are real, and the year and a half since has taught me a lot about what they mean in practice.
This is a plain-language read on what the settlement actually did, what it didn't do, and how a buyer or seller in California should be thinking about the new framework when they walk into their next transaction.
What the settlement actually addressed
The shorthand is "the NAR settlement." NAR is the National Association of Realtors, the national trade association for real-estate agents who hold the Realtor designation. The case behind it is Burnett v. NAR (sometimes called Sitzer-Burnett), a class-action that was settled for roughly $418 million and took effect for industry practice on August 17, 2024. CAR, the California Association of Realtors, adopted parallel forms tailored to California law on roughly the same timeline.
The practice the lawsuit targeted wasn't illegal, exactly. For decades, when a listing agent put a property on the MLS, the listing also published the compensation that the buyer's agent would earn if their buyer bought the house. The seller, in effect, was paying both sides of the transaction, and the buyer-side number was visible to every agent in the market before any buyer ever toured. The plaintiffs argued this arrangement had antitrust problems: it created a conventional rate, it discouraged negotiation, and it obscured from buyers what was really being paid on their behalf.
The settlement resolves the class action without anyone admitting wrongdoing. NAR adopted rule changes for its members. CAR rolled out California-specific forms that meet both the NAR rules and our state's own disclosure framework. I'm an agent, not an attorney; for the legal nuance underneath all of this, talk to a real-estate lawyer. What I can speak to is what it looks like in actual transactions.
The two changes that matter
There are two practical changes a buyer or seller will encounter directly.
The first is that compensation can no longer be posted on the MLS. A listing agent is not allowed to advertise to other agents, through the MLS, what the buyer side will earn on a given property. Compensation is now negotiated outside the MLS. In California, that most often happens through the offer itself, as a seller concession written into the purchase agreement. Sometimes it happens through a direct agreement between the buyer and their own agent, with the seller not involved at all. The point is that there is no longer a default, pre-published number sitting on the listing.
The second is that a written representation agreement between a buyer and their agent is required before that agent shows the buyer any property. Before any tour. Before stepping inside the front door. The agreement has to specify how the agent will be compensated, the scope of what the agent will do, and the term of the engagement. CAR's version, the Buyer Representation and Broker Compensation Agreement, is the form most California buyers will sign. It meets both the federal-level rule changes and the state's own requirements.
That second change is the one that has reshaped the first conversation I have with a buyer. It used to be: "Tell me about the kind of house you want." Now it's: "Tell me about the kind of house you want, and let's talk about how this works."
What it looks like in real transactions
The headline is that almost nothing about the underlying economics has changed yet, and almost everything about the timing of the conversation has.
For buyers, the new sequence is: have an upfront conversation with your agent about compensation, sign a buyer representation agreement, then start touring. In most California transactions I've worked on in the year since the rules took effect, the buyer's side has still been compensated by the seller, as a concession negotiated through the offer. The mechanism is different but the outcome often looks similar. What's different is that nothing is assumed. The buyer knows what their agent is being paid, the seller knows what they're being asked to contribute, and the number is on the table during negotiation rather than humming along in the background.
When the seller chooses not to offer concessions toward the buyer's agent, the buyer has a choice. They can pay their agent directly out of pocket. They can sometimes structure the agent's fee through a closing-cost concession, depending on the loan type and the lender's specific rules (this is where I tell the buyer to call their lender, because financing rules vary and I don't give financing advice). Or they can walk away from a property where the math doesn't work for them, the same way they might walk away from one with a roof problem they can't solve.
For sellers, the listing agreement is now where the strategic question gets answered. Sellers are not required to pay the buyer's agent. That bears repeating because it's the part of the new framework that most surprises people: under the post-settlement rules, a seller can list and sell a property without offering any compensation to the buyer's side at all. The expectation that "the seller pays both agents" was a market convention, not a legal requirement, and that convention is what the settlement loosened. Most sellers in our market still choose to offer some buyer-side compensation, because doing so broadens the buyer pool: it lets first-time buyers and cash-light buyers compete for the property without having to bring an extra two or three percent to closing. Some sellers are choosing to offer less, or none at all, and letting the market sort it out. Both are legitimate strategies. I've taken listings on both sides of that question in the last year, and the right answer depends on the property, the price tier, and the depth of the buyer pool the seller wants to reach.
In my own transactions since the rules took effect, the great majority have still included some form of seller-paid buyer-side compensation. The seller wasn't required to offer it. They chose to, because the strategic logic almost always favored doing so. A competitive coastal-California buyer pool prefers properties where the math works without an extra two or three percent to closing, and listing agents who counsel sellers honestly tend to recommend offering something rather than nothing for that exact reason. The industry data tracks the same way. The reporting I've seen on the year after the settlement put the average buyer-agent commission in early 2025 around 2.5 to 2.7 percent, only marginally below pre-settlement norms, and the share of listings offering some form of buyer-side compensation has stayed high. Not 100 percent. There are properties at certain price tiers, or in cash-heavy submarkets, where the seller declines and lets the market sort it. But the prediction that "sellers will stop paying buyer agents" hasn't played out at scale. What changed is that the number is now negotiated like every other term in the deal, written into the offer instead of pre-published on the MLS. It's negotiable, the same way the price is negotiable, the same way the inspection period is negotiable. The math is more honest. The work is more conversation-heavy. The dollars themselves haven't moved much.
For agents, the work is more upfront and the paperwork is heavier. The competence bar is also higher, in a way I think is healthy. Buyers can no longer assume the structure works invisibly behind the scenes, which means the agents they hire have to actually explain it. The agents who can't explain it cleanly are the ones who get found out fastest in the new framework.
The honest assessment
Was this change good? It depends on who you are.
For a sophisticated buyer or seller, the new structure is more transparent and probably better. Numbers are on the table. Choices are explicit. People know what they're paying for and what they're getting. I have had clients tell me, in the year since, that they appreciate the conversation even when it's a little uncomfortable, because at least they know.
For a first-time buyer without much cash, it can be harder. The upfront fee conversation is intimidating when you've already been white-knuckling your way to a down payment. The worst-case scenario, where the seller offers no concessions and the buyer has to come up with two or three percent on top of their down payment to compensate their agent, is genuinely worse than the old way for that buyer. It's one of the things I think about most about the new framework. I work with a lot of first-time buyers (it's a real piece of what I do, and it's a piece I care about), and the new rules require more careful explanation up front about what the worst-case looks like, even when the worst case is unlikely.
The fundamental dynamic, though, hasn't changed. Competent agents representing clients still get compensated for the work. It's still a negotiated market. What's changed is the mechanics of how the compensation gets agreed to, who agrees to it, and at what point in the process. The people who liked the old way mostly liked it because it was familiar. The people who like the new way mostly like it because it's honest about what's happening. Reasonable arguments live on both sides, and I'm trying to be careful here not to oversell either one.
How I run a buyer engagement now
The mechanics of my work with a buyer in 2026 look like this.
We start with a real conversation, before any tour. I explain what the representation agreement is, what it commits the buyer to, what it commits me to, and how compensation will be handled. I tell them my standard fee. I tell them how I expect that fee will most likely be paid: through a seller concession negotiated into the offer, in the great majority of cases. I also tell them about the worst case: that on a property where the seller declines to offer any concession and the buyer's loan won't accommodate a fee through closing costs, they would need to bring my fee to closing themselves. I show them the math on a hypothetical price point so the number is concrete and not abstract.
We sign the representation agreement. The CAR form is specific about scope and term. I usually scope my agreements to a defined geography or property type, with a term that gives both of us flexibility (a buyer who decides we're not the right fit shouldn't feel locked in for a year, and I shouldn't feel obliged to keep showing properties to a buyer whose timeline keeps slipping). The CAR form accommodates that kind of negotiated structure cleanly.
We tour. We write offers. When we write an offer, the request for the seller to cover the buyer-agent compensation is in the offer itself, alongside price, contingencies, and the rest of the terms. The seller can accept it, counter it, or decline it. If they decline it, the buyer knows what they're choosing between: this house with this fee structure, or a different house, or a different negotiation.
For sellers, the conversation runs the other direction. When I take a listing, one of the early questions is whether the seller wants to offer compensation to the buyer's side, and how much, and under what conditions. In the investor and estate work I do, where the buyer pool tends to be more sophisticated and often working with their own representation agreements already in place, sellers sometimes prefer to leave the question open and respond to offers as they come. In a Pierpont cottage at the under-$2M tier, where I expect five offers in the first weekend and several first-time buyers in the mix, my advice to the seller is usually to publish a willingness to consider buyer-side compensation, because excluding the first-time buyer pool is leaving money on the table. Both are defensible strategies. The right one depends on the property.
What I tell every client, on either side of the table: the new framework is more transparent, more negotiated, and more dependent on your agent actually being able to explain it. That last part is the part most worth dwelling on. If you're working with an agent and you can't get a clear answer to the question "how do you get paid on this transaction, and where does the money come from," that's the signal to find a different agent. The old answer used to be invisible. The new answer should be in plain English, on a piece of paper you've signed, before you ever step into a house with them.