The NAR Settlement Explained: A Chicago Seller’s Guide to the New Commission Rules
In August 2024, the real estate industry changed fundamentally. The National Association of Realtors (NAR) settlement ended decades of commission practices that critics argued kept fees artificially high. If you’re selling a home in Chicago, understanding these changes gives you more negotiating power and more options for keeping your money.
This guide explains what the NAR settlement changed, what stayed the same, and how Chicago home sellers can take advantage of the new rules to save thousands on their transaction.
What Is the NAR Settlement?
The NAR settlement resolved a class-action antitrust lawsuit that challenged how real estate commissions have worked for decades. Plaintiffs argued that the traditional commission system—where sellers were effectively required to pay buyer agent commissions through the MLS—violated antitrust laws by suppressing competition and keeping fees artificially high.
The Lawsuit Background
In 2019, home sellers filed lawsuits alleging that NAR and major brokerages conspired to inflate commissions. The core argument: by requiring sellers to offer buyer agent compensation as a condition of listing on the MLS, the system eliminated normal market forces that would otherwise drive fees down.
A Missouri jury agreed, awarding plaintiffs nearly $1.8 billion in damages in October 2023. Facing additional lawsuits and potential damages of $5 billion or more, NAR agreed to settle.
Settlement Terms
NAR agreed to:
- Pay $418 million over four years
- Eliminate the requirement that sellers offer buyer agent compensation through the MLS
- Require written buyer representation agreements before agents show homes
- Implement new rules around commission transparency
These changes took effect in August 2024 and apply to all NAR-affiliated MLSs nationwide, including MRMLS which serves the Chicago market.
Timeline
| Date | Event |
|---|---|
| October 2019 | Initial lawsuits filed |
| October 2023 | Missouri jury verdict ($1.8B) |
| March 2024 | NAR announces settlement |
| August 2024 | New rules take effect |
| 2026 | Current landscape post-settlement |
Key Changes in the Settlement
The settlement changed three fundamental aspects of how real estate transactions work:
1. No More Offers of Compensation on the MLS
Before: Listing agents were required to enter a buyer agent compensation amount in the MLS as a condition of listing. This created an expectation that sellers would pay buyer agents, typically 2.5-3% of the sale price.
After: MLS listings cannot include offers of buyer agent compensation. Sellers can still offer to pay buyer agents, but the offer must be communicated outside the MLS—through agent-to-agent communication, on the listing agent’s website, or through other channels.
What This Means: The automatic expectation that sellers pay buyer agents is gone. You now have explicit choice in whether to offer buyer agent compensation and how much.
2. Mandatory Written Buyer Agreements
Before: Buyers often worked with agents informally, without written agreements specifying compensation. Buyer agents expected to be paid by sellers through the MLS-posted commission.
After: Before showing any home, buyer agents must have a written agreement with their client specifying:
- The services the agent will provide
- How the agent will be compensated
- The amount or rate of compensation
What This Means: Buyers and their agents must negotiate their own compensation arrangement. This separates the buyer side transaction from the seller side, creating true market competition for buyer agent services.
3. Increased Transparency Requirements
Before: Buyers often didn’t understand that the seller was paying their agent’s commission, or that commission rates were negotiable.
After: Agents must clearly explain how they’re compensated and confirm that all fees are negotiable. The settlement requires explicit disclosure and consent around compensation.
What This Means: More information for all parties, which generally benefits consumers making large financial decisions.
What This Means for Home Sellers
The settlement gives Chicago home sellers more control over commission costs than ever before. Here’s how to think about the changes:
You’re No Longer Required to Pay Buyer Agents
Under the old system, offering buyer agent compensation was effectively mandatory—properties without it were less likely to be shown. While agents might deny this, the data showed correlation between offered compensation and showing activity.
Now, you have genuine choice:
- Option 1: Offer traditional buyer agent compensation (2.5%) to maximize your buyer pool
- Option 2: Offer reduced buyer agent compensation (1-2%) and still attract most buyers
- Option 3: Offer no buyer agent compensation, leaving buyers to pay their own agents
- Option 4: Offer to contribute to buyer agent compensation as a negotiable concession
Each option has trade-offs. Offering compensation still attracts the widest pool of buyers and their agents. But the amount you offer is now clearly your choice, not an industry expectation.
Commission Negotiation Is Easier
Before the settlement, negotiating listing agent commission felt awkward because it was tied to the buyer agent offer through the MLS. Now that these are explicitly separate, you can:
- Negotiate your listing agent fee independently
- Decide separately what (if anything) to offer buyer agents
- Consider flat-fee alternatives that were always available but now make more obvious sense
The settlement didn’t reduce commissions automatically—you still need to negotiate. But it removed structural barriers that made negotiation difficult.
Pricing Strategy Considerations
If you choose to offer reduced or no buyer agent compensation, consider how to position your property:
- Price your home competitively (you can’t overcome commission concerns with overpricing)
- Make the compensation arrangement clear in marketing materials
- Be prepared to negotiate buyer agent compensation as part of offer terms
- Consider that FHA and VA buyers may have additional constraints
Some sellers offset reduced buyer agent offers with slightly lower listing prices, effectively passing savings to buyers. Others maintain pricing and keep the full savings. Both strategies can work.
What This Means for Home Buyers
While this guide focuses on sellers, understanding buyer-side changes helps you navigate negotiations:
Buyers Must Sign Representation Agreements
Before touring homes, buyers must sign written agreements with their agents specifying compensation. This means:
- Buyers know upfront what their agent costs
- Buyers may need to pay their agent if the seller doesn’t offer compensation
- Buyers can shop for agent services based on price and value
- Buyers with limited funds may face new challenges covering agent fees
Potential Impact on Your Sale
Some buyers—particularly first-time buyers and those with tight budgets—may struggle to pay their agent out of pocket. If you offer no buyer agent compensation, you might:
- Reduce your potential buyer pool
- Face requests for seller concessions to cover buyer agent fees
- Attract more cash buyers and investors (who don’t use agents)
- See longer time on market in some situations
The market is still adjusting. Most Chicago sellers currently still offer buyer agent compensation, though amounts have become more variable.
How Chicago Sellers Can Save More Now
The settlement creates a favorable environment for cost-conscious sellers. Here’s how to maximize your position:
Consider Flat-Fee Listing
The settlement’s unbundling of commissions makes flat-fee listing more obviously sensible. If you’re paying a fixed $1,995 to list your home instead of 2.5%, the savings are clear:
| Home Price | Traditional 2.5% | Flat Fee | Savings |
|---|---|---|---|
| $500,000 | $12,500 | $1,995 | $10,505 |
| $650,000 | $16,250 | $1,995 | $14,255 |
| $800,000 | $20,000 | $1,995 | $18,005 |
These savings apply regardless of what you decide about buyer agent compensation. Use our home sale calculator to see your specific numbers.
Negotiate Buyer Agent Compensation Strategically
Rather than defaulting to 2.5%, consider:
- Starting at 2% and seeing market response
- Offering 2.5% only for buyers who close within a certain timeframe
- Making buyer agent compensation a negotiable deal term rather than a fixed offer
- Adjusting based on your local market—hot neighborhoods may support lower offers
Time Your Sale for Maximum Advantage
Chicago’s market remains fast in most neighborhoods. When homes sell in 5-10 days at 99-100% of asking price, you have room to minimize commission costs. Data from the past 90 days:
| Neighborhood | Days to Contract | Sale-to-List |
|---|---|---|
| North Center | 5 days | 100.6% |
| Wicker Park | 6 days | 99.3% |
| Lincoln Park | 7 days | 100.3% |
| Lake View | 7 days | 99.0% |
| Logan Square | 9 days | 99.4% |
In markets this fast, extensive marketing campaigns aren’t necessary—buyers find listings through Zillow and Redfin within hours. The percentage-based commission model was designed for a slower era.
See What You Could Save
Use our calculator to see exactly how different commission structures affect your net proceeds.
Calculate Your Net Proceeds | Get a Free Market Report
The Flat-Fee Model Aligns With Post-Settlement Reality
The NAR settlement’s unbundling of buyer and seller commissions makes the flat-fee model more intuitive. Here’s why:
Transparent, Predictable Costs
Flat-fee listing charges a fixed amount—$1,995—regardless of your home’s sale price. You know exactly what your listing agent costs. Separately, you decide what (if anything) to offer buyer agents. This matches how the settlement intends commissions to work: separate, negotiable, transparent.
Services That Match Modern Markets
The flat-fee model provides full MLS exposure, professional photography, pricing strategy, negotiation, and closing support—the services that matter most when homes sell in 7-10 days.
What flat-fee doesn’t include is extensive marketing campaigns, print advertising, and months of effort—because in Chicago’s fast market, those aren’t necessary for a well-priced home.
Your Interests Aligned
Traditional agents earning percentage commissions have complex incentive structures. They benefit from higher prices (more commission) but also from faster sales (more transactions per year). A flat-fee agent earns the same regardless of price, which means advice focused purely on what’s best for your sale.
FAQs About the NAR Settlement
Is the NAR settlement final?
Yes. The settlement was approved by the court and took effect in August 2024. The changes are now permanent rules governing how NAR-affiliated MLSs operate.
Do I still have to pay buyer agent commission?
No. You’re no longer required to offer buyer agent compensation. However, most sellers still choose to offer some compensation (often 2-2.5%) to attract the widest pool of buyers. The difference is that it’s now clearly optional and negotiable.
Will this reduce overall commission rates?
The settlement doesn’t mandate lower rates—it enables competition that should, over time, drive rates down. Early data suggests listing commissions haven’t changed much, but buyer agent compensation has become more variable. Full market effects may take years to materialize.
What if a buyer can’t afford to pay their agent?
Buyers who can’t pay their agent out of pocket can request that the seller contribute to buyer agent compensation as part of their offer. This is now a normal negotiation term rather than a preset expectation.
Does this affect FHA and VA buyers?
Potentially. FHA and VA loans have restrictions on what buyers can pay at closing. These buyers may be disadvantaged if sellers don’t offer buyer agent compensation, as they may not be able to pay their agent out of pocket. Sellers wanting to attract FHA/VA buyers should consider offering buyer agent compensation.
How does this change my negotiating position as a seller?
You have more power. The automatic expectation that you pay buyer agents is gone. You can negotiate listing agent fees independently. You can choose flat-fee alternatives without any stigma. The settlement essentially gave sellers explicit permission to prioritize their own interests.
Should I still offer buyer agent compensation?
It depends on your market and priorities. In competitive neighborhoods where homes sell quickly, you likely have flexibility to reduce or eliminate buyer agent offers. In slower markets or for unique properties, offering compensation may help attract buyers. Consult your agent about local norms.
The Post-Settlement Landscape
The NAR settlement marked the end of a commission structure that had persisted for decades. While the changes are significant, the core mechanics of buying and selling homes remain the same:
- Homes are still listed on the MLS
- Buyers still typically work with agents
- Sellers still typically work with listing agents
- Commissions are still paid at closing
What changed is transparency and choice. Sellers now have clearer options for controlling commission costs. Buyers now understand they’re paying for their agent’s services. The market is adjusting, with commission structures becoming more varied and competitive.
For Chicago sellers, this is an opportunity. Fast-moving markets like Lincoln Park, Wicker Park, and North Center don’t require expensive marketing campaigns or months of effort. A correctly priced home with professional photos sells within days. The flat-fee model—$1,995 instead of 2.5%—makes more sense than ever.
Ready to Sell in the Post-Settlement Era?
The NAR settlement changed the rules. Net Gain Realty helps you take full advantage with flat-fee listing that puts more money in your pocket.
Book a Free Consultation | Get Your Market Report
For more details on what agents charge and how to negotiate, see our guide to real estate commission rates in Chicago.
Ready to keep more of your equity?
Full service. Flat fee. You do the math.
Same MLS exposure. Same professional photography. Same expert negotiation. The only difference is how much you keep.