
Understanding the Ripple Effects of the NAR Settlement: What Does It Mean for Relocation Managers and Consumers?
At Armbruster Moving & Storage, we have a front-row seat to the changing landscape of the relocation industry. One of the most significant events we have witnessed recently is the National Association of Realtors (NAR) Settlement Agreement, which has sent shockwaves throughout the real estate and relocation sectors. Today, we want to discuss the NAR Settlement, what has changed, and how this will impact consumers, relocation managers, and the overall moving process.
What Was the NAR Settlement About?
In case you’ve missed the headlines, the NAR Settlement Agreement stems from a class-action lawsuit accusing the organization of conspiring to inflate commissions for real estate agents, essentially creating an artificially high cost of doing business for home buyers and sellers. The crux of the matter was that, traditionally, real estate agents representing buyers were compensated through commissions paid by the seller, typically through the MLS (Multiple Listing Service). The lawsuit argued this practice was anti-competitive and increased costs for consumers.
As part of the settlement, NAR has maintained a denial of any wrongdoing but acknowledged that settling would help avoid further litigation and preserve consumer choice in real estate services. The total payout to resolve the lawsuit is a hefty $418 million over four years, but most of the financial impact is expected to be absorbed by large real estate firms, not individual consumers. Still, this settlement has far-reaching implications for everyone involved in the buying and selling process—particularly those of us in the relocation industry.
How Will It Impact Relocation Managers?
For those of us working in global mobility and relocation, this agreement signals one of the most significant shifts in how real estate transactions are structured. Here are the main changes that relocation managers need to be aware of:
- Realtor Compensation Will No Longer Be Pre-Determined by Sellers
Perhaps the most profound change is that sellers will no longer be responsible for offering a commission to the buyer’s agent. In the past, commissions paid to buyer agents were a standard part of the listing agreement, visible through the MLS. After the settlement, buyers will need to negotiate and secure their own representation, and the commission terms will need to be explicitly agreed upon before viewing any property.
As a relocation manager, this shift could impact your work in a few key ways:
- Increased Negotiation Complexity: Relocation clients may find themselves more involved in negotiations with agents. Since buyer agents will now negotiate their commissions directly with the buyer, it may require more upfront discussion and clarity on costs, potentially complicating the overall relocation process.
- More Agency Options: Buyers might feel more empowered to choose an agent who aligns with their needs, but this could also lead to confusion or a longer decision-making process, especially if the buyer is unfamiliar with the market or the relocation process.
This change is expected to impact commission structures across the board, and it’s important for relocation professionals to keep an eye on how these shifts play out in specific regions or markets.
2. New "Concessions" Field on MLS Listings
Another update from the settlement is the introduction of a new “Concessions” field on MLS listings. This field will indicate whether the seller is willing to offer financial assistance, like closing costs, to the buyer. While this might seem like a minor addition, it has the potential to drastically change how homes are marketed and negotiated.
For relocation managers, this could be a helpful tool in the relocation process. Offering concessions, especially in a competitive market, could make a property more attractive to relocating employees who may have limited budget flexibility. However, it also means we’ll need to stay on top of this new field, ensuring that our clients are well-informed about any available incentives when selecting homes.
3. Written Agreements for Buyer’s Agent Compensation
With the new settlement, buyers will now be required to have a written agreement with their real estate agent regarding commission rates before viewing homes. This represents a fundamental shift in how the process will unfold. While the idea is to make buyer-agent compensation more transparent, it also adds an additional layer of complexity for relocation clients who are typically moving on tight timelines and often need to streamline processes.
For us as relocation managers, this means that it’s going to be even more crucial to ensure that buyers are represented by competent, trustworthy agents who understand the relocation process. This might also make it harder to find agents who are familiar with global mobility needs or who are willing to accommodate the intricacies of a corporate relocation.
4. No More MLS Transparency on Commission Rates
In the past, MLS listings often provided transparency regarding the buyer’s agent commission. This made it easier for relocation managers to understand the structure of real estate transactions and plan accordingly. With this transparency now gone, buyers and relocation managers will need to take extra care to inquire about the compensation structure upfront.
This change means more behind-the-scenes legwork on our part. We'll need to work closely with buyers to ensure they understand what they are negotiating for, and coordinate more closely with real estate agents to ensure that no one is caught off guard by the commission structure. The potential lack of transparency could create confusion or delays for our clients, especially if the homebuying process becomes more complicated than expected.
What Hasn’t Changed?
Despite all of the media attention and industry chatter, many aspects of the relocation and real estate industries remain unchanged by the settlement:
- Buyer’s Agency Representation is Still Necessary: Buyers will still need to secure representation. The only difference is that they now have to negotiate compensation directly with the agent.
- Relocation Managers Still Play a Key Role: As relocation managers, we continue to be central to our clients' moving experience, ensuring they have the support they need to navigate home buying, moving, and settling into a new city.
- Market Forces Still Impact Home Prices: Real estate trends, interest rates, and regional market dynamics continue to play the dominant role in shaping how relocation programs unfold.
Conclusion
While the NAR Settlement Agreement certainly introduces changes to the real estate landscape, its impact on the relocation industry will depend largely on how it is implemented across markets. For relocation managers, this shift signals a need for more proactive communication with buyers and real estate agents, clearer documentation of compensation agreements, and a deeper understanding of how MLS listings will evolve. Ultimately, while the industry may be in flux, the core role of relocation professionals in guiding clients through the complexities of moving remains unchanged. It’s just a matter of adapting to the evolving environment and ensuring that we continue to meet the unique needs of our clients.
Still have questions? If you are looking for an experienced relocation specialist, get in touch with us at Armbruster Moving & Storage today. Our team of Certified Employee Relocation specialists is highly skilled and qualified to make your employee relocation programs run smoothly and effectively.