Understanding the Impact of the NAR Settlement on Washington’s Real Estate Market

understanding the nar settlement in washington state

Imagine stepping into the real estate market with enhanced clarity and options regarding what you pay or earn from a transaction. That’s the vision behind the result of the recent National Association of Realtors or NAR settlement.

This settlement, resulting from a class-action lawsuit, aims to further improve how broker fees are discussed and understood in real estate transactions across the United States.

“Over 4.35 million existing homes were sold in the United States in 2023, according to the National Association of Realtors. With such a high volume of transactions, even small changes in real estate practices can have monumental effects on thousands of Americans’ financial futures.”

Why does this matter to you? Whether you’re buying your first home or selling one you’ve cherished for years, the settlement seeks to reinforce the already existing practice where compensation has always been negotiable. It highlights the importance of open communication, ensuring that all buyers and sellers are as informed as possible about their options. This initiative is particularly timely, as while most agents operate with transparency, there can be instances where the details are not as clear to every consumer.

The changes prompted by this settlement are designed to encourage a market that celebrates clear, upfront conversations, leading to better-informed decisions and fostering a trustworthy environment.

This settlement isn’t just about adhering to legal standards—it’s a significant step towards enhancing the mutual understanding and trust that buyers and sellers place in their real estate professionals, reinforcing confidence in the fairness and transparency of the home buying and selling process.

What is the NAR Settlement?

The NAR settlement arises from a series of class-action lawsuits challenging the traditional practices surrounding how real estate broker compensations are structured in the United States. These lawsuits argued that certain rules established by the National Association of Realtors (NAR) potentially restricted competition and lacked transparency, which could impact both home buyers and sellers by limiting their understanding of and control over real estate compensations.

Here are the key elements of the settlement:

  1. Enhanced Transparency: One of the central aims of the settlement is to increase transparency in real estate transactions. It encourages clearer communication about the services provided by real estate agents and the costs associated with those services. This change is designed to give consumers better information, enabling them to make more informed decisions.
  2. Negotiation of Compensations: The settlement reaffirms that commissions are negotiable and emphasizes this point to ensure it is clearly understood by all parties involved in a real estate transaction. This is aimed at dispelling any misconceptions that compensations are fixed and promoting a more competitive market environment where consumers can negotiate terms that best suit their needs.
  3. Changes to MLS Practices: Traditionally, Multiple Listing Services (MLS) displayed compensation offers to buyer brokers, which was a practice some argued could influence decisions in ways not always aligned with the buyer’s best interests. Under the settlement, this practice will be restricted to prevent any perceived conflicts of interest and encourage agents to focus more on client needs rather than compensation structures.
  4. Legal and Financial Resolutions: To resolve the lawsuits, NAR agreed to a substantial financial settlement. This includes the payment of $418 million over several years, intended to cover claims and fund efforts to ensure compliance with the new guidelines. Additionally, this settlement relieves over one million NAR members and various brokerages from ongoing liability related to these claims.
  5. Future Implications: The settlement also sets the stage for future practices in real estate transactions. By modifying how compensations and agent services are discussed and agreed upon, it aims to foster a more dynamic and client-focused industry. This could lead to more personalized service offerings as agents and brokerages innovate to meet client needs more effectively.

National vs. Local Implications

The NAR settlement introduces significant changes to improve transparency and fairness in real estate transactions nationwide. However, the extent of their impact can vary significantly by region.

In Washington State, thanks to forward-thinking regulations and the pioneering practices of the Northwest Multiple Listing Service (NWMLS), many of these changes are already in place, which means the adjustments required may be less dramatic compared to other states.

How Washington Stands Out

1. Decoupling of Compensation

National Change: The NAR settlement requires a shift forcing listing and buyer brokers to negotiate their fees independently, ending the practice of linked compensation which was seen to potentially stifle competition and transparency.

Local Practice: In Washington, NWMLS had already made significant strides toward this change in October 2019 by allowing brokers to publish the buyer’s agent commission independently of the seller’s. This rule change essentially pre-empted the settlement’s requirements, providing a model of how decoupling can enhance broker autonomy and consumer choice.

2. Mandatory Buyer Contracts

National Change: A key element of the settlement is the requirement for buyer brokers to secure a written representation agreement defining the scope and terms of their services before conducting real estate services (showings). This ensures buyers are well-informed about what they are paying for.

Local Implementation: Washington State took proactive steps by updating its agency laws effective January 2024, which align closely with the NAR settlement. These laws mandate that real estate brokers representing buyers must have a signed Buyer Representation Agreement in place before providing typical buyer’s agent services, including home showings. This legislation not only aligns with but also reinforces the settlement’s emphasis on informed consent and transparency in buyer representation.

3. Restriction on MLS Display of Buyer Compensation

National Change: The settlement prohibits NAR-owned MLSs from displaying buyer broker compensation, aiming to encourage direct negotiation between clients and brokers, thus enhancing privacy and flexibility.

Local Context: NWMLS, as a privately owned entity not governed by NAR, is not directly impacted by this aspect of the settlement. Nevertheless, the trend toward greater discretion in compensation disclosure might influence NWMLS practices over time, mirroring broader industry shifts toward enhanced privacy in compensation discussions.

Broader Implications for Washington

Washington’s early adoption of practices similar to those mandated by the NAR settlement positions the state as a leader in ethical real estate practices. This not only minimizes the transition impact for local professionals and consumers but also sets a benchmark for how proactive regulatory environments can benefit market participants. It underscores the state’s commitment to maintaining high standards and fostering an environment where real estate transactions are conducted with the utmost fairness and transparency.

By exploring these national changes and local implementations, it becomes clear that while the NAR settlement will adjust the broader U.S. real estate landscape, Washington State’s existing practices will make these transitions smoother and has served as a model for other states aiming to enhance their real estate practices.

How the NAR Settlement Could Affect Buyers and Sellers in Washington State

As of now, the proposed National Association of Realtors (NAR) settlement has not yet been finalized and, therefore, has no immediate effect on buyers and sellers in Washington State. The earliest any changes could take effect would be July 2024, and that timeline could extend further if there are objections or delays in the settlement’s approval process.

Here’s what buyers and sellers in Washington State need to know:

Current Status

No Immediate Changes: For now, real estate transactions in Washington State continue under existing laws and regulations. The practices around transparency, compensation negotiation, and the use of written buyer representation agreements remain as they are currently governed by state laws and the Northwest Multiple Listing Service (NWMLS) rules.

Potential Future Implications

Uncertain Changes: The specifics of how the NAR settlement might alter real estate practices in Washington are not yet clear. The settlement proposes changes at a national level which primarily aim to enhance transparency and flexibility in real estate transactions. However, since Washington’s NWMLS already incorporates many progressive practices, the impact might be less pronounced here compared to other states.

Monitoring Developments: Buyers, sellers, and real estate professionals should stay informed about the progress of the settlement. Local real estate associations and legal experts will likely provide updates and guidance on what to expect as the settlement moves towards potential finalization.

Preparation for Future Adjustments: Although no changes are imminent, being aware of the proposed settlement terms could help people in Washington prepare for any future adjustments. Understanding the settlement’s emphasis on explicit agreements and transparent negotiations could be beneficial, should these elements become more standardized.

For now, buyers and sellers in Washington State can continue their real estate activities as usual, with no immediate changes from the NAR settlement affecting their transactions.

However, staying informed about this national development is crucial as it has the potential to influence local practices down the line, depending on how the settlement is finalized and implemented. Real estate professionals and clients alike should keep an eye on updates from NAR and local real estate bodies to ensure they remain up-to-date on any changes that could impact the market in Washington State.

Myth vs. Fact

As the NAR settlement discussions continue, it’s important to address and clarify prevalent myths that may cause confusion among consumers and real estate professionals. Here’s a balanced view of some common misconceptions compared to the factual realities of the settlement:

  • Myth: The settlement will force real estate brokers to reduce their compensation.
  • Fact: The settlement does not impose any standard or limit on what Realtors may charge. Fees for services have always been negotiable, and the settlement reinforces the importance of transparency and negotiation between clients and agents.

  • Myth: Sellers are no longer required to pay compensation for agents bringing buyers.
  • Fact: While the settlement removes the requirement from MLS to display mandatory compensation offers, it does not prohibit sellers from offering compensation to buyer’s agents. This practice remains a negotiable part of the listing agreement and can be used as a strategy to attract buyers.

  • Myth: Home prices will decrease as a result of the NAR settlement.
  • Fact: Home prices are primarily determined by market forces such as supply and demand, not by changes in real estate agent commissions or MLS policies. While the settlement may reduce some transaction costs, it is unlikely to have a direct impact on overall home prices. The cost of buying a home is influenced by a variety of factors including economic conditions, interest rates, and regional housing market trends.

  • Myth: The NAR settlement will make homeownership more affordable.
  • Fact: The settlement aims to increase transparency and flexibility in real estate transactions, which could help some buyers and sellers negotiate better terms. However, making homeownership more affordable involves a broader range of factors, including housing policies, lending practices, and economic conditions. The settlement itself is not a direct tool for affecting overall affordability.

  • Myth: The settlement prohibits any discussion of agent compensation with clients.
  • Fact: The settlement does not prohibit discussions regarding compensation. Instead, it promotes clearer and more direct negotiations between real estate professionals and their clients, aiming to enhance transparency and mutual understanding in the agreement terms.

  • Myth: All real estate transactions will now be the same across the U.S. due to the settlement.
  • Fact: The settlement provides guidelines intended to foster a more transparent and fair real estate market nationally. However, local regulations and market conditions will still influence how real estate transactions are conducted in different regions.

  • Myth: Real estate agents are greedy or overpaid.
  • Fact: The perception that real estate agents are overpaid is not supported by the broader context of their work and earnings. The average annual salary for real estate agents in the United States is approximately $49,040, with many earning less, particularly in their early years or in slower markets. Agents perform a diverse and demanding set of tasks for each transaction, which can include market analysis, property listing, marketing, conducting showings, negotiation, handling legal compliance, managing inspections and appraisals, and ensuring a smooth closing process. Moreover, agents often work irregular hours and are only compensated via commission after a transaction closes—if it closes. This pay structure means that much of their work could potentially go uncompensated if a deal does not finalize.


1. What is the NAR Settlement? The National Association of Realtors (NAR) settlement is a response to class-action lawsuits alleging that certain NAR rules regarding real estate broker commissions were anti-competitive. The settlement proposes changes to enhance transparency and fairness in real estate transactions, including decoupling compensation, requiring clearer contracts, and changing how compensation is displayed on MLS.

2. When will the NAR Settlement take effect? If approved, the changes outlined in the NAR settlement will not take effect until at least July 2024. This timeline could extend if there are objections or delays in the legal process.

3. How will the settlement affect real estate commissions? The settlement does not set commission rates; instead, it encourages transparency and negotiation directly between clients and agents. This could lead to more varied commission structures based on the quality of service and market conditions.

4. Can sellers still offer compensation to buyer’s agents? Yes, sellers can still offer compensation to buyer’s agents. The settlement removes the requirement from MLS to display this compensation but does not prohibit the practice.

5. What does the settlement mean for buyers? Buyers may benefit from clearer information regarding agent services and fees due to mandatory written agreements. This could enhance their negotiating power and help them make more informed decisions.

Expert Insights

Legal Perspective: According to real estate legal experts, the settlement’s focus on increasing transparency is crucial for protecting consumer rights and promoting fair competition within the industry.

Industry View: Real estate professionals anticipate that the changes might initially require adjustments but ultimately will lead to a more client-centered market. Agents who adapt by focusing on service quality and clear communication are likely to thrive.

Resource Links

For those seeking more detailed information about the NAR settlement and its implications, the following resources are recommended:

How the NAR Settlement May Affect the Real Estate Market in the Future

Immediate Changes and Adaptations

Once the NAR settlement kicks in, we’ll likely see a push for more transparency in how real estate transactions are done here in Washington. Agents might start to get really clear about what they’re charging and why, which is great for buyers and sellers who want to understand exactly what they’re paying for.

In the short term, though, everyone’s going to have to adjust. Real estate agents might need to change how they handle their listings and discussions about fees. You might see some agents offering different types of commission structures, which could shake things up a bit.

Looking Down the Road

Over the next few years, as everyone gets used to the new ways, we could see some significant shifts. For one, agents might need to prove their worth a bit more, showing that they’re really earning their fees by providing top-notch service or unique benefits.

However, there’s a potential downside to consider, especially for sellers and buyers in Washington. If more listing agents start offering a single, lower rate of compensation across the board, it might encourage something called dual agency—where one agent represents both the buyer and the seller. This could limit the pool of buyers for each home, potentially reducing competition and the final selling price, which isn’t great for sellers looking to maximize their profits.

Challenges for Buyers

This change could also make things tricky for buyers. Say a seller’s offering less compensation than what a buyer’s agent usually charges. That could make a buyer’s offer less competitive unless they’re willing to cover the difference, which can be a tough pill to swallow, especially if you’re scraping together every dime for a down payment.

This scenario could be particularly tough on first-time and low-income buyers, who are already facing challenges in finding affordable housing. If buyers start needing to pay their agent’s fees out of pocket, that’s an extra hurdle in an already tough market.

Tips for Navigating the New Landscape

For those navigating the market:

  • For Sellers: Think carefully about how you’re setting agent compensations. Keeping it competitive can help attract a wide pool of buyers.
  • For Buyers: Be aware of potential extra costs. Talk with your agent about all the different possibilities in light of these new rules.
  • For Agents: Transparency is key. Make sure you’re clear about what you’re offering and why it’s worth the price.

And for everyone, staying informed is crucial. Keep an eye on how these changes are playing out in the market and be ready to adapt. It might take a little time to settle, but being prepared can help you make the most of the new real estate landscape in Washington.

Wrapping It Up

As we’ve navigated through the potential changes and impacts of the NAR settlement, it’s clear that while some things might shift in the real estate landscape here in Washington, much of what we’re used to will stay the same. Thanks to already having progressive practices in place, we might not feel the waves of change as intensely as other states.

However, that doesn’t mean we should just sit back and relax. Whether you’re buying, selling, or working in real estate, staying informed and ready to adapt will be key. For sellers, thinking carefully about how to attract the broadest pool of buyers might mean rethinking compensation offers. Buyers, especially those stepping into the market for the first time or working within a tight budget, should be aware of potential new costs and discuss options openly with their agents.

And for real estate professionals? Emphasizing transparency and value will be more important than ever. The way you communicate your worth and negotiate terms could really set you apart in a market that’s becoming even more focused on fairness and clarity.

Ultimately, the NAR settlement is about pushing towards a more transparent and fair market. For all of us here in Washington, it’s a reminder of the importance of staying informed and engaged in our real estate transactions. Let’s use these changes as an opportunity to ensure that buying or selling a home is as clear and straightforward as possible.

Here’s to navigating these changes together and making the most of our real estate market’s new era!

*Please note that the information provided in this blog post is for general informational purposes only and should not be considered legal advice. While I strive to provide accurate and up-to-date information, the details of the NAR settlement and its implications are subject to change as new regulations are finalized. I am not an attorney nor do I hold any legal qualifications. For specific legal advice regarding the NAR settlement or any real estate transactions, please consult a licensed attorney who specializes in real estate law in your area.

Share this post!

About the Author

Jason Fox

Facebook Twitter

"The best way to find yourself is to lose yourself in the service of others." ~ Gandhi [ Recognized as a top 3.5% agent in the United States. ] [ Jason Fox was born in Everett, WA currently lives in the Meadowdale neighborhood in Lynnwood and has lived in different parts of the Puget Sound area in between. He has been in the real estate industry for 20 years in many different capacities. From General Manager of a real estate CRM engagement business, Founder of 2 real estate marketing agencies, nationally recognized blogger with the Jason Fox Real Estate Marketing Blog, Marketing Manager for a top title and escrow service. ] [ Jason is now an award winning residential real estate sales agent, Co-Founder of The Madrona Group, Co-Owner of John L. Scott Ballard and John L. Scott Westwood. ] [ Active in the community, Jason is a proud part of the Autism Speaks effort to raise awareness for autism. This project is very dear to him as he has an 8 year old son, Hudson, diagnosed ASD. Jason is also involved with Neighbor's in Need, the Forgotten Children's Fund, WELD Seattle and the Union Gospel Mission assisting the homeless population in the greater Seattle area. ] [ "My passion is being able to give back to the community that has given so much to me." ] [ When he is not assisting his friends and family with the services of home ownership he loves being a dad to his 4 children, Carter, Rowen, Tyler and Hudson and being a husband to his amazing wife Sarah. Hiking, working around the house, cheering for the Seahawk's, Mariners and Huskies and golfing. ]

Leave a Reply

Your email address will not be published. Required fields are marked *