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Last Friday, the National Association of Realtors (NAR) announced an agreement that would end litigation regarding home sellers’ claims on broker commissions. Under the terms of the agreement, NAR would pay $418 million over approximately four years to resolve the claims against the group.

The proposed agreement to end billion-dollar litigation against the NAR would lead to a change in how brokers are paid, and one leading local professional is concerned it could mean trouble for struggling homebuyers who may be on the hook for paying their own real estate agents.

“Our primary concern is the impact the verdict and settlement could have on buyers who are already struggling with the financial challenges of purchasing property — especially first-time home buyers and those in disadvantaged areas,” said Desrie van Putten, president of Guarantee Real Estate in Fresno.

The agreement ends claims from across the U.S. brought by home seller’s against NAR claiming it conspired to inflate home sale commissions under the current system where sellers offer commission to a buyer’s real estate agent from the start of a potential transaction.

The biggest shift is how buyers and sellers perform transactions via the Multiple Listing Service (MLS) — a market’s database of available properties.

NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model rule, where the seller’s agent splits the commission with the buyer’s agent. The rule was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. 

The result is that sellers are no longer obligated via the MLS system to pay a buyer’s brokerage fees. Homebuyers could potentially negotiate for lower-priced representation — but they could also be on the hook for those costs.

That doesn’t bode well for people new to the market, according to one local real estate leader.

J.P. Shamshoian, CEO and owner of Realty Concepts, said in an Instagram video that if a buyer’s agent is a member of the MLS, that agent must obtain a signed agreement with the buyer outlining which services the agent will provide and how much they will be compensated. 

“Unless you can find a quality professional who is willing to work for free, it’s likely that your agent is still going to get paid,” said Shamshoian. “They’re just going to get paid in a way that is a lot worse for buyers or sellers and will cause there to be less transparency in the market.”

Van Putten said it is important to note that the settlement announced by NAR last Friday is still subject to preliminary approval by the court, a subsequent objection period by class members and potential interest by the Department of Justice. 

Some in the industry believe this could spell the end of the MLS system and disruption in the industry. But NAR contends this was in the best interest of protecting members from legal liability.

See our Friday paper’s cover story for more information.