How Do the 2024 Real Estate Commission Changes Affect Property Transactions?

The real estate industry experienced transformative changes in August 2024 when the National Association of Realtors implemented new rules governing broker compensation following a $418 million settlement agreement. These changes fundamentally altered how home buyers and sellers negotiate with their agents, eliminated longstanding practices around commission disclosure, and introduced new requirements for buyer representation agreements. Understanding these developments is essential for anyone planning to buy or sell property in 2025 and beyond.

What Changed About Real Estate Commissions?

Prior to August 2024, home sellers traditionally paid commissions for both their own agent and the buyer's agent. The buyer agent's compensation was published directly in Multiple Listing Service property listings, allowing potential buyers to see this information when viewing homes.

How Does the New System Work?

Under the new rules, offers of compensation for buyer agents can no longer appear on MLS listings. While sellers may still choose to offer compensation to buyer agents, this information must be communicated outside the MLS system. This change aims to increase transparency and give buyers more control over their representation costs.

Home buyers must now sign formal written agreements with their agents before touring any properties. These agreements must clearly specify the services to be provided, the terms of representation, and the compensation arrangement. If the seller does not agree to pay the buyer agent's commission, the buyer becomes responsible for covering these costs.

Why Were These Changes Made?

The settlement resolved litigation brought by home sellers who alleged that the previous commission structure artificially inflated real estate transaction costs. Plaintiffs argued that the system created anticompetitive practices by standardizing commission rates and limiting negotiation. The new framework encourages more direct negotiation between parties and potentially introduces greater price variation in agent services.

What Do Property Buyers Need to Know in 2025?

Navigating property purchases under the new rules requires buyers to approach agent relationships more deliberately than in the past.

Is It Required to Sign a Buyer Agreement Before Viewing Homes?

Yes. The new MLS rules mandate that buyers must have an executed buyer representation agreement before an agent can show them properties. This requirement applies to all residential transactions involving Realtor members. Some buyers find this change beneficial because it clarifies expectations and costs upfront. Others feel it adds complexity to the early stages of house hunting.

How Can Buyers Negotiate Agent Compensation?

The new environment creates opportunities for buyers to negotiate agent fees more actively. Some agents now offer flat-fee arrangements instead of percentage-based commissions. Others provide tiered service packages at different price points. Buyers should interview multiple agents to understand their options and find arrangements that fit their needs and budgets.

The Harvard Law Library provides comprehensive legal research resources for individuals seeking to understand their rights in real estate transactions.

What Should Property Sellers Consider?

Sellers face their own strategic decisions under the new commission framework.

Should Sellers Still Offer to Pay Buyer Agent Commissions?

Many real estate professionals advise sellers to continue offering buyer agent compensation because it makes properties more attractive to buyers who might otherwise face out-of-pocket costs. However, sellers now have greater flexibility to negotiate these amounts or decline to offer compensation entirely.

Properties where sellers decline to pay buyer agent fees may appeal less to buyers working with agents under traditional percentage arrangements. Sellers must weigh potential savings against the risk of reduced buyer interest and longer time on market.

How Do These Changes Affect Home Pricing?

Real estate economists continue debating whether the new commission structures will meaningfully affect home prices. Proponents of the changes argue that increased competition among agents will reduce transaction costs, potentially lowering overall housing expenses. Skeptics counter that sellers who stop paying buyer agent commissions will simply pocket the savings rather than reducing prices.

What Are the Environmental and Sustainability Trends in Real Estate Law?

Beyond commission changes, property law increasingly addresses environmental considerations that affect transactions and property values.

How Does Local Law 97 Affect Commercial Real Estate?

New York City's Local Law 97 imposes carbon emission limits on buildings larger than 25,000 square feet, with penalties for non-compliance. Building owners must report emissions every five years, with allowable thresholds decreasing at each compliance period. This regulation significantly impacts commercial real estate valuations and transaction planning in the New York market.

Similar regulations are emerging in other major cities as governments pursue climate goals. Property investors and owners must factor potential compliance costs and liability exposure into their planning.

What Is Green Real Estate?

The green real estate movement emphasizes sustainability and energy efficiency in property development and management. Properties featuring energy-efficient systems, sustainable building materials, and environmentally conscious design increasingly command premium prices and attract environmentally conscious tenants.

Investors evaluating commercial properties now routinely conduct environmental, social, and governance assessments as part of their due diligence. ESG compliance has become a significant factor in property valuations and financing availability.

What Legal Considerations Apply to Cross-Border Real Estate Investments?

Globalization has increased cross-border real estate transactions, introducing additional legal complexity for investors.

What Challenges Do International Buyers Face?

Foreign investors must navigate not only domestic real estate laws but also foreign investment regulations, tax treaties, and currency considerations. Different countries impose varying restrictions on foreign property ownership, and compliance requirements can be substantial.

Legal professionals handling cross-border transactions need expertise in multiple jurisdictions and understanding of how different legal systems interact. Proper structuring of international real estate investments can minimize tax exposure and regulatory risk.

How Do Sanctions Affect International Real Estate Transactions?

Economic sanctions increasingly affect international property transactions. Buyers and sellers must conduct enhanced due diligence to ensure that counterparties are not subject to sanctions restrictions. Financial institutions involved in real estate financing have implemented rigorous compliance programs to avoid sanctions violations.

What Are the Technology Trends Affecting Property Law?

Technology continues transforming how real estate transactions occur and how property records are maintained.

How Is PropTech Changing Real Estate Practice?

Property technology companies have streamlined many aspects of real estate transactions, from property searches and virtual tours to document management and closing procedures. Digital platforms enable more efficient communication between parties and reduce some transaction costs.

What Role Does Data Play in Modern Real Estate?

Access to comprehensive data has become essential for informed real estate decision-making. Attorneys, investors, and agents increasingly rely on sophisticated databases to analyze market trends, assess property values, and perform due diligence. Organizing and managing these datasets requires significant resources but provides competitive advantages.

What About Landlord-Tenant Relationships?

Recent legal developments have significantly affected the balance of rights between property owners and tenants.

What Are Good Cause Eviction Laws?

Good cause eviction laws, enacted in various jurisdictions including New York, restrict landlords' ability to remove tenants without demonstrating legitimate grounds. Under these laws, landlords must show good cause such as non-payment of rent, nuisance behavior, or illegal use of premises before seeking eviction. The laws also typically impose caps on rent increases and require adherence to specific notice procedures.

These regulations represent a significant shift in landlord-tenant dynamics, providing tenants with enhanced protections while imposing new compliance obligations on property owners.

Adapting to the Evolving Property Law Landscape

The real estate industry continues undergoing significant legal changes that affect how properties are bought, sold, managed, and developed. The 2024 commission restructuring represents the most visible recent change, but environmental regulations, technology adoption, and tenant protection laws are equally transformative. Parties engaged in property transactions should work with knowledgeable professionals who understand these evolving requirements and can help navigate the increasingly complex regulatory environment. Staying informed about legal developments enables buyers, sellers, investors, and property managers to make sound decisions and protect their interests in this dynamic market.