One Year Later, What has REALLY changed about Real Estate Commissions in ENC

In 2024, the National Association of REALTORS® (NAR) agreed to a $418 million settlement in lawsuits that challenged long-standing policies governing real estate commission practices. Sellers were rejoicing the end of seller paid commissions but is that really what happened in Eastern NC and around the state?  Let’s take a look at the impact today.

First and foremost, North Carolina has always had negotiable commissions. The lawsuit changed the WHEN of buyer agency agreements but again, NC is one of eleven states who already had written agency agreements. The impact is increased commission costs to the buyers who sign advanced commission agreements with agents and are responsible for the difference between the seller contribution and the agreed amount.

This can impact affordability for buyers who are already under the pressures of increased down payments and closing costs as well as insurance rates and raised taxes.

The seller impact in our state has been minimal for overall compensation since North Carolina has always had a negotiable commission structure with a buyer agency component. A portion of this agency agreement includes compensation disclosure to the buyer including any bonuses a seller may be offering. The core impact is that the seller can no longer offer a buyer agent commission through a central source of communication (commonly the MLS). Instead, compensation for buyer agents is negotiated directly between the buyer and their agent. This change means sellers might face a more complex negotiation process and buyers will likely need to pay their agents directly.

For our builder members, you no longer attract potential buyer’s agents through offers of compensation through the MLS and must rely on listing agents to communicate compensation directly with buyer’s agents. This will have a potential impact on buyers who may choose not to look at homes where the compensation they owe is not covered by seller contribution. Both buyers and sellers agents will need to negotiate and agree on compensation before showings begin, which adds a layer of complexity to the transaction. If you choose to market your homes without an agent but are offering a buyer’s agency component, you will likely need a written policy for commission compensation. Builders resistant to commission structure in the past may need to consider adding it to marketing costs for the build budget. This allows the buyer to receive representation from a licensed agent and the fee is built into their mortgage structure leaving no surprises.

Speaking of mortgage structure, the mortgage industry has also been impacted by the buyer paying the difference between agent compensation and seller contribution. It adds to the closing costs the buyer pays. Lenders have begun to request written documentation, including agency agreements and commission compensation agreements. Only then does the lender have a true picture of additional fees that impact the buyer. For more information about this topic, reach out to your REALTOR® partner or feel free to contact the Coastal Plains Association of REALTORS® (CPAR) where the IBXHBA are associate members.

 

Erin Pierce

Erin Pierce Homes