What the NAR settlement changed in brokerage practice.

The settlement changed how compensation is agreed, disclosed and named. Here is the operating change set for a brokerage back office.

The dates, stated plainly

The National Association of Realtors announced the settlement agreement on March 15, 2024. The court granted preliminary approval on April 23, 2024. The practice changes took effect on August 17, 2024, and final court approval followed on November 26, 2024. The settlement figure was 418 million dollars payable over roughly four years, but the money is not what changed daily operations. The two practice changes did.

Change one: compensation leaves the MLS

As of August 17, 2024, an offer of compensation to a buyer broker cannot be published on a multiple listing service. MLSs were required to remove the fields rather than make them optional, and the prohibition covers remarks, attachments and any other route by which an offer could be communicated through the MLS system.

Change two: written buyer agreements before touring

An MLS participant working with a buyer must enter into a written agreement with that buyer before the buyer tours a home. The agreement must state the compensation the broker will receive in an objective and specific amount, and the broker cannot receive more than that amount from any source. Both requirements apply to MLS participants, which in practice covers most brokerages.

What did not change

Cooperative compensation itself remains legal. Sellers may still agree to pay buyer brokers. Commission rates remain negotiable, as they always were. Nothing in the settlement set a rate, capped a rate, or required any particular structure. The change is procedural: where offers may be made, and what has to be agreed with the buyer first.

Why the back office feels it most

The negotiation happens in the field, but the record of it lives in the file. Before August 2024 a buyer-side file needed a purchase contract and a commission figure. Now it needs a dated agreement, a compensation amount, a source, and a chain showing the amount collected never exceeded the amount agreed. That is four new things to check on every buyer-side transaction.

The agreement is the document the whole buyer-side file now hangs from, and its date is as important as its terms.

Before touring, including the first showing

The requirement attaches to touring a home, which includes an in-person visit and, under NAR's guidance, a live virtual tour where the agent walks the buyer through. It does not attach to answering questions, sending listings, or an open house the buyer attends unaccompanied. The practical rule most brokerages adopted is simple: signed before the agent unlocks a door.

What the agreement must contain

A specific and objective compensation amount, expressed as a dollar figure, a percentage, or a stated formula. Phrases like whatever the seller offers, or a range, do not satisfy it. The agreement should also state its term and the geographic or property scope it covers, since an expired or out-of-scope agreement is functionally the same as no agreement at the moment of a showing.

The ceiling rule

The broker cannot receive more than the agreement states, from any source. If the agreement says two and a half percent and the seller offers three, the brokerage collects two and a half. Collecting the difference requires an amendment signed by the buyer before closing, and an amendment signed after the fact does not repair a disbursement that already exceeded the ceiling.

State law sits on top

Several states already required written buyer agreements before August 2024 and some have since added their own statutory requirements with different content rules or timing. Where state law is stricter, state law governs. Where it is silent, the settlement terms govern for MLS participants. The guide on what belongs in a buyer broker agreement covers the document itself in more detail.

Version control matters now

Buyer agreements get amended more than they used to, because the compensation figure has to move whenever the deal structure changes. A file with three versions of the agreement and no clear indication of which was operative at closing is the most common buyer-side finding in post-settlement audits. Keep the chain dated and keep the latest version identifiable.

The offer still exists. It just travels by a different route.

What may not be published

No compensation field, no compensation figure in public or private remarks, no attachment stating an offer, and no workaround field repurposed to carry the number. MLSs enforce this actively because their participation in the settlement depends on it, and listings carrying compensation language get pulled.

Where the offer is made instead

Three routes are common. The listing agreement authorizes the seller to pay a buyer broker and the listing brokerage communicates that willingness off-MLS, often through its own website or by phone. The purchase contract carries a compensation term negotiated with the offer. Or the two brokerages sign a separate compensation agreement before the offer is written. All three are permitted; the file needs whichever one applies.

Concessions are a different thing

A seller concession that is not conditioned on the buyer using a broker is generally permitted, and some MLSs display concessions in a dedicated field. A concession is a credit to the buyer, and the buyer may then choose to apply part of it to their broker's compensation. That is a buyer-paid disbursement funded by a credit, and it should be recorded that way rather than as seller-paid compensation.

The practical effect on timing

Compensation used to be known before the showing because it was on the listing. Now it is often unknown until the offer is negotiated, which means the buyer agreement is signed before anyone knows who will fund the amount. That is why the source field on the disbursement authorization matters: the amount was fixed early, the funding was decided late, and the file has to show both.

Every buyer-side transaction now has a source answer, and it is one of three: seller paid, buyer paid, or mixed.

Why the source has to be a field

A brokerage that records only a dollar amount cannot answer the question an auditor actually asks, which is whether the buyer was charged what the agreement said. Two transactions at the same amount, one seller funded and one buyer funded, produce entirely different settlement statements and different exposure. Store the source alongside the amount rather than inferring it from the closing documents later.

Mixed is the case that breaks systems

A seller pays two percent, the buyer agreement says two and a half, and the buyer funds the remaining half percent at closing. That is two disbursement lines to the same brokerage, from two different funding sources, that together must not exceed the agreement. Accounting systems built around a single commission figure per side handle this badly, and it is worth checking how yours behaves before an audit does.

Reconcile against the ceiling every time

The check is arithmetic: total received by the buyer brokerage compared against the amount in the operative buyer agreement. Software that supports post-settlement compensation recording can run that comparison on every file automatically, which turns a manual review into an exception report.

Referrals and bonuses sit outside

A referral fee paid to another brokerage and a bonus offered by a seller are separate arrangements with their own paperwork. A bonus cannot be used to route around the ceiling in the buyer agreement, and a referral fee reduces what the brokerage keeps without changing what it received. Both belong on the file as separate documents.

The three-letter form stayed. The word behind the first letter changed.

Commission becomes Compensation

Commission Disbursement Authorization has become Compensation Disbursement Authorization across most brokerage and title workflows. The rename is not cosmetic in intent: compensation is the broader term that covers a buyer-paid amount, a seller-paid amount, and a mixed arrangement, while commission carried the assumption of a split from a single listing-side figure.

Field changes on the form

Post-settlement forms typically add a compensation source field with the three options, a reference to the buyer agreement date, and a statement of the agreed amount for comparison against the disbursed amount. Some add a line confirming the disbursed amount does not exceed the agreed amount, which is the closing check reduced to a signature.

What title and escrow expect

Escrow holders in most markets now expect the source to be identified because it changes which side of the settlement statement the line appears on. A CDA that gives a figure and no source generates a phone call, and the phone call happens on closing day. Filling the field in advance removes a predictable delay.

Update the template once

Brokerages that still send the old form usually do so because the template lives in one person's documents folder. Move it into the transaction system, update the label and the fields once, and the entire office produces the current version without anyone remembering to.

The audit is a sequence test before it is a document test. The dates decide whether the documents matter.

The sequence test

Compare the buyer agreement date against the first showing date. If the showing came first, the file fails and no later document repairs it, because the requirement is about when the agreement existed rather than whether it exists now. This is why the showing date belongs on the transaction record even though it is not a contract date.

The ceiling test

Compare the total compensation received by the buyer brokerage against the amount in the operative buyer agreement, including any signed amendments. Over-collection is the finding with the clearest remedy and the clearest liability, since the excess is money the brokerage was not entitled to receive.

The consistency test

The buyer agreement, the purchase contract compensation terms, the settlement statement lines and the disbursement authorization should all state the same amount and the same source. When they disagree, the buyer agreement is the ceiling and the settlement statement is the record of what happened, and the gap between them is what the file has to explain.

Run it as a report, not a review

Three comparisons across every buyer-side file is a query, not a reading task. A brokerage closing forty transactions a month cannot review them by hand and will not do it consistently if it tries. Store the showing date, the agreement date, the agreed amount, the source and the disbursed total as fields, and the compliance check becomes a list of exceptions that fits on one screen.

Questions brokers ask