Does the NAR Settlement Affect Commercial Real Estate?

In March 2024, the National Association of REALTORS (NAR) reached a settlement that restructures how real estate commissions are handled in residential transactions. This agreement eliminates the ability to advertise buyer agent commissions on Multiple Listing Services (MLS) and mandates written agreements between agents and buyers before property tours. These changes have raised concerns about whether similar requirements apply to commercial real estate.

While the settlement does not directly impact commercial transactions, industry professionals should remain aware of its implications. Nishad Khan P.L. provides legal guidance on real estate matters, ensuring individuals and businesses are informed of evolving regulations.

How the NAR Settlement Impacts Commercial Real Estate

The settlement primarily affects residential properties, as the new rules apply to listings on MLS platforms, which are widely used for single-family homes and multi-unit residential properties. In contrast, commercial real estate transactions typically rely on Commercial Information Exchanges (CIEs) rather than MLS databases. CIEs do not operate under the same structure, meaning the settlement’s commission disclosure rules do not directly apply to commercial listings.

Additionally, commission structures in commercial real estate have historically been more flexible and negotiable. Unlike in residential transactions, where commission splits are often standardized, commercial brokers usually negotiate fees on a case-by-case basis. The absence of predefined commission offers in commercial transactions makes the NAR settlement less relevant to this sector.

However, residential and commercial real estate brokers should consider how the new regulations shape industry norms. If transparency expectations shift across the market, Orlando real estate attorneys may see changes in how clients approach commission discussions.

Potential Indirect Effects on Commercial Real Estate

Although the NAR settlement’s new rules do not bind commercial brokers, indirect effects could emerge. Buyers and sellers engaging in residential and commercial transactions may bring new expectations about commission transparency into commercial dealings. This could lead to greater scrutiny over how fees are structured, even in transactions not governed by MLS rules.

Additionally, the residential sector’s shift toward written buyer agreements could influence commercial practices. While commercial real estate transactions often involve contracts that outline commission terms, the trend toward formalized agreements in residential transactions may encourage commercial brokers to reinforce their documentation practices. Ensuring clear, well-drafted agreements remains essential in avoiding disputes and maintaining client trust.

Brokers and investors seeking to stay ahead of industry changes can benefit from legal guidance tailored to real estate transactions. An Orlando, Florida, real estate attorney can provide the insight needed to manage these evolving regulations. To learn more, visit our practice areas for detailed legal guidance.

Best Practices for Commercial Brokers

While commercial real estate professionals are not required to change their current practices due to the NAR settlement, adapting to shifting industry expectations can be beneficial. Brokers should take the following steps to maintain strong relationships with clients and ensure compliance with evolving norms:

• Clarify Commission Agreements Early: Clearly outline fee structures in all agreements to prevent misunderstandings.
• Monitor Industry Trends: Changes in residential real estate often influence commercial practices over time.
• Educate Clients: Buyers and sellers unfamiliar with commission structures may require additional guidance.

Real estate attorneys in Orlando can maintain transparency while protecting their business interests by staying proactive.

Legal Support for Successful Real Estate Transactions

While the NAR settlement introduces significant changes to residential real estate, its impact on commercial transactions remains limited. However, understanding industry shifts is essential for brokers, investors, and business owners involved in real estate. Staying informed about evolving regulations can help prevent legal disputes and ensure compliance with best practices. 

Proper legal support is crucial when negotiating a commercial lease, structuring a property investment, or handling a real estate contract. Nishad Khan P.L. provides comprehensive legal services across Central Florida for commercial and residential real estate transactions. Contact us today if you need guidance on legal matters related to your property investments.