The NAR settlement changed some essential elements of how builders and Realtors should work together. But honestly, too many builders are still trying to navigate this new world with an old map.
I'm seeing builders rush to reassure everyone that "nothing has changed" when, in reality, some very important things have changed. This isn't just semantic hair-splitting. It's about fundamentally rethinking how we connect with buyers and where our incentive dollars should flow. This is a continuation of my
previous post on the topic, and also pulls in some of the conversation from my recent presentation at the Builder100 conference on May 6th, 2025. I've also included quotes from my
interview with James Dwiggins on the Market Proof Marketing podcast that went live on January 2nd, 2025. James is the Co-Founder and Chief Executive Officer of NextHome Inc., and one of the named defendants in the NAR case, so his views come from personal experience.
The Triangle Is Now a Line
There used to be this tidy triangle relationship between builders, buyers, and buyer agents. All three had clear connections to each other, with money and influence flowing in every direction.
But that triangle has collapsed. Post-settlement, the buyer-agent relationship is completely decoupled from the builder. The buyer signs a representation agreement upfront with their agent, and that agreement can't legally be modified based on what a builder might offer later.
As James Dwiggins, a named defendant in the lawsuit and co-founder of NextHome real estate franchise, bluntly puts it: "Offering bonuses to agents when they cannot receive them is reverse steering. If you want to do it legally, offer the incentive to the buyer to get them to buy that property over another." Yet I'm watching builders scramble to preserve a connection that shouldn't exist in the same manner anymore. Why are we so desperate to return to a relationship where we don't belong?
Stop Paying Agent Bonuses. Full Stop.
Let's not dance around this. Builder-paid bonuses to buyer agents are not compliant with the settlement and put those agents and their broker at risk of being sued again. In a way, the settlement agreement is like being on parole from jail. Legal teams will be closely watching the defendants, and if they violate the settlement terms, they'll quickly find themselves right back in the courtroom. It doesn't matter if your lawyer gives you a creative workaround. The plaintiff's interpretation rules the day, and risking future litigation to make a few sales is short-sighted at best.
When I talk to home builders about this, the pushback I hear is usually some version of: "Realtors just follow the biggest paycheck." But that's the exception, not the rule. Most agents genuinely want to serve their clients well. And here's what's crucial to understand: under the new rules, even if you offer 3% or 4% upfront, any extra won't go to the agent. If their agreement with the buyer is for 2%, they can't legally take more. Instead, they'll ask for that extra 1% to be given to their buyer as a concession.
So even if your goal is to "win agent loyalty," it won't work as it used to. Because the agent's fiduciary loyalty to the buyer, and the terms of their agreement, come first - or else... you guessed it - the lawyers will be back. You're not talking to a free agent; you're talking to someone contractually bound to another party - your mutual customer.
Some builders say, "Well, we weren't party to the settlement, so we can do whatever we want." And in some ways, they are correct. But there are two massive problems with this thinking:
- The agents and brokers you're trying to incentivize don't want to get sued again. The ones doing the most business are hyper-aware of compliance and don't want your "special offer" landing them in another billion-dollar lawsuit.
- You're painting a target on your own back. In a world where lawyers and regulators are hunting for the next group to sue, do you really want to be the one waving the "we found a loophole" flag? Housing affordability is a hot-button political issue. The narrative of "we've lowered home prices by stopping builders from offering excess compensation to agents" is going to be compelling both politically and legally.
(slides above courtesy of James Dwiggins)
Your Customer In The Transaction Is the Buyer. Period.
This isn't just semantics. It's reallocating dollars, adjusting messaging, and cleaning up CTAs that used to point toward agents. You can still talk to them about partnerships generally, and how you love working together, even how you’ll do your best to make the process smooth and easy.
The buyer and their agent handle their own relationship; your job is to serve the buyer. Stop treating "every agent" like a distribution channel and reinvest what was going to agent bonuses into buyer-focused incentives or services that help the agent but don’t involved compensation.
Make sure your OSCs and sales teams are clear; if a buyer comes through an agent, the buyer and agent handle their relationship. Train teams to avoid steering conversations back to agent compensation or "how to get paid." That's not your domain anymore. As James describes, "The buyer rep agreement is signed before they look at any properties... to set services and compensation regardless of what the seller is offering. It's designed to avoid steering."
Create Transparent, Buyer-Centric Value Messaging
With the safety net of automatic commissions gone, buyers will scrutinize where every dollar goes, including what they're paying an agent for. Builders need to:
- Clearly articulate their value proposition: Why is your process simpler than resale or what support and tools are built-in to how you build your homes?
- Use tools like cost comparisons, calculators, and testimonials to help buyers evaluate your offering on its own merits and reduce perceived risk.
- Make sure buyers know that your team is full of educated and experienced professionals, too. Highlight training programs, product knowledge, and unique access to an unmatched level of detailed data about the builder.
In fact, if you want to get more attention from both buyers and their agents, your best move isn't padding commissions; it's lowering the price, improving your incentive offer, or simplifying the process. That attracts more interest, especially from the majority of buyers not yet working with an agent, than dangling a commission number ever could.
The buyer must now be the core audience in every transaction. Builders must let go of the legacy three-way dance and speak directly to the buyer.
The Consumer Benefit Question
Here's something our industry needs to discuss more openly. It's been common for a customer to ask, "If I don't have an agent, is there a benefit to me?" We've always told them no, explaining that the money was set aside to pay for procuring cause.
But now? We're paying the Realtor at the buyer's discretion. This means customers need to be informed about the tradeoffs, which means there should be a benefit to a customer who doesn't need agent representation.
There's another layer to this conversation: if a buyer isn't using an agent, what happens to that money? We've long told buyers, "It's already baked into the price," but that's no longer true. If the buyer is negotiating agent compensation directly, and they choose not to use one, there should be a clear, transparent value tradeoff. That could mean a lower price, better incentives, or something else, but ignoring the question isn't an option anymore.
Reimagine, Don't Just Rewrite, Your Realtor Program
If your current "realtor program" boils down to events, bonuses, and flyer drops, it's time to start over. Instead:
- Educate agents on how to talk to buyers about your homes and process, especially if they're new to new construction.
- Provide training resources or co-branded content they can share with clients, but make sure it's buyer-first.
- Build selective, trusted, deeper relationships where it makes sense, but stop treating "every agent" like a distribution channel that can be bribed with larger commissions.
Looking Forward
It's a brave new world, and like all things, we need to approach it with awareness, transparency, and creativity. Here's the bottom line: continuing to crave a pre-settlement structure doesn't benefit anyone, not even the best buyer's agents.
Re-evaluate who is in charge of what part of the relationship and where value for the customer is highest, and allow that to guide you forward. Most importantly, builders must stop optimizing for the edge case, the rare buyer steered by a financially motivated agent, and start building for the mainstream. Chasing agent behavior in a legal and political environment that sees you as the next easy target is not just misguided, it's reckless.
The most successful builders in this new era won't be the ones trying to recreate the past - they'll be the ones who embrace the changes and build something better.
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