From Navigate With NAR Powered by REALTOR® Magazine - sign up today to get your daily Smart Brief delivered to your email inbox. Get more facts about NAR's proposed settlement agreement at facts.realtor.

​​

July 19 - What should you tell home buyers and sellers they need to know about practice changes?

 

Consumers should know that after Aug. 17:

• If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided and for how much.

• Written agreements are required for both in-person and live virtual home tours.

• You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.

• Agent compensation for home buyers and sellers continues to be fully negotiable.

• When finding an agent to work with, ask questions about their services, compensation and these written agreements.

​

July 18 - Will NAR raise dues or levy an assessment on members to fund the settlement?

 

NAR will not change membership dues for 2024 or 2025 because of this payment. 

​

July 17 - Can NAR use reserves to pay for the settlement? If so, how much?

 

This settlement was heavily negotiated, and the amount is based on NAR's ability to pay. One of the critical advantages of this agreement is that NAR would be able to pay the settlement amount over time. NAR will determine how to allocate funds as they become due, working closely with its Finance Committee

​

July 16 - Why did NAR enter into the negotiated settlement?

 

NAR is confident that this agreement provides a path forward for the association to continue its work to preserve, protect and advance the right to real property for all. The settlement amount is a substantial sum, and it will be incumbent on NAR to use its remaining resources in the most effective way possible to continue delivering on our core mission.

The Finance Committee and Strategic Planning Committee will remain critical in reviewing and providing guidance about NAR's operating budget to help ensure the association continues to deliver unparalleled value to and advocacy on behalf of REALTORS®, including through learning opportunities, resources, research and member tools.

 

July 15 - Why is NAR paying so much more to settle than the corporate defendants did?

 

This settlement was heavily negotiated and is based on NAR's ability to pay. NAR has secured a release of liability for over 1 million members, all state/territorial and local REALTOR® associations, all REALTOR® MLSs and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. There are strong grounds for the court to approve this settlement because it is in the best interests of all parties and class members.

​

July 12 - Who at NAR signed off on the settlement, and was the decision to settle subject to proper NAR governance procedures?

 

The settlement was signed off by NAR's leadership team, in consultation with outside legal and financial experts, and in accordance with NAR's governance procedures. Throughout the settlement process, NAR engaged with a diverse range of members and considered their perspectives and interests while fighting to protect all industry players as best it could. As is common in negotiating a complex settlement, there is a need to maintain confidentiality and effectively navigate complex legal considerations, which restricted the extent of the information that NAR could share more broadly. 

​

July 11 - How does this settlement change NAR's value proposition? Why should real estate professionals continue to be NAR members?

 

NAR is confident that its proposed settlement agreement provides a path for NAR to move forward and continue to preserve, protect and advance the right to real property for all.

NAR fought to include all members in the release and was able to ensure more than 1 million members were included.

NAR continues to deliver unparalleled value to, and advocacy on behalf of, REALTORS®, including through learning opportunities, resources, research and member tools.

​

July 10 - How will NAR fund the settlement?

 

One of the critical advantages of this agreement is that NAR would be able to pay the settlement amount over time. NAR will determine how to allocate funds as they become due, working closely with its Finance Committee.

 

July 9 - Does the requirement to use a written agreement before showings apply to commercial transactions?

 

No. The settlement and the practice changes it requires are focused on residential transactions, not commercial transactions or leases. And if a commercial broker who is a REALTOR® has access to an MLS, but is showing a property on CIE or another platform that is not associated with an MLS, the requirement to use a written agreement does not apply for that property.

​

July 8 - Are commercial listing services that don't pull from an MLS subject to the practice change prohibiting offers of compensation on an MLS?

 

No. That practice change prohibits offers of compensation on the MLS and it prohibits MLSs from allowing third parties to use MLS data to facilitate a platform for multiple brokerages to make offers of compensation.

​

July 5 - What do the practice changes mean for commercial practitioners?

 

NAR's proposed settlement agreement is focused on residential real estate transactions. That means most commercial transactions will not be affected.

In many markets, commercial listings appear in CIEs (commercial information exchanges)—and not MLSs—and do not include an offer of compensation.

The settlement prohibits offers of compensation on an MLS and requires MLS participants working with buyers to enter into written agreements with their buyers. These practice changes will go into effect Aug. 17. 

 

July 3 - Can an MLS have a function within its system that automatically pushes out emails to clients about available properties hitting the market and allows MLS participants or subscribers to filter out listings based on the offer of compensation, listing firm or the listing agent?

 

Since offers of compensation may no longer be communicated on an MLS, it should not have any functionality related to broker compensation. As for filtering based on listing firm or listing agent, just like the inability of MLS participants or subscribers to withhold listings based on those criteria in IDX and VOW displays, MLSs cannot enable that same ability within other MLS functions that provide listing data to consumers. An MLS must take appropriate action if it becomes aware that a participant or subscriber acts inconsistently with this MLS policy.

 

July 2 - Is 'ranking' or 'sorting' different from 'filtering out' listings?

 

Yes, ranking or sorting listings is the ability to organize a list of MLS listings in a particular order. Examples of criteria that may be used to rank or sort may be the property sales price, the number of bathrooms or bedrooms, the property location, etc. Ranking or sorting must not involve the removal or the blocking of MLS listings, which prevents the communication of those listings to a client or customer.

​

July 1 - Didn't NAR's MLS policies already include a policy about the non-filtering of MLS listings based on compensation?

 

Yes, Policy Statement 8.5 was enacted in 2021. It has been amended only for clarification purposes and to ensure consistency with the proposed settlement agreement.

Filtering out listings means to remove or block MLS listings from being communicated to customers or clients based on the amount of compensation offered, the existence of an offer of compensation or based on the listing firm or agent.

MLS participants have the duty to cooperate, which is to share information on listed property and make property available to other brokers for showing to prospective purchasers and tenants when it is in the best interest of their clients.

​

June 28 - Can the seller concession be a total sum or the percentage of the purchase price?

 

This is a matter of local discretion. But an MLS must ensure that the seller concessions are not limited to or conditioned upon the retention of or payment to a cooperating broker, buyer broker, or other buyer representative.

​​

June 27 - Will seller concessions communicated on an MLS be binding on the seller?

 

As a general matter, seller concessions usually aren't binding until they are established in an executed contract, such as a listing agreement or a purchase contract.

 

June 26 - If my MLS removes the compensation field, can I choose to publish my cooperative commission offer in the agent remarks?

 

No. The new rule would prohibit offers of compensation on an MLS.

 

June 24 - Is there an NAR MLS policy about seller concessions?

No, MLSs will continue to have local discretion on seller concessions. This includes determining what local rules to have about seller concessions, except under the settlement an MLS must ensure that the seller concessions are not limited to or conditioned upon the retention of or payment to a cooperating broker, buyer broker, or other buyer representative.

​

June 20 - What provisions must be included in written buyer agreements?

The written agreement must include:

1. A specific and conspicuous disclosure of the amount or rate of compensation the participant will receive, or how this amount will be determined, to the extent that the participant will receive compensation from any source.

2. The amount of compensation in a manner that is objectively ascertainable and not open-ended.

3. A term that prohibits the participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.

4. A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.​

​

June 18 - Can a listing broker explain to a seller that the buyer will know who is paying the commissions?

Yes, Articles 2 and 12 of NAR's Code of Ethics apply equally to brokers working with sellers. The listing broker should explain to her client the benefits and costs of the various types of marketing that can be done for a listing, and how potential buyers might respond to such marketing—including any buyer costs that the listing broker or seller may offer to pay.

A listing broker should inform the seller about costs the buyer will incur, how the buyer might react to those costs and how the seller can market a house considering the buyer's costs. But a listing broker must not tell a seller that a broker will steer buyers based on the amount that broker is compensated.

​

June 17 - Can a broker tell a potential buyer the amount of broker commissions and explain who is paying those commissions?

 

Yes. In fact, REALTORS® must provide this information to potential buyers under NAR's Code of Ethics. Written buyer agreements, required by the NAR practice changes that will be implemented on Aug. 17, will also outline that MLS participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.

The NAR settlement also requires that "to the extent that such a REALTOR® or participant will receive compensation from any source, the agreement must specify and conspicuously disclose the amount or rate of compensation it will receive or how this amount will be determined." 

​

June 14 - Does NAR's settlement address the theoretical possibility of steering?

 

Deck: Yes. In the agreement, NAR reaffirms its commitment to requiring that MLS participants must not limit the listings their client sees because of broker compensation.

Written buyer agreements, required by the NAR practice changes that will be implemented on Aug. 17, will also outline that MLS participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer. Since a broker working with a buyer cannot receive more compensation than the buyer has agreed to in that agreement, the amount of any offer of compensation is irrelevant to the buyer-broker's compensation.

Under these practice changes, NAR has eliminated any theoretical steering. A broker will not make more compensation by steering a buyer to a particular listing because it has a "higher" offer of compensation.

​

​

June 12 - Can disputes about an offer of compensation still be arbitrated or mediated?

 

Yes. REALTORS® are bound to arbitrate or mediate pursuant to Article 17 of the Code of Ethics. MLS participants who are non-REALTORS® are bound to arbitrate or mediate pursuant to their MLS's local rules.

​

June 11 - Can an MLS participant use or share their MLS data or data feeds to establish or maintain a platform for offers of compensation from multiple brokers and buyer brokers or other buyer representatives?

 

No. Use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers to buyer brokers or other buyer representatives is prohibited. 

​

​

June 10 - Can a listing broker communicate offers of compensation on a broker website that has an IDX or VOW feed?

 

Yes. MLS participants may augment MLS data or data feeds with offers of compensation to buyer brokers or other buyer representatives for only listings of their own brokerage. 

​

​

June 7 - Should active listing agreements entered into before the MLS policy change be amended to address the settlement agreement's prohibition on offers of compensation being communicated on the MLS?

 

If the listing agreement instructs the listing broker to make an offer of compensation without reference to the MLS, no change to the listing agreement is needed, as the listing broker can comply with that instruction without violating the MLS policy change. But if the listing agreement specifies that offers of compensation be made "on the MLS," then the listing broker should work with the seller to amend the listing agreement—before the MLS policy change is implemented on Aug. 17—to make it clear the listing broker will not make an offer of compensation on the MLS and will not be violating the listing agreement by failing to make an offer of compensation on the MLS

​

​

June 6 - Should active listing or buyer agreements entered into before the MLS policy change be amended to include a conspicuous disclosure that compensation is not set by law and is fully negotiable?

 

MLS participants must make this disclosure, but active agreements do not need to be amended to accomplish this. MLS participants can do a separate disclosure to satisfy the requirement.

 

June 5 - Won't prohibiting offers of compensation on the MLS raise fair housing issues?

 

NAR's proposed settlement agreement allows compensation to remain a choice for consumers when buying or selling a home. NAR continues to believe that offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities and increase the potential buyer pool for sellers.

The settlement does not change the ethical duties that NAR members owe their clients. REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction honestly (Article 1, COE). NAR members will continue to use their skill, care and diligence to protect the interests of their clients.

 

June 4 - How will offers of compensation be communicated if brokers can't use MLSs? Doesn't this make broker compensation less transparent?

 

Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example, concessions that can be used for buyer closing costs).

The settlement does not change the ethical duties that NAR members owe their clients. REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction honestly (Article 1, COE). NAR members will continue to use their skill, care and diligence to protect the interests of their clients.

NAR remains dedicated to promoting transparency in the marketplace and working to ensure that consumers have access to comprehensive, equitable, transparent and reliable property information, as well as the ability to have affordable professional representation in their real estate transactions.

 

June 3 - What should listing brokers advise their clients about the prohibition of offers of compensation on an MLS?

 

Listing brokers should inform their clients that offers of compensation will no longer be an option on an MLS. This change will not prevent offers of cooperative compensation off an MLS, and it will not prevent sellers from offering buyer concessions on an MLS (i.e. concessions for buyer closing costs). Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve. 

​

May 31 - The opt-in agreements in the appendices indicate that MLSs opting into the NAR settlement have until Sept. 16 to implement changes. Should MLSs also implement the practice changes by Aug. 17?

 

MLSs that have opted into the settlement agreement have until Sept. 16 to implement the necessary policy changes and to be considered released parties under the settlement, as provided in the relevant appendices they executed. However, in accordance with mandatory NAR policy, REALTOR® MLSs must implement the practice changes by Aug. 17. If they do not, they will not be in compliance with NAR mandatory policy.

NAR recommends all MLSs opting into the settlement to implement the practice changes by Aug. 17. NAR's accelerated rule change process, during which it released the exact language of the practice changes in early May, gives MLSs over three months to implement the changes by Aug. 17.

​

May 30 - When will the practice changes following NAR's proposed settlement agreement take effect?

 

On Aug. 17, NAR's mandatory MLS policy changes, which implement the settlement's required practice changes, will take effect. The settlement requires NAR to implement the practice changes no later than the date of class notice. Aug. 17 is the earliest date of class notice.

Additionally, to comply with NAR's mandatory national MLS policies, REALTOR® MLSs must implement the practice changes by Aug. 17. NAR shared these practice changes in early May to provide a three-month window for NAR members and MLSs to prepare to implement these changes.

​

May 29 - Are all other MLS policies that were not amended following NAR's proposed settlement agreement still in effect?

 

Yes, all MLS policies will continue to be in effect and subject to enforcement by local MLSs. Get more facts about NAR's proposed settlement agreement at

​

May 28 - How has the definition of an MLS participant been changed?

 

The definition has been amended to remove any references to offers of compensation and to establish that a participant has the duty to cooperate, which is to share information on listed property and to make property available to other brokers for showing to prospective purchasers and tenants when it is in the best interest of their clients.

​

May 24 - MLS participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement. Does this mean that brokerages can only have one agreement with the buyer?

 

No. NAR policy does not dictate:

​

• What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).

• The term of the agreement (e.g., one day, one month, one house, one zip code).

• The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).

• The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate).

​

Compensation continues to be negotiable and should always be negotiated between MLS Participants and the buyers with whom they work.

​

May 23 - Will MLSs be required to get a copy of buyer written agreements?

 

No, the MLS is not required to receive a copy but can request it as a matter of their local enforcement.

​

May 22 - How will state laws affect the implementation of the practice change requiring written agreements with buyers?

 

Written buyer agreements will be required of all MLS Participants working with buyers prior to touring a home, unless state law requires a written buyer agreement earlier in time.

​

May 21 - Do the written buyer agreement requirements change my state's disclosure requirements to an unrepresented buyer?

 

No, you must still comply with all your state and local legal requirements. MLS policies and rules are subject to state and local laws and regulations.

​

May 20 - Are written buyer agreements required in a designated agency scenario when a single broker works both for the seller and for the buyer and designates an agent to represent the buyer?

 

Yes. If an MLS participant is working as an agent for a buyer, a written agreement is required. 

​

May 17 - Are written buyer agreements required in a dual agency scenario when a single agent works both for the seller and for the buyer?

 

Yes. If an MLS participant is working as an agent for a buyer, a written agreement is required.

​

May 16 - If an MLS participant enters into a non-agency relationship with a buyer, is a buyer written agreement still necessary?

 

Yes, regardless of whether it is an agency or non-agency relationship, the obligation is triggered once the MLS participant works with that buyer and has taken her to tour a home.

​

May 15 - Are written buyer agreements required when MLS participants perform ministerial acts?

 

Yes. The obligation is triggered once the MLS participant is working with that buyer and has taken them to tour a home, regardless of what other acts the MLS participant performs.

But an MLS participant performing only ministerial acts—without the expectation of being paid for those acts and who has not taken the buyer to tour a home—is not working for the buyer.

​

May 14 - Are written buyer agreements required when listing agents talk with a buyer on behalf of a seller only or as subagents of the seller?

 

No. If the MLS participant is working only as an agent or subagent of the seller, then the participant is not working for the buyer. In that scenario, an agreement is not required because the participant is performing work for the seller and not the buyer.

​

May 13 - If an MLS participant hosts an open house or provides access to a property, on behalf of the seller only, to an unrepresented buyer, will they be required to enter into a written agreement with those buyers touring the home?

 

No. The new rule will cover every type of relationship where an MLS participant is working with a buyer.

​

May 10 - Does the requirement for a written agreement with buyers mean that MLS participants and buyers must enter into a written agency agreement?

 

No. MLS participants and buyers will still be able to enter into any type of professional relationship permitted by state law. NAR policy does not dictate:

​

• What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).

• The term of the agreement (e.g., one day, one month, one house, one ZIP code).

• The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).

• The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate).

​

May 9 - How will state laws affect the implementation of the practice change requiring written agreements with buyers?

 

Written buyer agreements will be required of all MLS participants working with buyers prior to touring a home, unless state law requires a written buyer agreement earlier in time.

​

May 8 - If an MLS participant hosts an open house or provides access to a property, on behalf of the seller only, to an unrepresented buyer, will they be required to enter into a written agreement with those buyers touring the home?

 

No. The new rule will cover every type of relationship where an MLS participant is working with a buyer.

​

May 7 - The practice change requiring written agreements with buyers is triggered by two conditions: It only applies to MLS participants "working with" buyers and is triggered by "touring a home." What does it mean to "tour a home"?

 

Written buyer agreements are required before a buyer tours a home For Sale listed on the MLS.

Touring a home is when the buyer and/or the MLS participant, or other agent, at the direction of the MLS participant working with the buyer, enter the house. This includes when the MLS participant or other agent, at the direction of the MLS participant, working with the buyer enters the home to provide a live, virtual tour to a buyer not physically present.

A "home" means a residential property consisting of not less than one nor more than four residential dwelling units.

​

May 6 - The practice change requiring written agreements with buyers is triggered by two conditions: it only applies to MLS participants "working with" buyers and is triggered by "touring a home." What does it mean to be "working with" a buyer?

 

The "working with" language is intended to distinguish MLS participants who provide brokerage services to a buyer—such as identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on behalf of the buyer, presenting offers by the buyer or other services for the buyer—from MLS participants who simply market their services or just talk to a buyer, like at an open house or by providing an unrepresented buyer access to a house they have listed.

If the MLS participant is working only as an agent or subagent of the seller, then the participant is not "working with the buyer." In that scenario, an agreement is not required because the participant is performing work for the seller and not the buyer.

Authorized dual agents, on the other hand, work with the buyer (and the seller). 

​

May 3 - Who will be responsible for enforcing written agreements and ensuring all parties follow the new practice change?

 

The MLS will be responsible for enforcing the rule regarding written agreements, like the MLS enforces other existing rules. 

​

May 2 - Does the requirement to use a written agreement before showings apply to commercial transactions?

 

No. The settlement and the required practice changes are focused on residential, not commercial, transactions and leases.

The changes also do not apply to a commercial broker who is a REALTOR® and has access to an MLS but is showing a property on CIE or another platform that is not associated with an MLS. 

​

May 1 - New information about written agreements

 

NAR has updated its FAQs about the proposed settlement agreement to include additional information and clarity about written buyer agreements. As part of the settlement, NAR has agreed to require MLS participants working with buyers to enter into written agreements with their buyers before touring a home.

What exactly does it mean to be "working with" a buyer or to "tour a home," and do state laws affect this practice change? Find answers in questions 46 through 62 in NAR's regularly updated FAQs page at facts.realtor. Each new FAQ will appear in this newsletter over the coming days. Additional guidance about the timing of the practice changes required under the settlement is forthcoming, NAR says.

Read about the preliminary approval of the settlement, which NAR received April 24. The settlement agreement is still subject to final court approval. The final approval hearing is scheduled for Nov. 26.

​

April 30 - Are independent MLSs affected by the prohibition on publishing compensation offers on the MLS?

 

Independent MLSs are not required to prohibit offers of compensation on the MLS pursuant to the agreement unless they choose to opt into the settlement, in which case they will need to agree to the practice changes in the agreement and pay a per-subscriber fee to the Settlement Fund.

​

April 29 - Does Standard of Practice 16-16 prohibit the negotiation of buyer broker compensation in a buyer's purchase offer?

 

No. A buyer can always ask their buyer broker to make it a term of the purchase offer that the seller pay certain compensation to the buyer broker.

Standard of Practice 16-16 prohibits a REALTOR® from attempting to modify the terms of a listing agreement through the terms of an offer because the listing agreement is a contractual matter between the seller and the listing broker. However, the seller and the listing broker may independently choose to amend the listing agreement or take any other action they deem appropriate based on the seller's negotiations with the buyer. Standard of Practice 16-16 also prohibits a REALTOR® from delaying or withholding delivery of a buyer's offer while attempting to negotiate a buyer broker compensation.

​

April 26 - How will offers of compensation be communicated if brokers can't use MLSs for that purpose? Doesn't this just make broker compensation less transparent?

 

Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example, concessions for buyer closing costs).

The settlement does not change the ethical duties that NAR members owe their clients.

​

• REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction honestly (Article 1, Code of Ethics).

• NAR members will continue to use their skill, care and diligence to protect the interests of their clients.

​

NAR remains dedicated to promoting transparency in the marketplace and working to ensure that consumers have access to comprehensive, equitable, transparent and reliable property information, as well as the ability to have affordable professional representation in their real estate transactions.

​

April 25 - Do association-owned MLSs need to do anything to be covered by the release in NAR's settlement agreement?

 

Yes. By June 18, 2024, association-owned MLSs need to execute an appendix to the agreement in which they agree to abide by the practice changes in the agreement.

To be released under the settlement agreement, all MLSs wholly owned by REALTOR® associations must agree to and execute Appendix B - REALTOR® MLS "Opt In" Agreement and return it to the email addresses realtorsoptin@jndla.com, realtorsoptin@cohenmilstein.com and nargovernance@nar.realtor within 60 days of the filing of the motion for preliminary approval—June 18. 

​

April 24 - Why was prohibiting the publication of compensation offers in the MLS part of NAR's settlement agreement?

 

While NAR has long maintained—and continues to believe—that cooperative compensation and NAR's current policies are good things that benefit buyers and sellers, the association also acknowledges that continuing to litigate would have hurt members and their small businesses. So, NAR agreed to put in place a new rule prohibiting offers of compensation on the MLS. This is consistent with NAR's long-maintained position that prohibiting all offers of cooperative compensation entirely would harm consumers and be inconsistent with real estate laws in the many states that authorize them. NAR believes this agreement provides a path forward for the real estate industry and the association.

​

April 23 - What should listing brokers advise their clients about the prohibition of offers of compensation on an MLS?

 

Listing brokers should inform their clients that offers of compensation would no longer be an option on an MLS. This change will not prevent offers of cooperative compensation off an MLS. And it will not prevent sellers from offering buyer concessions on an MLS (for example, concessions for buyer closing costs). Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

​

April 22 - What is the value of an MLS?

 

MLSs have always provided significant value beyond communicating offers of compensation. MLSs:

​

• Enable comprehensive marketplaces: Access to inventory and widespread advertising incentivizes local broker participation.

• Ensure reliable data access: NAR guidelines for local MLS broker marketplaces enable hubs of trusted, verified information where all participants have equitable access.

• Create connections: Local MLS broker marketplaces create the largest opportunity for connections between real estate agents with properties to sell and those with clients looking to buy.

• Advance small business: Compiling housing information that is accessible to all businesses in one place allows smaller real estate brokerages to compete with larger ones.

• Encourage entrepreneurship: Because of lower barriers to entry enabled by local MLS broker marketplaces, new market entrants can advance technology, consumer service and other innovations.

​

April 19 - How will buyer brokers get paid now?

 

NAR has long believed that it is in the interests of sellers, buyers and their brokers to make offers of compensation—but using the MLS to communicate offers of compensation would no longer be an option. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.

The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

​

• Fixed-fee commission paid directly by consumers

• Concession from the seller

• Portion of the listing broker's compensation

​​

Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

​

April 18 - How does NAR's settlement agreement affect home sellers and home buyers?

 

This settlement would preserve the choices consumers have regarding real estate services and compensation. After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via the MLS.

MLS participants acting for buyers would be required to enter into written agreements with their buyers before touring a home. These agreements can help consumers understand exactly what services and value will be provided and for how much.

​

April 17 - How does NAR's settlement agreement affect MLSs?

 

The agreement would release association-owned MLSs from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions.

While the release excludes MLSs that are not wholly owned by REALTOR® associations, the agreement provides a mechanism for those MLSs to obtain releases efficiently if they choose to use it. This mechanism includes opting into the MLS practice changes that are a part of the agreement and paying a per-subscriber fee to the Settlement Fund.

NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS and to require MLS participants working with buyers to enter into written agreements with their buyers. These changes will go into effect in late July 2024. 

​

April 16 - Will a prohibition on offers of compensation on the MLS save money for sellers or buyers?

 

As NAR has maintained throughout the litigation, nothing in NAR's current policies (including the MLS Model Rule) has increased costs for buyers or sellers. This settlement would preserve the choices consumers have regarding real estate services and compensation. After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via the MLS.

The settlement expressly provides that sellers may communicate seller concessions—such as buyer closing costs—via the MLS provided that such concessions are not conditioned on the use of or payment to a buyer broker.

​

April 15 - Is it possible for offers of compensation to be conveyed through channels other than the MLS?

​

Yes. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example, concessions for buyer closing costs).

​

April 12 - What is the mechanism for non-association MLSs to obtain releases of liability in seller litigation?

 

For MLSs that are not wholly owned by a REALTOR® association, the agreement includes a mechanism to obtain a release efficiently if they so choose. Broadly speaking, the agreement provides two paths:

​

1. The MLS can elect to pay an amount based on a pre-determined formula based on number of MLS subscribers.

2. The MLS can elect to participate in non-binding mediation within 110 days following preliminary approval of the settlement.

​

Under both options, participating non-association MLSs would agree to be bound by the practice changes set forth in the settlement agreement, including and not limited to the adoption of a rule prohibiting offers of compensation on that MLS. Non-association MLSs can also choose not to participate in this settlement.

​

April 11 - What is the mechanism for brokerages with residential transaction volume in 2022 that exceeded $2 billion to obtain releases of liability in seller litigation?

 

NAR secured in the agreement a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion to obtain releases efficiently if they choose to use it. However, the remaining defendants in the actions covered by the agreement cannot use the opt-in mechanism. Broadly speaking, the opt-in provides two paths:

​

1. A brokerage can elect to pay an amount based on a pre-determined formula based on that brokerage's residential transaction volume.

2. A brokerage can elect to participate in non-binding mediation within 110 days following preliminary approval of the settlement.

​

Brokerages can also choose not to participate in this settlement.

All agreements reached through this mechanism would be subject to court approval.

​

April 10 - Does the fact that NAR's settlement agreement does not cover everybody mean that NAR has left large corporate brokerages and affiliated agents to fend for themselves?

 

Absolutely not.

NAR fought to include as many people and companies in the release as possible and achieved a release for everyone it could. Over 1 million NAR members are covered, as are tens of thousands of REALTOR® businesses.

The scope of the release makes clear that NAR looked out for its members. Ultimately, NAR was able to ensure that agents—even those at brokerages that are not covered—are among the more than 1 million members released.

But despite NAR's efforts, plaintiffs would not agree to include everybody. Those that are not released—the largest companies in the real estate industry—are no worse off now than they were before the settlement. In fact, many are better off, as thousands of their independent contractor real estate agents are released by the settlement. They can choose whether to use the mechanism NAR negotiated.

NAR's options included reaching a settlement—whose terms were always going to be affected by the large settlements reached by other corporate defendants—or continuing to appeal the Sitzer-Burnett verdict and litigate the related cases. The latter likely would have resulted in NAR filing for Chapter 11 protection, leaving all members, associations, MLSs and brokerages exposed.

​

April 9 - How does NAR's settlement agreement affect state/territorial and local REALTOR® associations?

 

The agreement would release all state/territorial and local REALTOR® associations from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions, and would also require their compliance with the practice changes agreed to in the settlement. Institutes, societies and councils affiliated with NAR are included in the release in the settlement agreement.

​

April 8 - What were the key factors that influenced NAR's decision to choose the legal path it did to settle seller litigation?

 

NAR explored settling throughout the litigation and carefully considered the other legal options available. These included:

Appealing: A win on appeal would only have addressed the verdict in the Sitzer-Burnett case (not any of the copycat cases) and may only have resulted in a new jury trial, leaving members and consumers with continued uncertainty.

Chapter 11 reorganization: In theory, Chapter 11 would have enabled NAR to eliminate its own liabilities while pursuing an appeal of the Sitzer-Burnett verdict. But the association believes that would have left members with continued uncertainty and potential liability risk. Chapter 11 would also have paused the litigation against NAR but not the other defendants in the cooperative compensation cases.

Ultimately, while NAR continues to believe that it is not liable for the home seller claims related to broker commissions and that we have strong arguments challenging the Sitzer-Burnett verdict, the association decided to reach this settlement to put claims to rest for over 1 million NAR members and other parties who would be released under the agreement. 

​

April 5 - Why does the release of liability in NAR's settlement agreement carve out some co-defendants and some of their affiliated agents?

 

• NAR fought to include all members in the release and was able to ensure more than one million members are included.

• Despite NAR’s efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement.

• The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it.

​

April 4 - How does NAR's settlement agreement change the way buyer brokers get paid?

 

Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

​

• Fixed-fee commission paid directly by consumers

• Concession from the seller, provided that such concessions are not conditioned on the use of or payment to a buyer broker

• Portion of the listing broker’s compensation

 

Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

​

April 3 - How does NAR's settlement agreement affect home sellers and home buyers?

 

This settlement would preserve the choices consumers have regarding real estate services and compensation.

​

• After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via the MLS.

• MLS participants acting for buyers would be required to enter into written agreements with their buyers before touring a home. These agreements can help consumers understand exactly what services and value will be provided, and for how much.

​

April 2 - How does NAR's settlement agreement affect MLSs?

 

The agreement would release association-owned MLSs from liability for the types of claims brought in cases on behalf of home sellers related to broker commissions. While the release excludes MLSs that are not wholly owned by REALTOR® associations, the agreement provides a mechanism for those MLSs to obtain releases efficiently if they choose to use it.

​

April 1 - Is it possible for offers of compensation to be conveyed through channels other than the MLS?

 

Yes. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (e.g. concessions for buyer closing costs), provided that such concessions are not conditioned on the use of or payment to a buyer broker. 

​

March 29 - How do I know if I'm covered by NAR's settlement agreement?

​

If you are an NAR member, you are covered by the settlement if:
 

• You are an independent contractor of any brokerage other than HomeServices of America or one of its affiliates.

• You are an employee of any brokerage other than HomeServices of America or one of its affiliates or one of the defendants in the settled cases.**

If you fall into one of these categories, you are covered even if your brokerage is not.

**At World Properties, LLC; Compass, Inc.; Douglas Elliman, Inc.; Douglas Elliman Realty, LLC; eXp Realty, LLC; eXp World Holdings, Inc.; Hanna Holdings, Inc.; HomeSmart International, LLC; Howard Hanna Real Estate Services; Keller Williams Realty, Inc.; Real Broker, LLC; The Real Brokerage, Inc.; Realogy Holdings Corp.; Realty ONE Group, Inc.; Redfin Corporation; RE/MAX, LLC; United Real Estate; or Weichert, Realtors®

​

March 28 - Does NAR's settlement agreement mean the association is admitting that plaintiffs' allegations are true?

 

No. The settlement makes clear that NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model rule (MLS Model Rule). NAR's goal all along has been to resolve this litigation in a way that preserves consumer choice and protects members to the greatest extent possible. This settlement achieves both of those goals.

​

March 27 - Apart from the release of liability, what are the other key terms of NAR's settlement agreement?

 

1. Compensation offers moved off the MLS. NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example, concessions for buyer closing costs), as long as such concessions are not limited to or conditioned on the retention of or payment to a buyer representative. This change will go into effect in mid-July.

2. Written agreements for MLS participants acting for buyers. While NAR has been advocating for the use of written agreements for years, the association agreed in this settlement to require MLS participants working with buyers to enter into written agreements with their buyers. This change also will go into effect in mid-July.

3. Settlement payment. NAR would pay $418 million over approximately four years. This is a substantial sum, and NAR says it will be incumbent on the association to use its remaining resources in the most effective way possible to continue delivering on its core mission. NAR will not change membership dues for 2024 or 2025 because of this payment.

4. NAR continues to deny any wrongdoing. NAR still maintains that cooperative compensation and the association's current policies benefit buyers and sellers. They promote access to property ownership, particularly for lower- and middle-income buyers who can have a difficult-enough time saving for a down payment. With this settlement, NAR says it is confident that the association and its members can still achieve those goals.

​

March 26 - Who is covered in NAR's settlement agreement?

 

The settlement agreement would release many entities from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions, including:

​

• NAR and over one million of its members

• All state, local and territorial REALTOR® associations

• All association-owned MLSs

• All brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below

 

NAR fought to include all members in the release. But despite the association's efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement. The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it.

​

March 25 - Why did NAR enter into the negotiated settlement?

 

Since the litigation began, NAR has worked consistently to reach a resolution with the plaintiffs. The association always wanted to reduce the significant strain on members and provide a path forward for the industry. From the beginning of the litigation, NAR had two goals:

​

1. Secure a release of liability for as many members, associations and MLSs as possible; and

2. Preserve the choices consumers have regarding real estate services and compensation.

 

The proposed settlement achieves both of those goals and provides a path for the association to move forward and continue its work to preserve, protect and advance the right to real property for all.

​

March 22 - The truth about the NAR settlement agreement

 

The national conversation around real estate commissions reached a crescendo in the last week since the National Association of REALTORS® announced a settlement agreement that would resolve litigation brought on behalf of home sellers related to broker commissions. Misinformation has been pervasive, making it difficult for members to separate fact from fiction for themselves and the consumers they serve. Getting the facts right is important, especially because the settlement agreement is complex.

​

Source: Smart Brief - sign up here. Get more facts about NAR's proposed settlement agreement at facts.realtor.