The National Association of Realtors® (NAR) announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions.
The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years.
Here are the key terms in the proposed settlement:
- Release of liability: The agreement would release NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions.
- 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.
- 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. Sellers can also offer buyer concessions on an MLS (for example—concessions for buyer closing costs). This change will go into effect in mid-July 2024.
- Written agreements for MLS participants acting for buyers: While NAR has been advocating for the use of written agreements for years, in this settlement NAR has agreed to require MLS participants working with buyers to enter into written representation agreements with their buyers. This change will also go into effect in mid-July 2024.
- Settlement payment: NAR would pay $418 million over approximately four years. NAR’s membership dues for 2024 will NOT change because of this payment.
- NAR continues to deny any wrongdoing: NAR has long maintained that cooperative compensation and NAR’s current policies are good things that 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 is confident it and its members can still achieve all those goals
To help members keep up with this case, the settlement agreement, and key terms go facts.realtor- a resource that NAR has provided for members that is updated as announcement are made.
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