NAR Settlement: Everything You Need to Know
Disclaimer: It is imperative to acknowledge that I am not a legal professional, nor do I provide legal counsel. The information presented here is solely for educational and informational purposes, to provide a synopsis of recent developments that may affect realtors. For legal advice regarding the National Association of Realtors (NAR) settlement and its implications for your business, please seek the counsel of a qualified legal expert.
The NAR settlement marks a significant juncture in the real estate industry, promising to reshape how realtors conduct business. This settlement arises from lawsuits alleging anti-competitive practices within the real estate brokerage industry. Comprehending the nuances of this settlement is crucial for realtors to adapt and succeed in a dynamic landscape. These changes are still pending court approval.
Background of the Settlement
The origins of the NAR settlement can be traced back to a series of lawsuits filed by home sellers and buyers, accusing the NAR and various real estate brokerages of violating antitrust laws. The allegations focused on the NAR's policies related to listing services, commission structures, and agent representation rules. After extensive negotiations, a settlement was reached, although without admitting wrongdoing by the NAR. This settlement is poised to introduce changes to the operational standards of the real estate industry.
The Settlement’s Main Points
Transparency in Commission Structure: The settlement mandates greater transparency about agent commissions. Realtors are now required to disclose their commission rates upfront. You must disclose the amount or rate of compensation you’ll get up front whether working as a seller or buyer. Your compensation must be written into the agreement as a percentage or amount (it cannot be open-ended). You cannot receive compensation from any source for more than the amount or rate agreed to in the buyer representation agreement.
Restrictions on MLS Listings: Modifications to the MLS where cooperative compensation can no longer be advertised. Sellers can still decide to specifically offer cooperative compensation and can be marketed in other places other than the MLS, such as newsletters, text messages, or brokers’ or agent’s websites. You cannot market other brokerage’s cooperative compensation for their listings on your or your broker’s website.
Sellers can offer a concession to buyers in the MLS, which can be used to pay the buyer’s agent should the buyer choose: The concession offer from the seller to the buyer can be noted in the public comment section of your MLS listing.
Agents must disclose in listing agreements, buyer representation agreements, and preclosing disclosures that the broker commissions are not set by law and are fully negotiable.
Impact and Implications for Realtors
For realtors, adapting to these changes is of paramount importance. The alterations represent a different path to the same destination. Sellers still aim to sell, and buyers still aim to buy, but the methods employed by realtors to facilitate these transactions will undergo some modifications. The increased transparency necessitates adjustments in how services are marketed and delivered. Realtors must remain informed and potentially pursue additional training to align with the new guidelines. Embracing these changes can foster greater trust from consumers and potentially open up new avenues for business.
What Does the Future Hold?
Realtors are nervous about the changes laid out in the NAR settlement - and rightfully so. It can have a huge impact on the industry, as a whole. However, adjustments in transparency, choice, MLS listing rules, and standards are set to redefine the future of the industry. Realtors who adapt swiftly and ethically will likely find themselves with a competitive advantage in this new landscape. Numerous brokers and associations are hosting webinars and providing FAQs regarding the information. If you require further information, please do not hesitate to contact us at 951-297-9922 or info@behappytc.com, and we will gladly guide you in the right direction.
