Separating Fact From Fiction
In March, the National Association of Realtors® (NAR) agreed to settle the Sitzer-Burnett lawsuit, leading to widespread speculation about the long-term impact on the real estate industry. However, some of the details surrounding the specific changes were open to interpretation. This settlement introduces significant modifications to commission practices, aimed at increasing transparency and eliminating certain traditional rules. To help you navigate these important changes, we reviewed all 108 pages of the agreement and the 57 pages of NAR’s policy change summary. Here are nine key points to help you understand how the settlement will affect sellers, buyers, and agents.
Key Points of the Settlement
1. NAR Policy Changes Begin in August
While the settlement was announced in March, the changes are not immediate. The Court has granted preliminary approval, and NAR’s MLS policy changes will take effect on August 17, 2024, unless otherwise noted.
2. Commission Offers Will No Longer Be Displayed on the MLS
Key changes to NAR-affiliated MLS policies include:
- Elimination of Mandatory Compensation: Listing agents are no longer required to offer compensation to buyer agents, although it is still permitted.
- Removal of Compensation Offers from MLS: Listing agents and sellers cannot include offers of compensation to buyer agents on the MLS, and MLSs must remove fields related to compensation information.
- Membership and Participation Requirements: Offering or accepting compensation offers can no longer be a requirement for MLS membership and participation.
Despite these changes, NAR noted that buyer agent compensation offers can be pursued off-MLS.
3. Restrictions on Using Non-MLS Mechanisms for Compensation Offers
MLSs are barred from using “non-MLS mechanisms” like aggregator websites to relay compensation offers. They also cannot provide data feeds to platforms that include compensation offers from multiple brokers.
4. Written Agreements Required Before Home Tours
Agents must enter into a written agreement with buyers before touring any homes. While an exclusive agreement is not necessary, this written agreement helps clarify the agent’s role and services provided. It also offers an opportunity to educate clients about the agent's value and align on terms and expectations, including compensation.
5. Clear Definition of Agent Compensation
The settlement requires that agent compensation be disclosed in a written buyer’s agreement. This disclosure must be specific and cannot use vague language. The agreement must also state that the agent will not receive compensation exceeding the amount or rate provided in the agreement.
6. Communication of Negotiable Commissions
Agents are now required to inform clients that their compensation is fully negotiable and not set by law. This information must be included in all written agreements in clear and understandable language.
7. No Filtering of Listings Based on Commissions
Agents cannot filter or restrict listings based on the compensation offered or the name of a brokerage or agent. This rule, adopted by NAR in 2021, ensures fair consideration for all listings and agents.
8. Development of New Educational Content by NAR
NAR is mandated to create new educational materials that explain the practice changes and eliminate any previous materials that do not align with the new standards. Staying updated with these materials is essential for compliance and client education.
9. Increased Consumer Awareness About Commissions
While the settlement has not drastically changed policies, it has increased public awareness about the negotiability of commissions. The most significant impact may be a shift in public perception, empowering consumers to negotiate commissions more actively.
Commitment to Your Success
At Pries Capital Real Estate, we are dedicated to your success in buying and selling real estate. With my expertise in legal intricacies, market trends, and negotiation techniques, I am committed to delivering the best possible outcomes for my clients.
Despite the changes brought by the NAR settlement, this year’s vibrant summer selling season is in full swing. There is no better time to sell your home than now. If you would like to discuss the NAR settlement further or if you have any plans for selling your home this year, please feel free to reach out.
Best regards,
Tina Pries
Broker Owner
Pries Capital Real Estate
(843) 999-1570
