Major changes are on the horizon for residential real estate after the National Association of Realtors (NAR) recently agreed to a seismic $418 million settlement over broker commissions.
The disagreement originated in Missouri, where a group of home sellers brought an antitrust class action lawsuit against NAR alleging that NAR and several large brokerage companies adopted illegal rules requiring home sellers to pay buyers’ broker commissions—at inflated rates—along with their own brokers’ commissions. These rules and practices allegedly led to increased fees and lower quality service for home buyers and sellers. A jury agreed, finding the NAR had engaged in anticompetitive practices in a case expected to substantially change the future of home buying and selling.
Complete Coverage of the NAR's Seismic $418M Settlement
Details of the NAR's Settlement
The NAR announced Friday, March 15, 2024, they had reached an agreement, pending court approval, that would see the organization pay $418 million in damages over four years and change rules governing commissions.
“It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” Nykia Wright, Interim CEO of NAR, said in the NAR’s settlement announcement.
Under the agreement, the NAR, which represents more than 1 million Realtors, also agreed to enact a new Multiple Listing Service (MLS) rule that prohibits broker compensation offers on the MLS. Conversations regarding compensation must now occur off the MLS. The NAR also agreed to require MLS participants working with buyers to reach a written agreement with clients.
Quick Recap of All NAR Settlement Changes
- Release of most NAR members and industry stakeholders from liability
- New MLS rule prohibits offers of broker compensation on the MLS
- Cooperative compensation remains a choice—but must occur off the MLS
- MLS participants working with buyers must reach a written agreement with their buyers
Each of these changes will go into effect in mid-July 2024. The NAR has created an estimated timeline of key upcoming milestones to summarize the dates found in the 108-page NAR settlement agreement.
The Latest NAR Settlement News
Since the announcement in mid-March, the NAR has released a series of statements "correcting the record" and addressing what they see as “pervasive” misinformation regarding the settlement—even going as far as to correct President Joe Biden.
Since the agreement is still pending court approval, with a decision on preliminary approval expected in early April, this situation remains in flux.
To help Realtors stay updated, the NAR has created an NAR Settlement Facts home page as a resource for all the changes and when they take effect. There, the NAR offers a host of helpful resources, from frequently asked questions to a 35-minute Real Estate Today podcast featuring NAR President Kevin Sears on the settlement and what it means for the industry.
The Role of Real Estate Continuing Education
The implications for this case are so wide-ranging that, once resolved, buyer broker compensation and representation will no doubt be part of every broker's training and ongoing continuing education courses.
Given this shifting landscape, agents must be aware of the latest industry announcements and updates regarding buyer broker commissions to ensure they’re complying with the new rules. Become the trusted source for your clients with WebCE’s real estate CE courses created by award-winning, REEA Gold Standard Instructors that bring you the most up-to-date information.
WebCE’s online real estate continuing education courses can help every professional stay updated on the latest court rulings and regulatory changes. Our flexible and interactive platform enables learners to progress at their preferred pace as they navigate the latest changes in real time.