Member Resources Regarding NAR Settlement

• What does preliminary approval mean for pending or potential copycat cases?
  • Class members are now temporarily enjoined from filing, commencing, prosecuting, intervening in, or pursuing as a plaintiff or class member any claims against NAR or any released party. This prohibition applies to any and all claims, regardless of the cause of action, arising from or relating to conduct that was alleged or could have been alleged in the Sitzer-Burnett and the other settled Actions based on any or all of the same factual predicates for the claims alleged in those Actions.
  • NAR will move to have litigation about the MLS cooperative compensation Model Rule stayed, or paused, as to NAR pending the settlement approval process.
     
• Do individual NAR members need to take any action in order be covered by the settlement agreement?
  • No. If you are an NAR member as of the date of the class notice, you are covered by the settlement unless:
    • You are an employee of: At World Properties, LLC; 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; Realty ONE Group, Inc.; Redfin Corporation; United Real Estate; or Weichert, Realtors® OR
    • You are associated with HomeServices of America or one of its affiliates.
      
      The date of the class notice has not been set, but it will be sent no earlier than August 17, 2024.

Who is covered under the settlement agreement?

NAR’s settlement agreement would release the following organizations from liability for the claims brought on behalf of home sellers relating to compensation.

• All state and local Realtor® Associations
• All association-owned MLSs
• All brokerages with a NAR member as a principal whose residential transaction volume in 2022 was $2 billion or less.

To be clear, if you are a Realtor and:

• Affiliated with a brokerage group that is not listed below, you are covered (even if your brokerage may not be covered)
• Affiliated with any of these brokerage groups, and are an independent contractor, you are covered (even if your brokerage may not be covered)
  • 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; The Real Brokerage, Inc.; Realty ONE Group, Inc.; Redfin Corporation; United Real Estate; and Weichert Realtors.

How does the settlement affect brokers not included in the release?

NAR has negotiated in the settlement the option for those not included to obtain a release if they so choose to use it.  This information can be found within the NAR Settlement PDF (found under NAR Resources)

When will the terms of the settlement go into effect?

The settlement is still awaiting approval by the courts, however if approved, it is anticipated that these rules would go into effect mid-July 2024.

Keep in mind that details and timelines can still change because the proposed settlement is still subject to court approval and will take several months. 

What are the proposed changes to the MLS?

The proposed settlement prohibits all offers of compensation on the MLS. It prohibits the MLS from creating or supporting any mechanism for making cooperative compensation offers, even off the MLS.

The MLS is also prohibited from disclosing listing broker compensation or total broker compensation. Sellers will be able to offer concessions on the MLS, but they cannot be conditioned on retaining or paying a buyer representative.

Will my NAR membership dues increase to cover the cost of the settlement?

NAR would pay $418 million over approximately 4 years.  NAR will use remaining resources in the most efficient way possible.  NAR has stated that their membership dues for 2024 and 2025 will not change because of this payment.

Written agreement required when working with buyers

Under the proposed settlement, a new requirement will emerge that states a written agreement must be entered into between the buyer agent and the buyer.  This agreement must disclose the amount of compensation and how it will be received and cannot be “open-ended”.  It also states that compensation may not be from any source that exceeds the amount or rate agreed to with the buyer.

Please be sure to view questions 44-62 on the NAR Settlement site for more specific answers to questions regarding written agreements

Can a listing broker still offer cooperation OFF THE MLS?

Yes, there are no prohibitions in the settlement regarding offers of compensation made to buyer brokers or other buyer representatives outside of the MLS.

There will continue to be many ways in which buyer brokers could be compensated, including through offers of compensation communicated off the MLS.  However, using the MLS to communicate these offers will no longer be an option.

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
• Portion of the listing broker's compensation
   

What about VA Loans and the prohibition on buyers paying commissions directly?

NAR has engaged with the VA on this issue and remains committed to working with them.  The VA has not yet addressed whether it will change its requirements.

Are GMAR’s forms compliant with the settlement?

While we are still awaiting the details of the approved settlement, we are certain that minor revisions will be required to some of our forms.  We anticipate that we will be making these changes shortly and will provide to our forms vendors as soon as available, with notice to membership.

The changes proposed in the settlement agreement do not prevent offers of compensation to buyer brokers or other buyer representatives off the MLS; and they also do not prevent sellers from offering buyer concessions on a Realtor® MLS (e.g., for buyer closing costs).

NAR has created a central resource for updates and materials about NAR's commitment to strengthen the association, defend the Realtors and their immense value and look into the future.

This page can be accessed by visiting Facts.Realtors

"TheTruth About the NAR Settlement Agreement" Realtor Magazine article published by NAR (03/22/2024)

Kevin Sears, NAR President & Katie Johnson, NAR Legal Counsel:  Briefing (03/22/2024)

NAR Settlement Overview (PDF)

NAR Settlement Timeline (PDF)

Kevin Sears:  Discussing Key Settlement Considerations and Ongoing Advocacy Efforts  (03/21/2024)
A message from the NAR President Kevin Sears about recent association developments and priorities

Litigation Update Video with Kevin Sears and Katie Johnson

Read the NAR Press Release
NAR Reaches Agreement to Resolve Nationwide Claims Brought by Home Sellers

Download the Settlement Agreement (PDF)
Legal documentation of the settlement

Download the Fact Sheet (PDF)
Read the details of NAR's action

Litigation FAQ - March 20, 2024 (PDF)
Financing FAQ - March 20, 2024 (PDF)
Frequently Asked Questions about the settlement for NAR members

March 19, 2024

Following recent inaccuracies in media coverage, including the false representation or suggestion that the National Association of REALTORS® (NAR) requires a standard 6% commission, NAR has issued the following statement:

CHICAGO (March 19, 2024) – The National Association of REALTORS® (NAR) does not set commissions – they are negotiable. The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation. That offer can be any amount, including zero. And other rules throughout the MLS Handbook and NAR policy expressly prohibit MLSs, associations, and brokers from setting or suggesting any such amount that should be included in that field. The text of the current rule is linked here and excerpted below, the text of our MLS Antitrust Compliance Policy is linked here and excerpted below, and a notice included in NAR’s MLS Handbook is below.

Again, the current rule that has been the subject of litigation does not set commissions.  

As reflected in our release about the proposed settlement agreement, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS.  Commissions remain negotiable, as they have been.

Excerpt from Handbook on Multiple Listing Policy – Commission/Cooperative Compensation Offers, Section 1: Information Specifying the Compensation on Each Listing Filed with a Multiple Listing Service of an Association of REALTORS® 

In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.

The listing broker retains the right to determine the amount of compensation offered to subagents, buyer agents, or to brokers acting in other agency or nonagency capacities, which may be the same or different.

Excerpt from Handbook on Multiple Listing Policy – MLS Antitrust Compliance Policy 

The purpose of multiple listing is the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public. Boards and associations of REALTORS® and their multiple listing services shall not enact or enforce any rule which restricts, limits, or interferes with participants in their relations with each other, in their broker/client relationships, or in the conduct of their business in the following areas.

Boards and associations of REALTORS® and their MLSs shall not:

1. Fix, control, recommend, or suggest the commissions or fees charged for real estate brokerage services (Interpretation 14).
2. Fix, control, recommend, or suggest the cooperative compensation offered by listing brokers to potential cooperating brokers.

Excerpt from Handbook on Multiple Listing Policy – Notice to Association Members

Under the long-established policy of this association, the (state) association of REALTORS®, and the National Association of REALTORS®:

1. The broker’s compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement.
2. The compensation paid by a listing broker to a cooperating broker in respect to any listing is established by the listing broker and is not fixed, controlled, recommended, or maintained by any persons other than the lister broker. (Amended 4/92)

About the National Association of REALTORS®

The National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.

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Take a few moments and view Michigan Realtors Letter of the Law to learn additional information from Brian Westrin

Listen to Becky Burke from Michigan Realtors answer some top questions on this edition of From the Mailbag

View the Michigan Realtors Seller Concessions Addendum 

GMAR Forms
GMAR has revised several of the forms in our library and will be distributing these forms, to our members, in the next two weeks (by July 19). These forms will also be provided to the various transaction platforms, for ease of use. Updated forms will be distributed to our Ann Arbor Area Chapter members as well. 

GMAR MLS
On Tuesday, August 13, 2024, Compensation fields will be removed from Flexmls.  Please note that when these fields are removed, it will remove all historical data as well as it pertains to the commission/compensation fields.

In addition to the removal of any compensation fields, you will see Seller Concession fields will be added.  It is important to note that Seller Concessions are not binding, are not exclusive or limited to only buyer broker compensation.  These optional fields at listing input will include:

• Concessions?  Yes / No
• Concession Amount Type:  $ (dollar) or % (percentage)
• Concession Amount:  (numeric field only)

This field can be used to communicate financial incentives that the seller is willing to consider, if at all, to the buyers fees.  This can be used for a variety of expenses that the seller may incur, such as closing costs, repairs/improvements, title, and payments to a buyer’s broker. 

This field is not to be used for compensation (broker to broker).  As the NAR Settlement states, compensation must remain off the MLS.  However, if the buyers broker was paid by concessions, this amount can be denoted in the concessions fields at closing.

You can find more information at https://gmaronline.com/mls 

Communication and Education
Our Communication and Education departments are working to provide more educational options to ensure our members are fully equipped to navigate the transition seamlessly. We are also working to deliver crucial information to our members as it is released.

We encourage you to register for an upcoming Agency course, or Accredited Buyer's Representative (ABR) Designation course. The ABR Designation course is currently being offered to all members at no charge.  Visit our full education calendar for dates.

Our staff and leadership will continue to ensure we have the most current information to help lead our members through these changes.

It is important for you to learn the facts and assess the future. There is an opportunity for the industry to thrive as these changes play out. Here are things you can focus on and control right now:

• Understand Buyer Representation Agreements. According to the proposed settlement, starting in July, a Buyer Representation Agreement must be signed before showing any property.
• As a listing agent, learn to effectively communicate how the buyer’s agent can be paid, how sellers can participate, and the potential impact to the seller.
• If you do not already, make buyer consultations a part of your business in the way that you have always had seller consultations. Have a solid presentation that defines your value and your fee.

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1. Are REALTORS® who deal in commercial real estate covered under the terms of the agreement? 
   
   The settlement does not distinguish between REALTORS® who deal in commercial real estate from those who work in residential real estate.
   
   If you are an NAR member, you are covered by the settlement unless:
   
   You are an employee of: 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® 
   
   You are an independent contractor or employee associated with HomeServices of America or one of its affiliates.

2. What do these practice changes mean for commercial practitioners?  
   
   The proposed settlement agreement—like the Sitzer-Burnett lawsuit and the copycat lawsuits—is focused on residential real estate transactions. That means most commercial transactions will not be affected.
   
   In many markets, commercial listings appear in commercial information exchanges (CIEs) and not multiple listing services (MLSs), and do not include an offer of compensation. 
   
   The settlement prohibits offers of compensation on the MLS and requires MLS participants working with buyers to enter into written agreements with their buyers. These practice changes will go into effect around late July.