NAR Settlement Frequently Asked Questions

Over the last year, there has been much attention in the news regarding the class action lawsuit against the National Association of Realtors (NAR) and many major real estate brokers that focused primarily on anti-trust violations.. Specifically, the lawsuit targeted NAR’s rules requiring sellers to offer commissions to the buyers’ agents as a condition of listing on the MLS. The plaintiffs argued that this practice prevented competition and led to inflated commissions that were typically around 5-6% of a home’s sale price, which were split between the buyer’s and seller’s agents. The suit claimed this system harmed sellers, who were forced to pay buyer’s agent commissions that were artificially high, thereby violating antitrust laws.

As a result of this lawsuit NAR has put into place several new guidelines that have gone into effect as of August 2024. Keep in mind, commissions have always been negotiable and remain negotiable. We consistently see a variation in commissions amongst our clientele.

Below please find a FAQ written by the National Association of Realtors regarding the key terms of the settlement:

Release of liability: The agreement would release NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all REALTOR® MLSs, and all brokerages with a NAR member as principal whose residential transaction volume in 2022 was $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.
The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion, and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it. Individual members and all brokerages with a NAR member as principal whose residential transaction volume in 2022 was $2 billion or below are released by the agreement and not required to opt in.

Compensation offers moved off MLS: NAR has agreed to put in place a new rule prohibiting offers of compensation on an MLS. Offers of compensation could continue to be an option consumers can pursue off- MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example— concessions for buyer closing costs). This change will go into effect August 17, 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 we have agreed to require MLS Participants working with buyers to enter into written agreements with their buyers before touring a home. This change will go into effect August 17, 2024.

Settlement payment: NAR would pay $418 million over approximately four years. This is a substantial sum, and it will be incumbent on NAR to use our remaining resources in the most effective way possible to continue delivering on their core mission. NAR will not change membership dues for 2024 or 2025 because of this payment.

NAR continues to deny any wrongdoing: NAR has long maintained—and they continue to believe—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.

Practice Changes & MLS Information

The policy changes, agreed to by NAR leadership, were reviewed and updated with the changes as outlined below:

Eliminate and prohibit any requirement of offers of compensation on an MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
Retain, and define, “cooperation” for MLS Participation.
Eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation on an MLS to buyer brokers or other buyer representatives.
Require an MLS to eliminate all broker compensation fields and compensation information on an MLS.
Require an MLS to not create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for Participants, Subscribers, or sellers to make offers of compensation to buyer brokers or other buyer representatives.
Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives. Such use must result with an MLS terminating the Participant’s access to any MLS data and data feeds.
Reinforce that MLS Participants and Subscribers must not, and MLSs must not enable the ability to filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
Require compensation disclosures to sellers, and prospective sellers and buyers.
Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home.

Frequently Asked Questions

How does the settlement affect home sellers and home buyers?

This settlement would preserve the choices consumers have regarding real estate services and compensation.
After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers cannot be communicated via an MLS.
MLS Participants acting for buyers would be required to enter into written agreements with their buyers before touring a home. These agreements can help consumers understand exactly what services and value will be provided, and for how much.

Will this prohibition save money for sellers or buyers?

As NAR has maintained throughout the litigation, nothing in NAR’s current policies (including the MLS Model Rule) has increased costs for buyers or sellers.
This settlement would preserve the choices consumers have regarding real estate services and compensation. After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via an MLS.
The settlement expressly provides that sellers may communicate seller concessions—such as buyer closing costs—via an MLS provided that such concessions are not conditioned on the use of or payment to a buyer broker.

What should I tell home buyers and sellers they need to know about these changes?

Consumers should know that after August 17, 2024:

If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much.
Written agreements are required for both in-person and live virtual home tours.
You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
Agent compensation for home buyers and sellers continues to be fully negotiable.
When finding an agent to work with, ask questions about their services, compensation, and these written agreements.
More details about these changes and what they mean can be found at competition.realtor.

How will buyers brokers get paid now?

Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.
The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to:
- Fixed-fee commission paid directly by consumers
- Concession from the seller
- Portion of the listing broker’s compensation
- Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent
- Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent.

What should listing brokers advise their clients about the prohibition of offers of compensation on an MLS?

Listing brokers should inform their clients that offers of compensation will no longer be an option on an MLS.
This change will not prevent offers of cooperative compensation off an MLS. And it will not prevent sellers from offering buyer concessions on an MLS (ex. concessions for buyer closing costs).
Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

How will offers of compensation be communicated if brokers can’t use MLSs? Doesn’t this just make broker compensation less transparent?

Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions that can be used for buyer closing costs).
The settlement does not change the ethical duties that NAR members owe their clients.
REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction, honestly.
NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.
NAR remains dedicated to promoting transparency in the marketplace and working to ensure that consumers have access to comprehensive, equitable, transparent, and reliable property information.

Can an MLS have a Yes/No seller concession field that indicates whether a seller is offering any concession?

Yes, it is a matter of local discretion which may depend on an MLS’s technological capabilities and what an MLS deems to be in the interests of its market.

Does this prohibition affect the compensation amount paid to the listing broker?

Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent.

Won’t prohibiting offers of compensation on an MLS raise fair housing issues?

This settlement allows compensation to remain a choice for consumers when buying or selling a home.
NAR continues to believe that offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers.
The settlement does not change the ethical duties that NAR members owe their clients.
REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction honestly (Article 1, COE).
NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.