NARs Settlement and the MLS
On March 15th, the National Association of Realtors® (NAR) entered into a settlement agreement with plaintiffs that would end litigation of claims brought on behalf of home sellers related to broker commissions across the United States.
The settlement now has preliminary approval which is a strong marker that it will gain final approval. The agreement would release NAR, over one million NAR members, all state/territorial and local Realtor® associations, all association-owned MLSs, and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below from liability for the types of claims brought in many national cases on behalf of home sellers related to broker commissions.
Below you will find information and guidance on how the proposed settlement will affect the MLS platform, policies and procedures. These MLS changes will apply to all MLS subscribers and participants. Keep in mind that the Association of Realtors® and the MLS are two separate entities and we work to enhance the business of all MLS members equally.
Know The Facts
Whether or not you are a Realtor® member, make sure you are aware of the facts around this settlement, which will have a large impact on our industry as a whole.
In an effort to focus here solely on the MLS effects of the settlement, we won't recreate resources posted elsewhere. We encourage you to read the materials directly from the source.
To explore the material that NAR has posted, explore their Facts for Realtors® webpage. Or You might also like to jump straight to their extensive FAQs.
1. Review the changes to the MLS platform
The NAR settlement terms, as negotiated by NAR, include discontinuing the inclusion of a listing broker's offer of buyers agent compensation in the MLS platform (or any similar platform). Late Summer 2024, we will remove the compensation field set from MLS Listing Input. We will provide a specific date closer to time.
While this change in the settlement directly affects offers of compensation in the MLS, should a seller instruct their listing brokerage to offer compensation to a buyers agent, this can occur outside of the MLS - but no offer can be listed in any field in the MLS (including notes/remarks).
While this will be very different from what we are all used to, the result of this change will be more discussion, transparency, and collaboration between all parties, and is a required term negotiated by NAR in the national settlement.
It is important that BCAR/NCRMLS members do not attempt to manipulate listings to insinuate what an offer of compensation may be. That practice would only make this transition more difficult for our industry. Do not use public or private remarks, photos, documents, or any other field.
2. Confirm your buyer broker agreement practices
The settlement terms, as negotiated by NAR, mandate that MLSs must require all participants working with a buyer to have a written agreement before touring a listing. That agreement must describe the broker’s compensation, the amount must be objectively ascertainable and not open-ended, and the broker may not receive compensation from any source that exceeds the amount in the agreement.
This required change will go into effect on late Summer 2024, when the other changes take place.
3. Review the reminders
Alongside the larger changes noted above, these items are part of the NAR-negotiated settlement as well. While some of these are already in effect in our Rules & Regulations, please review the full list.
No advertising services as free.
MLS participants and subscribers are not permitted to represent their services as free.
Participant disclosure regarding offers.
MLS participants and subscribers are required to disclose to sellers and obtain seller approval for any payment or offer, if any, the listing broker or seller makes to another broker, agent, or representative (e.g., attorney) working with a buyer.
Participant disclosure regarding commissions.
MLS participants and subscribers are required to disclose to sellers and buyers that commissions are not set by law and are fully negotiable in listing agreements, in their buyer broker agreements, and in pre-closing disclosure documents, if any (unless it’s a government specified form).
No filtering.
MLS may not facilitate filtering out listings based on the existence or level of compensation offered to the broker assisting the buyer.
Off MLS offers permitted.
The above changes do not prevent offers of compensation to buyer brokers outside of the MLS.
Concessions in MLS permitted.
Sellers may offer buyer concessions on the MLS (e.g., for buyer closing costs), so long as they are not limited to or conditioned on the retention of or payment to a cooperating broker.
4. Strengthen your practices
Even though the MLS changes will not be in place until late Summer 2024, you can do several things to strengthen your business now. If you are not sure where to begin, check in with your Broker-in-Charge.
- Stay Informed:We encourage you to stay informed about this case and its implications for our industry.
- Professional Conduct:Continue to uphold the highest standards of professional conduct and ethical behavior in all your transactions.
- Transparently Discuss Costs: Ensure that you continue to clearly and transparently explain all costs, including commissions and fees, to your clients. It's crucial that clients are fully aware and understand the financial aspects of their transactions.
- Buyer Broker Agreements & Showings: Ensure Buyer Broker Agreements are signed and transparent prior to touring a home. These agreements should include
- a specific and conspicuous disclosure of the amount or rate of compensation the Participant will receive or how this amount will be determined, to the extent that the Participant will receive compensation from any source;
b. the amount of compensation in a manner that is objectively ascertainable and not open-ended.
c. a term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
d. a conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.
amber@bcarnc.com | 910-754-5700