GLAR Update: NAR Settlement Announcement

The National Association of REALTORS® announced a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. Two critical achievements of this resolution are the release of most NAR members and many industry stakeholders from liability in these matters and the fact that cooperative compensation remains a choice for consumers when buying or selling a home. Read a summary of the key terms of the agreement below.

Release of liability: 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 a NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions.

Compensation offers moved off the MLS: NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Sellers can offer buyer concessions on an MLS (like concessions for buyer closing costs). This change would go into effect in mid-July 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 representation agreements with their buyers.

Settlement payment: NAR would pay $418 million over 4 years. This is a substantial sum, and it will be incumbent on NAR to use our remaining resources most effectively to continue delivering on our core mission. NAR’s membership dues for 2024 will not change because of this payment.

NAR continues to deny any wrongdoing: NAR has long maintained — and we 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 time saving for a down payment. With this settlement, NAR is confident it and its members can still achieve all those goals.

Your GLAR leaders and team of staff professionals continue to actively monitor the progression of this settlement as well as industry indicators and will alert members on updates affecting your business.

Earlier this year while litigation was still ongoing, we introduced our newly updated Exclusive Buyer Agency Contract for members to use when representing a client as a buyer's agent. This legal document outlines the length of your agreement as a buyer's agent, explains the role of the agent and buyer, and also details how and when the agent will be paid. This form is available on our Transaction Desk platform and you can begin using this document immediately in your real estate practice.

To our commercial members, while your business model is not directly impacted by these changes, you may see some residual effects. We will continue to monitor and inform on any impacts.

As a local REALTOR® trade association, our foundation is rooted in our Three-Way Agreement with the National Association of REALTORS®. This Three-Way Agreement has been in place for more than 100 years and empowers the REALTOR® organization. We will continue to use its combined resources and influence to have a unified, powerful voice in shaping public policy, setting recognized standards for ethical real estate practice, and contributing to the betterment of the real estate industry.

We believe that you as REALTORS® play a crucial role in real estate transactions bringing tremendous value and expertise to the process. We encourage you to promote the REALTOR® value proposition to consumers and clients using the resources listed below as we also continue to work on amplifying our public-facing efforts.