NAR's Settlement Summary
On March 15, 2024, NAR announced a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The proposed settlement terms includes a release of liability, all offers of compensation are prohibited in the MLS, All MLS Participants/Subscribers will be required to obtain a written agreement when providing brokerage services to a buyer, and includes a settlement payment.
We encourage you to read the details of each of these terms by visiting NAR’s The Facts for Realtors page. The NAR Settlement FAQs page is updated frequently and one of the best resources available.
Here are the details on how to navigate the settlement changes and what to expect. These changes are required to be in place by August 17, 2024. We want to assure our customers that realMLS has been discussing and preparing for various possible outcomes of this lawsuit for over a year. We are ready.
NAR Settlement FAQ
August 15, 2024 (NOTE NEW DATE):
All references to the listing broker’s offer of compensation to a buyer’s broker will be removed automatically from your listings-all property types. No action is needed on your part.
Fields being removed from listings:
- Buyer Brokerage Compensation and its correlating Type %/$
- Transaction Brokerage Compensation and its correlating Type %/$
- Non-Representative Compensation and its correlating Type %/$
- Dual or Variable Rate Commission Y/N
August 17, 2024:
Any offers of compensation CANNOT BE INCLUDED IN THE MLS OR ANY OTHER ANCILLARY SERVICE PROVIDED BY realMLS. To do so puts yourself, your brokerage, the MLS and the Association at risk of being in violation of the settlement. This is a part of the settlement agreement and will be aggressively monitored.
No reference to compensation can be entered into any part of a listing or any third-party ancillary product. Offers of compensation or any reference to an offer of compensation cannot be entered in:
- Any fill in the blank data field of a listing
- Directions
- Public Remarks
- Supplement
- Private Remarks
- Documents
- Photos
- Tours/Videos
- Open Houses
- 3rd Party programs such as Showingtime etc.
Some examples of terms that will be monitored are compensation, commission, bonus, concession and seller to pay if used as a form of an offer to pay compensation. If you enter “Seller to pay closing costs”, or “concession offered for flooring” that is acceptable.
Each instance will be examined by a staff member to confirm the intended context. If a violation is found it is an INSTANT $1000 fine to the agent. If not resolved within 24 hours the Broker will also then be fined $1000.
Sellers and listing brokers can still make offers of compensation to a buyer’s broker, but this must be done outside of the MLS.
Any offers of compensation cannot be included in the MLS or any other ancillary service provided by realMLS, such as showing platforms.
Effective August 17, 2024, the settlement terms mandate that MLSs must require all participants/subscribers providing brokerage services to a buyer must have a written agreement before touring a listing (services such as but not limited to identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on behalf of the buyer, presenting offers by the buyer, or other services for the buyer).
That agreement must describe the broker’s compensation and must 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
- The amount of compensation in a manner that is objectively ascertainable and not open-ended.
- 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
- A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable. (This could be on a separate agreement but is required)
MLS Participants who simply market their services or just talk to a buyer—like at an open house or by providing an unrepresented buyer access to a house they have listed will not at that time be required to obtain a Buyer’s Broker Agreement.
- The obligation to enter into a written buyer agreement is triggered just prior to an MLS Participant taking a buyer to tour a home, regardless of what other acts the MLS Participant performs for the buyer.
- An MLS Participant performing only ministerial acts—and who has not taken the buyer to tour a home—is not working with the buyer and therefore does not yet need to enter into a written buyer agreement. (Updated 7/23/24)
- The “working with” language is intended to distinguish MLS Participants who provide brokerage services to a buyer—such as identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on behalf of the buyer, presenting offers by the buyer, or other services for the buyer —from MLS Participants who simply market their services or just talk to a buyer—like at an open house or by providing an unrepresented buyer access to a house they have listed.
- If the MLS Participant is working only as an agent or subagent of the seller, then the participant is not “working with the buyer.” In that scenario, an agreement is not required because the participant is performing work for the seller and not the buyer.
- A written buyer agreement is required prior to a buyer “touring a home.” An MLS Participant “working with” a buyer can enter into the written buyer agreement at any point but must do so by no later than prior to the buyer “touring a home,” unless state law requires a written buyer agreement earlier in time (Updated 7/23/24)
- Touring a home means when the buyer and/or the MLS Participant, or other agent, at the direction of the MLS Participant working with the buyer, enter the house. This includes when the MLS Participant or other agent, at the direction of the MLS Participant, working with the buyer enters the home to provide a live, virtual tour to a buyer not physically present.
The Buyer’s Broker Agreements will be monitored and requested by the MLS for compliance reviews. Failure to provide a valid Buyer Agreement could result in a $200 fine.
Listing Agreements signed prior to August 17, 2024:
For listing and buyer agreements signed before August 17 that do not already include this
disclosure, the below is a sample compensation disclosure statement that can be used to address
the disclosure requirement.
(For agreements entered in August 17 or later, MLS participants are required to provide a
conspicuous disclosure that compensation is fully negotiable and not set by law in all listing and
written buyer agreements.
Please use the Modification to the Listing Agreement MLA-6 for the new required disclosures to amend your existing listing agreement.
Go to facts.realtor for more information about the proposed settlement agreement and the required
practice changes.
Buyers Broker Agreements signed prior to August 17, 2024:
Possibly, be sure after the effective date of this policy that all your Buyer Broker Agreements contain:
- 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
- The amount of compensation in a manner that is objectively ascertainable and not open-ended.
- 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
- A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable. (This could be on a separate agreement but is required). Please use the Compensation Disclosure Statement CDS-1. This disclosure should be given to the Buyer if the existing buyer agreement does not contain this disclosure.
These contracts/forms do not need to be amended to accomplish the new disclosures. Participants/Subscribers can do a separate disclosure to the seller/buyer to satisfy the requirement.
It may be a good idea to get a Compensation Agreement, or a Revised Compensation Agreement signed. Once the fields have been cleared from the MLS system they will no longer be visible and cannot be referenced at that point. This is not a requirement but may be a good idea to have a newly signed compensation agreement for all your Active Under Contract or Pending listings.
Click here for a video on the Compensation Forms