Frequently Asked Questions about the NAR Settlement
The National Association of REALTORS® (NAR) has reached a significant settlement in response to lawsuits concerning real estate broker commissions. This settlement aims to enhance transparency and fairness in the real estate market while protecting the interests of both consumers and REALTORS®. Key changes include new practices for MLS listings and buyer agreements, set to take effect in August 2024. This FAQ outlines the essential details and implications of the settlement for industry professionals and consumers alike. For full explanation and FAQ visit NAR's website.
Settlement Overview and Key Terms
NAR entered into the settlement to:
- Secure a release of liability for as many members, associations, and MLSs as possible.
- Preserve consumer choices regarding real estate services and compensation.
- Release of Liability: Over one million NAR members, state/territorial and local REALTOR® associations, REALTOR® MLSs, and brokerages with an NAR member as principal with residential transaction volume in 2022 of $2 billion or below are released from liability.
- Compensation Offers Moved Off MLS: NAR will prohibit offers of compensation on an MLS starting August 17, 2024. Offers can still be made off-MLS through negotiation.
- Written Agreements for MLS Participants: MLS Participants working with buyers must enter into written agreements with their buyers before touring a home, effective August 17, 2024.
- Settlement Payment: NAR will pay $418 million over approximately four years without changing membership dues for 2024 or 2025.
- NAR Denies Wrongdoing: NAR maintains that cooperative compensation and its policies benefit buyers and sellers and denies any wrongdoing.
No, NAR continues to deny any wrongdoing and believes that cooperative compensation benefits buyers and sellers. The settlement aims to resolve litigation while preserving consumer choice and protecting members.
No, NAR maintains that the policy is beneficial and denies any wrongdoing. The settlement is a strategic decision to protect members and consumers.
NAR considered various legal options, including appealing and Chapter 11 reorganization. The settlement was chosen to reduce liability for over one million members and other parties, providing a path forward for the industry.
- Preliminary approval was granted on April 24, 2024.
- Practice changes will take effect on August 17, 2024.
- The final approval hearing is scheduled for November 26, 2024.
Who is covered?
If you are an NAR member as of the date of the class notice and not an employee of a remaining defendant, you are covered. Class notice will be sent out no earlier than August 17, 2024.
You must be an active NAR member as of the date of class notice to be covered. Resigning or inactive membership before the class notice date disqualifies coverage.
Except for members affiliated with HomeServices of America and employees of remaining corporate defendants, members affiliated with large brokerages are covered. Individual members and brokerages with transaction volume below $2 billion are released from liability.
The agreement provides a mechanism for brokerages with over $2 billion in transaction volume to obtain releases efficiently if they choose to opt in.
Despite NAR's efforts, plaintiffs would not agree to include all members. However, NAR secured a mechanism for nearly all large brokerage entities to obtain releases if they choose to opt in.
- Preliminary approval was granted on April 24, 2024.
- Practice changes will take effect on August 17, 2024.
- The final approval hearing is scheduled for November 26, 2024.
Yes, they are included in the release.
No, NAR fought to include as many members as possible. The largest companies are no worse off than before the settlement, and many are better off as their independent contractor agents are released.
Eligible brokerages must agree to and execute the Brokerage “Opt In” Agreement and return it with required documentation within 60 days of the preliminary approval motion.
REALTOR® MLSs must execute the REALTOR® MLS “Opt In” Agreement and implement the practice changes by August 17, 2024.
An MLS not opting in will not be covered by the release of the proposed settlement agreement.
Practice Changes & MLS Information
- Prohibit offers of compensation on an MLS.
- Define "cooperation" for MLS Participation.
- Eliminate broker compensation fields on an MLS.
- Prohibit MLS data use to establish compensation platforms.
- Require compensation disclosures to sellers and buyers.
- Require written agreements for MLS Participants working with buyers.
MLSs provide significant value by enabling comprehensive marketplaces, ensuring reliable data access, creating connections, advancing small businesses, and encouraging entrepreneurship.
For full explanation of the NAR settlement and more questions please visit NAR's Website.
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