Understanding the National Association of Realtors’ (NAR) Settlement: What Homebuyers and Sellers Need to Know
For months, homebuyers and sellers have been seeking clarity from Realtors about the National Association of Realtors’ (NAR) settlement concerning broker commissions. Initially expected by late July, the changes are now set for August 17, coinciding with the class notice date as stipulated by the settlement.
The NAR recently discussed the settlement with U.S. Assistant Attorney General Jonathan Kanter, and the U.S. Justice Department is closely monitoring the updates. For detailed information, consumers are encouraged to visit the NAR’s settlement FAQs page.
Key Points of the NAR Settlement
Background: Homeowners filed class-action lawsuits against the NAR, accusing it of maintaining high broker commission rates and discouraging competitive terms. The NAR, which has 1.5 million members and significant control over Multiple Listing Service (MLS) systems, agreed in March to settle for $418 million over four years and to implement new rules regarding broker commissions. A federal judge in Missouri granted preliminary approval for the settlement on April 23. The NAR denies any wrongdoing.
Impact on Homebuyers, Sellers, and Realtors:
- Homebuyers: Starting August 17, buyers must sign an agreement detailing their broker’s commission before a Realtor can represent them and show properties. These agreements will outline the expected services and disclose the agent’s compensation.
- Sellers: Traditionally, sellers pay broker commissions, with the seller’s agent splitting the commission with the buyer’s agent. While this practice might change under the new rules, the NAR emphasizes that commissions have always been negotiable.
- Realtors: The settlement introduces significant changes, especially regarding MLS listings. Offers of broker compensation will no longer appear on the MLS but can still be negotiated off MLS with real estate professionals.
Key Dates to Remember:
- August 17: Implementation of changes.
- September 16: Deadline for other MLS systems to adopt practice changes to be considered “released parties” under the settlement.
- November 26: Final court approval for the settlement.
Thanks for reading,
Chris
