The National Association of Realtors (NAR) settlement is a hot topic, with headlines flying and questions swirling. As your trusted Realtor with over 10 years of experience in the real estate industry, I want to cut through the noise and empower you to navigate this evolving market with confidence.
Understanding the Sizter-Burnett Lawsuit and Verdict :
The Sizter-Burnett lawsuit, filed in 2020, challenged the traditional real estate commission model in the United States. These lawsuits essentially argued that the cooperative commission model, where buyer and seller agents split the commission, violated antitrust laws. The plaintiffs argued that the system stifled competition and prevented home sellers from negotiating lower commission rates. NAR argued that cooperative compensation makes the process smooth and efficient while ensuring that buyers benefit from professional representation if they so choose. They argued cooperation benefits sellers by bringing more buyers to the market.
The 2020 verdict did not definitively rule on the legality of the cooperative commission model. However, it raised significant questions about the practice and opened the door for similar lawsuits across the country. The Sizter-Burnett verdict, and subsequent copy-cat lawsuits, pressured NAR to seek a resolution. In 2024, the NAR reached a proposed settlement agreement to address the concerns raised in the lawsuit. The settlement is still awaiting court approval.
NAR’s Proposed Settlement:
- Compensation Offers Off the MLS: The settlement mandates a new rule prohibiting offers of buyer agent compensation on the MLS platform. However, negotiating compensation agreements outside the MLS would still be permitted. Sellers can continue to offer buyer concessions on the MLS (e.g., closing cost assistance). If approved by the courts, this change would take effect in mid-July 2024.
- Written Buyer Representation Agreements: Another significant change is the requirement for MLS participants working with buyers to have written representation agreements with their clients. This ensures that buyers have a clear understanding of the services provided and the associated compensation structure. This practice has been in place for years, but was never a requirement. , If approved by the courts, this too, would take effect in mid-July 2024.
While the immediate impact on consumers might be minimal, it’s important to be aware of the changes:
- Greater Transparency: Written buyer representation agreements should lead to clearer communication about fees and services offered by buyer agents. You’ll know more about what your buyer’s agent is receiving in compensation and how it will be obtained.
- Potential Shift in Compensation Structure: Consumers might see more discussions around commission structures that move beyond the traditional split. Realtors might get more creative with how they structure their fees with you. Be prepared to discuss different options.
- Continued Importance of Research: Choosing a qualified and experienced real estate professional will remain critical, regardless of the compensation model. No matter how agents get paid, finding a good one who works for you is still key.
Again, this settlement has not been approved. If you have questions on how this potential settlement will affect your plans, please don’t hesitate to reach out. I will be happy to meet for coffee or lunch to discuss how to strategize and help turn this change into an opportunity for your 2024 real estate plans.
Click here for the NAR Settlement Web Site with Up-to-Date Information
*Please note the NAR settlement is still waiting court approval. More up-to-date information can be found here. The real estate industry is rapidly changing right now and the answers to these questions are fluid and can change as new information becomes available. Right now, I am sharing information based on my interpretation of current events. Please contact an attorney or a local Realtor in your area for what directly applies to you and your situation.
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