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National Association of Realtors will Pay Half-Billion-Dollar Settlement
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National Association of Realtors will Pay Half-Billion-Dollar Settlement
NAR will pay the nearly half-billion-dollar settlement in installments, with a $197 million payment due within 90 days of final settlement approval.
Offers of compensation can no longer be made through the MLS, and MLSs will have just 150 days to update their platforms to adhere to rule changes.
Buyer agents will have to find other ways to be compensated, either by their clients directly, or through seller concessions or negotiations outside the MLS.
Buyer agency agreements will be required starting in July.
Court documents obtained by Real Estate News shed more light on the National Association of Realtors’ $418 million settlement in the commissions lawsuits, including the timeline for payment, who is — and isn’t — covered, and rule changes that will need to be implemented and followed across the industry.
How will the settlement be paid, and when?
The documents, which are expected to be filed in the Sitzer/Burnett and Moehrl cases, indicate NAR will pay the massive settlement through an installment plan, if approved by the courts.
After the settlement receives preliminary approval, NAR will have 30 days to deposit $5 million into an escrow account established by the plaintiffs.
Within 90 days of final approval, NAR will need to deposit the largest lump sum — $197 million — followed by $72 million a year later, and another $72 million within two years. In year three, the final balance, along with interest, is due.
The court documents also noted that NAR was not insolvent at the time the settlement was reached, suggesting that bankruptcy is not a concern for now.
Who is covered: In addition to NAR and its members, all state and local associations, along with association-owned MLSs, are covered under the agreement. The agreement also covers the majority of brokerage firms, with some notable exceptions.
Who’s not covered: The biggest brokerages — those who did more than $2 billion in residential transaction volume in 2022 — are not covered under the settlement. That list includes dozens of the top brokerage companies, including eXp, Compass, Howard Hanna Real Estate and Redfin.
HomeServices of America is also not a party to the agreement and is now the only defendant remaining in the Sitzer/Burnett and Moehrl lawsuits. In February, HomeServices asked the Supreme Court to throw out the Sitzer verdict.
Anywhere, RE/MAX and Keller Williams are covered under earlier settlement agreements totaling around $208.5 million.
“While we would have preferred all industry players, ultimately NAR could not persuade the plaintiffs to include the largest brokerages, particularly given the significant settlements that other corporate defendants have already reached,” NAR said in a prepared FAQ.
How compensation offers will change: The traditional approach of communicating offers of compensation via the MLS is essentially going away.
So how will buyer agents get paid?
Compensation could be paid upfront by homebuyers, included as a concession from the home seller, or through a portion of the listing broker’s compensation — but the arrangement can’t be communicated through the MLS.
Also, a buyer broker can’t receive compensation exceeding the amount agreed upon with the buyer.
Additionally, buyer agents participating in an MLS will be required to start using buyer agency agreements, if they aren’t already doing so, by July 2024.
MLS rule changes: The Multiple Listing Services will have to make significant changes to their platforms within a relatively short time period: just 150 days.
Those changes include eliminating broker compensation fields and prohibiting seller agent offers of compensation to buyer brokers “either directly or through buyers.”
Also prohibited: “Disclosing on the MLS listing broker compensation or total broker compensation (i.e., the combined compensation of both listing brokers and cooperating brokers).”
In addition, MLSs cannot provide a way for agents to filter listings based on compensation levels.
https://www.realestatenews.com/2024/03/15/nar-commissions-settlement-details-revealed
realestatenews.com
NAR commissions settlement details revealed
Court documents outline a payment schedule and a series of rule changes, including the elimination of offers of compensation through the MLS.
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