NAR Settlement Updates

A: There are two proposed rule changes that are part of the settlement. NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. Brokers and agents will have to negotiate compensation directly with their client. Additionally, NAR will require agents to enter into written buyer agreements with their buyers before touring a home. Click HERE for a link to the key points of the settlements and new policies for MLS subscribers.

A: Subject to the court’s approval, the proposed rule changes will take effect late July 2024. The settlement is subject to court approval, which is a process that we can expect to take several months or more and will include an opportunity for interested parties to object. In large class action settlements like this one, objections are common.

A: According to NAR rules under which we must operate, being a REALTOR means joining the national, state, and local associations. REALTOR® means member of the National Association of REALTORS®. Therefore, all REALTORS® belong to the National Association of REALTORS® and agree to abide by our Code of Ethics. In order to maintain REALTOR® membership, members must pay local, state, and national association dues and assessments. There is no ability to bifurcate membership between local, state, or national associations.

A: HAR dues will remain unchanged as they have for the last 20 years. When it comes to NAR dues, NAR says its dues will not go up in 2024 and 2025 because of the payment that is being made as part of the settlement.

A: Texas REALTORS® is reviewing existing forms and has created a task force to gather member input on the potential need for new or revised forms. Texas REALTORS® is particularly focused on client representation and broker compensation to ensure those issues are addressed in the forms in a way that meets the needs of Texas REALTORS® members and their clients going forward.

Yes. Compensation is currently negotiable and will continue to be negotiable. Compensation should always be negotiated between agents and the consumers they serve.

A: Yes. Offers of compensation can continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. According to NAR, listing brokers could display an offer of compensation to a buyer agent on their own website or on social media. However, sellers can still offer buyer concessions (i.e. buyer closing costs) on the MLS.

A: Offers of compensation cannot be displayed in ShowingSmart since it is affiliated with HRIS.

A: Under NAR’s proposed rule changes, offers of compensation cannot be communicated through the MLS.

A: A Listing Agent could include a note to contact the Listing Agent for more information, but use of the word commission, compensation or a related term in the Agent Remarks is not allowed. You may also include a link to the broker’s website which may or may not display the offer of compensation in its listing but not link directly to the page for that listing.

A: No. That would not be allowed as that is still an offer of compensation being made through the MLS.

A: Only if it is outside the MLS.

A: This would still relate to compensation, so we cannot add this field.

A: The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

-Fixed-fee commission paid directly by consumers

-Concession from the seller

-Portion of the listing broker’s compensation

A: If the sales contract is signed before the MLS policy change, the buyer broker should be able to rely upon the offer of compensation even if closing occurs after the date of the policy change. But if the sales contract is not signed before the date the participant’s MLS implements the policy changes, the offer on the MLS will not be valid and buyers and buyer brokers may wish to protect themselves in writing with the listing broker or seller through a broker agreement or by including the offer of compensation in the sales contract.

A: No. A buyer can always ask their buyer broker to make it a term of an offer to purchase that the seller pay certain compensation to the buyer broker.

Standard of Practice 16-16 prohibits a REALTOR® from attempting to modify the terms of a listing agreement through the terms of an offer because the listing agreement is a contractual matter between the seller and the listing broker. However, the seller and the listing broker may independently choose to amend the listing agreement or take any other action they deem appropriate based on the seller’s negotiations with the buyer. Standard of Practice 16-16 also prohibits a REALTOR® from delaying or withholding delivery of a buyer’s offer while attempting to negotiate a buyer broker compensation.

A: The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

-Fixed-fee commission paid directly by consumers

-Concession from the seller

-Portion of the listing broker’s compensation

A: Listing brokers should inform their clients that offers of compensation would no longer be an option on an MLS. This change will not prevent offers of cooperative compensation off an MLS. And it will not prevent sellers from offering buyer concessions on an MLS (for example – concessions for buyer closing costs). Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

A: Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).

A: No because there will be no information in the feed to display.

A: Bonuses will not be able to be expressed in the MLS based on the terms of this settlement.

A: Yes. It is a contract, so it is enforceable.

A: The MLS will be responsible for enforcing the rule regarding written agreements, similar to how the MLS enforces other existing rules.

A: No. We do not believe that an unrepresented buyer at an Open House invokes the requirement of having a Buyer Representation Agreement in place.

A: The Listing Agent may show a listing to an unrepresented buyer since they would not be seeking services from that Listing Agent who is already obligated to represent the interests of the seller.

A: The settlement only deals with properties for sale on this issue of buyer representation, and it does not address rentals or change anything about needing a written agreement prior to showing a rental property. It would still be a smart idea to have a conversation with the client about how the agent will be compensated and have the Buyer/Tenant Representation Agreement signed.

A: No. The settlement and the practice changes it requires are focused on residential transactions, not commercial transactions or leases.

A: Written buyer agreements are required before a buyer tours a home for sale listed on the MLS. 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(s) 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.

A: No. MLS participants and buyers will still be able to enter into any type of professional relationship permitted by state law. NAR policy does not dictate: what type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer), the term of the agreement (e.g., one day, one month, one house, one zip code), the services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers) or the compensation charged (e.g., $0, X flat fee, X percent, X hourly rate).

A: No. The new rule will cover every type of relationship where an MLS participant is working with a buyer.

A: No. If the MLS participant is working only as an agent or subagent of the seller, then the participant is not working for the buyer. In that scenario, an agreement is not required because the participant is performing work for the seller and not the buyer.

A: Yes. If an MLS participant is working as an agent for a buyer, a written agreement is required.

A: Yes. If an MLS participant is working as an agent for a buyer, a written agreement is required.

A: Yes. MLS participants working with a buyer after the effective date of the policy should take steps to ensure that the buyer has agreed to the necessary terms required by the settlement agreement.

A: MLS participants must make this disclosure, but active agreements do not need to be amended to accomplish this. MLS participants can do a separate disclosure to satisfy the requirement.

A: If the sales contract is signed before the MLS policy change, the buyer broker should be able to rely upon the offer of compensation even if closing occurs after the date of the policy change. But if the sales contract is not signed before the date the participant’s MLS implements the policy changes, the offer on the MLS will not be valid and buyers and buyer brokers may wish to protect themselves in writing with the listing broker or seller through a broker agreement or by including the offer of compensation in the sales contract.

A: No. The settlement and the practice changes it requires are focused on
residential transactions, not commercial transactions or leases.

A: This is not needed under the terms of the settlement. 

A: NAR recently submitted a letter to the Department of Veterans Affairs (VA) urging them to revise its policies pertaining to fees veterans cannot pay when using their VA home loan benefit. NAR specifically calls on the VA to allow their buyers to compensate their representative directly, which is currently prohibited under their policies. The letter stresses the importance of professional representation for veterans in the purchasing process and outlines the potential consequences for VA buyers in situations where compensation is not offered from a seller.

A: No. Under the settlement, buyers still have the same options when it comes to compensating their real estate representatives. That is, the listing brokers can compensate the buyer broker, the seller can compensate the buyer broker, or the buyer can compensate their broker directly. Based NAR’s interpretation of current guidance, buyers should still be able to get financing from Fannie Mae, Freddie Mac, and the FHA under these scenarios. NAR is working to verify that this interpretation will hold. However, none of these agencies will allow the buyer to finance a commission into the mortgage at this time.

A: According to NAR, financing commissions is not feasible under the current structure of the residential mortgage finance system, and there is no clear short-term legislative or regulatory fix.

A: This settlement would preserve the choices consumers have regarding real estate services and compensation.

A: The field for offers of compensation will no longer be allowed in the MLS, so an agent working with a renter would need to contact the property manager/owner/leasing agent to find out what, if any, compensation is being offered.

• -MLS participants working on behalf of buyers would be required to enter into written agreements with their buyers before touring a home. These agreements can help consumers understand exactly what services and value will be provided, and for how much.

A: The practice changes will go into effect in late July 2024.

A: No. The MLS rules for off market sales or pocket listings are not impacted by the proposed settlement.

A: Intermediary may be a practice that becomes more popular for a listing agent confronted with an unrepresented buyer who might accept the intermediary relationship for the one property transaction.

 

A: No. The settlement only deals with residential real estate. There are no changes that would be required for the commercial real estate industry as a result of the settlement.

A: HAR is offering a Value Propositions for REALTOR® class each month to help our members present themselves in the best way possible. We will incorporate any required changes into our contracts classes, as well as any others that are appropriate. Once we know more, if it warrants having a dedicated class, we will certainly offer that as well. Also, look for other supporting materials and webinars to answer questions going forward. You may visit www.har.com/edu for more course information or to register today.

A: The DOJ investigation is a completely separate legal process from the proposed settlement, so it would have no impact on it. What it does mean is that there could still be practice changes down the road as a result of the DOJ investigation. However, there is a chance that the DOJ could oppose or concur with the current settlement depending on what it files, if anything, with the court that will ultimately approve the settlement or not.

A: You can find more information as well as FAQs on NAR’s website.