The National Association of Realtors (NAR) recently reached a proposed settlement in a class-action lawsuit regarding broker commissions, and the U.S. District Court for the Western District of Missouri granted preliminary approval on April 23, 2024. The judge found the proposed changes to be “fair, reasonable, and adequate,” and a final approval hearing is scheduled for November 26, 2024. The settlement will bring major changes to how real estate commissions are handled, specifically prohibiting offers of cooperative compensation on NAR-owned MLS systems and requiring written agreements between agents and buyers before a home tour, detailing how the buyer’s broker will be compensated.
In addition, NAR has updated its policies around written buyer agreements, clarifying that agents must have a written agreement with buyers once they start working together. This agreement must outline compensation, which cannot be open-ended. While agents can still be compensated directly by sellers, buyers, or through other means, the offer of compensation cannot be communicated through MLS. This shift requires agents to adjust their practices, and agents should begin updating their agreements now to comply with these new regulations. The case will have wide-reaching implications for the real estate industry, especially concerning agent compensation models and buyer relationships.
For further reading on how these changes might affect the real estate landscape, check out the Sherman Antitrust Act’s implications for broker commissions and how similar lawsuits have shaped other industries. Additionally, you might explore resources on MLS practices and how policy changes like this can shift the balance between transparency and competition.