9 Key Changes Home Buyers and Sellers Need to Know from the NAR Lawsuit Settlement
The National Association of Realtors (NAR) recently settled the Sitzer/Burnett lawsuit in March, sparking widespread discussion about how it might reshape the real estate landscape. While the focus has been on how these changes will impact agents, it's essential for home buyers and sellers to understand what’s coming.
Here are nine crucial points that will likely impact your real estate experience:
1. NAR Policy Changes Begin in August
Although the settlement was reached in March, the changes aren’t immediate. The Court granted preliminary approval, and NAR announced that its MLS policy changes will go into effect on August 17, 2024. This means that the way agents work and communicate with you will start to shift around that time.
2. Commission Offers Will No Longer Appear on the MLS
One of the significant changes is that the MLS (Multiple Listing Service) will no longer display commission offers. Here’s what that means for you:
No More Required Commission Offers: Listing agents are no longer required to offer compensation to buyer agents, although they still can if they choose.
Commission Details Removed: Sellers and their agents won’t be allowed to include commission offers to buyer agents on the MLS.
MLS Membership Rules: Agents won’t need to offer or accept commission offers as a condition for MLS membership or participation.
As a buyer, this means you won’t see commission information when browsing listings. However, you can still negotiate commission details off-MLS with your agent.
3. No Workarounds for These Changes
MLSs are prohibited from using alternative methods, like aggregator websites, to bypass these new rules. They also can’t provide data feeds to platforms that aggregate commission offers from multiple brokers. This ensures transparency and consistency in how commission information is handled.
4. Buyers Must Sign a Written Agreement Before Home Tours
Before you tour a home with an agent, you’ll need to sign a written agreement. This doesn’t have to be an exclusive agreement, but it clarifies the agent’s role and the services they’ll provide. It’s an opportunity for both you and the agent to align on expectations, including compensation, before moving forward.
5. Clear Compensation Terms Are Required
Under the new rules, your agent’s compensation must be clearly defined in your agreement. No vague terms like "whatever the seller is offering" are allowed. The agreement must state that your agent will not receive compensation from any source exceeding the amount or rate specified in the agreement.
6. Agents Must Inform You That Commissions Are Negotiable
While commissions have always been negotiable, agents are now required to explicitly inform you of this. Your agreement will include clear language to ensure you understand that the commission is not fixed by law and can be discussed and adjusted to suit your needs.
7. Listings Can’t Be Filtered Based on Commissions
Agents are not allowed to filter or limit the listings they share with you based on the commission offered. Additionally, agents can’t restrict listings based on the name of a brokerage or another agent, ensuring that all properties receive equal consideration, regardless of commission details.
8. NAR Will Provide New Educational Content
As part of the settlement, NAR is tasked with creating new educational materials to help explain these changes. They’ll also remove outdated materials that don’t align with the new rules. Staying informed on these updates will help you navigate the buying or selling process more confidently.
9. Public Awareness About Commission Negotiation May Increase
While the policy changes themselves aren’t drastic, the settlement has brought more attention to the fact that commissions are negotiable. This increased awareness may influence how buyers and sellers approach negotiations, potentially leading to more conversations about commission rates.
These changes mark a shift in the real estate landscape, and as a home buyer or seller, staying informed will help you make the most of these new rules. Whether you're entering the market for the first time or are a seasoned participant, understanding how these updates affect your interactions with agents can lead to a more transparent and empowered experience.