Worth Real Estate Company is committed to making sure every client is up to date with the latest happenings, not only throughout specific real estate geographic markets, but also in the industry as a whole. The National Association of REALTORS® (NAR) has recently taken over some news headlines ‘real estate’ over their recent settlement on an ongoing litigation.
“From the start of this litigation, we knew we had a profound obligation to reach a resolution that’s best for not just the National Association of REALTORS® but for our members and our industry.” Kevin Sears, President of the National Association of REALTORS®.
So, what was the litigation about, exactly? And what does the settlement mean for agents, brokers, and clients moving forward? We’re here to break it down.
Who is NAR
NAR is America’s largest trade association, representing 1.5 million+ members, including NAR’s institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries. Members include residential and commercial brokers, salespeople, property managers, appraisers, counselors, and others who have a hand in the real estate industry.
NAR Litigation and Settlement
In 2019, the NAR faced a lawsuit that accused the organization of inflating commissions and blocking competition through conspiring with multiple listing services (MLSs) and real estate brokerage firms. Since then, after years of litigation the NAR has reached a settlement agreement that, according to the NAR, would “resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.” The organization will pay $418 million over approximately four years.
NAR denies all claims against the MLS cooperative compensation model rule (MLS Model Rule). NAR doesn’t set commissions and they have always been negotiable, remaining entirely between the broker and their client. Surrounding this litigation, there has also been some buzz on an alleged standard of 6% commission required by the NAR. However, the published NAR rule required that listing brokers merely “communicate an offer of compensation…that offer can be any amount, including zero.”
So, what’s the impact? A new MLS rule will be put in place prohibiting the offer of compensation to buyers’ agents in the MLS. Seller concessions (closing costs, prepaids, etc) will still be allowed in the MLS and sellers can still pay buyer’s agents commissions. This amount can be negotiated outside of the MLS and such agreements are recommended to be in writing.
The settlement will face final court approval in mid-to-late July of this year.
The Only Real Estate Company Worth Knowing
Worth Real Estate Company has spent decades ensuring communication is a priority. As a quality realtor, David Worth negotiates commissions in writing, practices full transparency between agents and remains compliant with all regulations in the industry.
The settlement continues to reflect the priorities of the NAR, protect its members, advance the right to real property ownership, and preserve consumer choice. The support of honest real estate agents will always deliver value throughout the home buying and selling process and with clear agreements in place, client/agent relationships can be seamless.
This is an ongoing development. Worth Real Estate Company will continue to provide updates as they become available. If you have any questions about what this means for you, feel free to send us a message using the form below.
