In Part 6 of the Real Estate Commission Lawsuit series, I’ll breakdown NAR’s proposed settlement. It’s the largest settlement with the widest blanket coverage for agents.
There are a couple of big rule and practice changes to the proposed settlement.
1. Settlement Status – NAR’s settlement has not been finalized with the court. Until it is finalized, anything can change. There are already a number of objections by interested parties like the DOJ and home sellers who believe the settlement is inadequate.
2. The Proposed Settlement – includes nationwide release of liability and a number of rule changes.
3. No Acknowledgment of Wrongdoing – NAR continues to deny any wrongdoing and there is no acknowledgement of liability. This will be important now that the DOJ has lodged an objection and has been given the right to reopen the previous investigation of NAR.
4. Liability – Who is Released? NAR will pay the plaintiffs $412 million over a four-year period. In return, NAR, Realtor Associations, Association-owned MLSs and over 1 million Realtor members will be released from liability nationwide. * Members must meet requirements.
5. Who is not released? – HomeServices, Employees of Defendants who have settled, MLSs not Association-owned, Brokerages with 2022 residential transaction volume over $2 billion, and non-Realtors as of the “date of Class Notice” (est. July 2024).
6. Roadmap to Settle – NAR negotiated a road map for non-released parties to settle with the plaintiffs. It includes a mediation process and a negotiated damages amount of 0.0025 of average annual residential transaction volume over the past 4-years. $2.5M per Billion.
7. Buyer Lawsuits – The settlement does not include buyer lawsuits.
8. Rule Changes – without admitting wrong-doing, NAR has proposed a number of immediate rule changes. It is understood that the local boards and MLSs will make the necessary technical changes by mid-July, 2024.
9. Prohibition of Offer of Compensation on the MLS – NAR negotiated the preservation of the right to offer co-op compensation, but it can no longer be offered on the MLS (or websites carrying MLS data, like IDX sites).
10. Compensation is Negotiable – agent compensation is negotiable, must be conspicuously disclosed, and sellers should be advised of the various forms of compensation choices. Sellers can continue to communicate seller concessions through the MLS.
11. Written Buyer Representation Agreements – buyer agents must enter into written buyer agent agreements that clearly establish how the buyer agent will be compensated. The agreement should be entered into before any property is shown.
12. NAR Membership – although not covered in the NAR settlement, a number of large brokerages have removed the requirement that their agents join NAR. NAR also relaxed its forced membership rules that required some agents to join multiple MLSs.
13. Objections, Opt-Outs and the DOJ – don’t forget that there are objections, opt-outs and strong opposition from the DOJ that could scupper the proposed settlement.
Next, in Part 7 of the real estate commission lawsuit series, we’ll cover “who gets paid”.
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