Homebuyers and sellers have been peppering Realtors for months with questions about the National Association of Realtors’ settlement over broker commissions and what it means for them.
The Chicago-based association had estimated that it would implement changes by late July. But that estimate has changed to Aug. 17 because the settlement “requires NAR to implement the practice changes no later than the date of the class notice,” according to the NAR’s website. The association said Aug. 17 was the earliest date of the class notice.
The association’s executives also met with U.S. Assistant Attorney General Jonathan Kanter last week over its settlement, with the U.S. Justice Department saying it’s keeping close watch on its updated forms, first reported by Inman News.
A NAR spokesperson told the Sun-Times that consumers should check the association’s settlement FAQs page for additional information.
“Our settlement requires NAR to implement the practice changes no later than the date of the class notice. Through the preliminary settlement approval process, we no longer have to estimate the date of the rule change, and now know the earliest date of the class notice is August 17, 2024,” according to the NAR.
Here’s what else you need to know ahead of next month’s changes.
What is the NAR settlement?
In a series of class-action lawsuits, homeowners accused the NAR of fixing broker commissions at high rates and discouraging sellers from seeking better terms. The association has 1.5 million members and broad control over access to the Multiple Listing Service systems.
In March, the trade group agreed to settle the lawsuit and pay $418 million over four years while implementing new rules around broker commissions. On April 23, a federal judge in Missouri granted preliminary approval to the settlement.
The NAR denied any wrongdoing in the settlement, a stance it’s maintained over the course of litigation.
How does this impact homebuyers, sellers and Realtors?
Starting Aug. 17, buyers will need to sign an agreement that discloses their broker’s commission. The contract must be signed before a Realtor can represent a client and show them properties.
The agreements will outline the services a client can expect from their Realtor. It also discloses how much the agent will be compensated and by whom.
It’s important to know some Chicago Realtors have long been using buyer-agency agreements. But they were never a state requirement, and using the agreements will be an adjustment for other Realtors.
For sellers, the impact is a bit more murky. Broker commissions are typically paid by sellers, and the seller’s agent usually agrees to split the commission with the buyer’s agent. That practice could change under the settlement, but the NAR has stressed that commissions have always been negotiable — even before the settlement.
In addition to buyer agreements, the biggest shift for Realtors will be the multiple listing service changes.
Offers of broker compensation will no longer be listed on the MLS, but “could continue to be an option consumers can pursue off MLS through negotiation and consultation with real estate professionals,” according to the NAR.
What are other key dates to know?
A final court approval for the NAR settlement will take place Nov. 26.
Additionally, other MLS systems that opt into the settlement agreement have until Sept. 16 to implement practice changes in order to be considered “released parties” under the settlement.
The NAR recommends that all MLS systems opting into the settlement make their changes by Aug. 17, even if they’re not Realtor-affiliated.
This story has been corrected to reflect the NAR’s settlement timeline was dependent on the courts and not decided by the association.
