Important Information Regarding the NAR Settlement and Changes to Compensation
On March 15, 2024, NAR announced a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. As a result, among other things, NAR agreed to adopt a new rule prohibiting offers of compensation in the MLS. This communication outlines the key changes and actions required by REALTORS. Additional communications will be forthcoming in the future.
Effective the evening of July 16th, in the Realcomp MLS, any field related to the offer of compensation will be removed from Add/Edit. These fields will also be removed from displays on MLS listings.
- Communication of compensation offers to buyer brokers must occur outside of the MLS, such as by phone, email, or in person.
- Offers of compensation are not set by law or rule, remain negotiable and should be treated as such by listing agents and buyer brokers.
- You will not be able to provide compensation information via Docs+ as it is part of the MLS.
Effective the evening of August 6th, we are also enhancing your closing concessions options for reporting a property sold. These fields will include following:
- Closing Concessions Y/N
- Concessions Closing Costs $
- Concessions Property Improvement Costs $
- Concessions Financing Costs $
- Concessions Professional Fees $ (Other than Broker Commissions)
- Concessions Other Costs $ (Other than Broker Commissions)
- Total Closing Concessions Amount $ - this field will automatically add the amounts if any that are included in the previous five fields
- Closing Concessions Comments
All new and changed fields are “optional”. Subscribers must not (i) make offers of broker compensation; (ii) disclose broker compensation; (iii) represent brokerage services are free or available at no cost unless no financial compensation from any source will be received; or (iv) make any concession limited to or conditioned on the retention of or payment to another broker or representative.
Written Buyer Agreement Required
As part of the NAR settlement, all MLS subscribers working with a buyer must enter into a written agreement with the buyer prior to touring the first home. The written agreement must include:
1. A specific and conspicuous disclosure of the amount or rate of compensation the subscriber will receive or how this amount will be determined, to the extent that the subscriber will receive compensation from any source.
2. The amount of compensation in a manner that is objectively ascertainable and not open-ended.
3. A term that prohibits the subscriber from receiving compensation for the brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.
4. A conspicuous statement that the broker fees and commissions are not set by law and are fully negotiable.
Written Seller Agreement Required
As part of the NAR settlement, all MLS subscribers acting for sellers must conspicuously disclose to sellers and obtain seller approval for any payment or offer of payment that the listing broker or seller will make to another broker, agent, or other representative (e.g., a real estate attorney) acting for buyers; and such disclosure must be in writing, provided in advance of any payment or agreement to pay to another broker acting for buyers, and specify the amount or rate of any such payment.
Forms, Documents and Disclaimers:
As a condition of the NAR settlement, MLS subscribers must disclose to prospective sellers and buyers that broker compensation is not set by law and is fully negotiable. This must be included in conspicuous language as part of any listing or other seller written agreement, buyer written agreement and pre-closing disclosure documents (if any).
As a REALTOR what action do you need to take?
Listing agreements and Buyer agency agreements will need the above disclosure added. You will need to edit and re-submit these agreements to Realcomp with this disclaimer added if these agreements are currently available through Docs+ or TransactionDesk. Realcomp developed documents for your use will contain all of the required language and other recommended practices.
We will also be adding new disclaimers to the bottom of full listing displays in RCO3.
What does this mean for listings currently in the MLS?
All compensation fields have been removed from all ACTIVE and OFF-MARKET listings (as of the evening of July 16th). If you currently have an active, pending, or ABO listing, you will need to begin the process of negotiating directly with the Buyer agent if there is an offer of compensation.
Effective August 7th, once your listing closes, you will be able to add the closing concessions.
The use of Remarks to make offers of compensation or disclose compensation is also prohibited by the terms of the NAR Settlement. All of these prohibitions will be strictly enforced by Realcomp.
We know this information will prompt many questions. Please do not hesitate to contact us at marketing@realcomp.com and we will be sure to get back to you as soon as possible. Watch for additional updates as they become available.