NAR Establishes Agreement to Resolve Nationwide Commission Claims

This is a breaking story that has been updated since its original posting with further quotes and context.

The National Association of Realtors (NAR) has announced an agreement to resolve litigation over broker commission claims asserted on behalf of home sellers. The agreement would settle claims against NAR, over one million NAR members, all state/territorial and municipal Realtor associations, all association-owned MLSs, and all brokerages having a NAR member as principal in 2022 with a residential transaction volume of $2 billion or less.

The settlement, which is subject to court approval, clarifies that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule), which was implemented in the 1990s in response to consumer protection advocates’ calls for buyer representation. Under the terms of the agreement, NAR is expected to pay $418 million over a four-year period in damages and will change numerous rules that housing experts believe will lower house costs.

This settlement is the culmination of a series of lawsuits against the NAR which will ultimately do away with standard commissions. Legal counsel for NAR approved the agreement early Friday morning.

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR.

This resolution accomplished two essential goals: it released most NAR members and many industry stakeholders from liability in these instances, and it ensured that cooperative compensation remains an option for customers when purchasing or selling a house. NAR also obtained in the deal a mechanism enabling practically all brokerage organizations with a residential transaction volume of more than $2 billion in 2022, as well as MLSs that are not completely controlled by Realtor’s associations, to acquire releases efficiently if they so desire.

In addition to the financial settlement, NAR has agreed to implement a new MLS rule that prohibits offers of broker remuneration on the MLS. This means that offers of broker remuneration cannot be made over the MLS, but they can still be pursued off-MLS through negotiation and consultation with real estate experts.

“On a scale of 1-10, the National Association of Realtors’ decision to shift the buyer side commission burden from sellers to buyers is a 10 and represents nothing short of a sea change,” said Toby Schifsky, VP of Real Estate Education at Kaplan. “This is by far the biggest change to hit the real estate industry in more than 30 years, and has introduced new complexities to the process of buying and selling a home. While this may result in lower prices for homebuyers—especially important at a time of elevated mortgage rates—it’s going to be imperative for buyer representatives and agents to demonstrate their value to would-be buyers.”

According to the New York Times, American homeowners may see a significant decrease in the cost of selling their houses in wake of the agreement that is set to eliminate the industry’s normal 6% sales commission.

Compensation offers help make professional representation more accessible, lower the expenses for home purchasers to get these services, promote fair housing prospects, and broaden the possible buyer pool for sellers. They also comply with the real estate laws of the many states that specifically permit them.

“While it’s too soon to tell what the new business model will look like, it’s safe to say it will be nearly unrecognizable from the current one,” said Schifsky. “Stakeholders will have to make significant adjustments and rethink their strategies.”

NAR has agreed to establish a new rule requiring MLS participants dealing with buyers to enter into written agreements with their clients. NAR continues, as it has for many years, to urge its members to adopt buyer brokerage agreements, which assist consumers understand exactly what services and value will be given and for how much. These adjustments will take effect in mid-July 2024.

“Ultimately, continuing to litigate would have hurt members and their small businesses,” said Wright. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission.”

To read the full release, click here.

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Demetria C. Lester

Demetria C. Lester is a reporter for MortgagePoint (formerly DS News and MReport) with more than eight years of writing and editing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is a jazz aficionado, Harry Potter fanatic, and likes to read. She can be reached at
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