NAR’s Settlement of Antitrust Cases
QUESTION: I’ve seen some social media posts saying that NAR settled the antitrust cases against it. Are all the lawsuits over? Is cooperating compensation is going to be banned? What is NC REALTORS® doing to help?
ANSWER: NAR has reached a settlement in the Missouri antitrust case, Burnett v. NAR, as well as several other cases where plaintiff-sellers were alleging violations of the antitrust law. The settlement is subject to court approval, which is expected to take several months. You can read more about the Burnett case here. The settlement does not include all the antitrust cases against NAR. Other cases that were brought by plaintiff-buyers involve claims that are different from those in Burnett, and so they remain pending.
The decision to settle by NAR was not an easy one. There were many factors involved, such as: the financial ability of NAR to function during an appeal; the risks of the appeal itself, including the potential for a new trial in the same Missouri court even if successful; the long period of time it would take for all appeals and a potential new trial to conclude; and the benefit to members if a settlement was reached. Ultimately, given that no perfect outcome existed, NAR decided it would be best to settle and allow members to focus on their practice rather than continue to face uncertainty as a result of these antitrust cases.
The settlement does not mean that cooperating compensation will be banned. Cooperating compensation will still be an option. It will just need to be negotiated outside the MLS, much like it is now in commercial transactions.
NAR has provided a detailed summary of the settlement that you can read here. The highlights are as follows:
- Cooperating compensation, including a statement of what the listing firm’s total commission will be, will no longer be allowed in the MLS.
- Written buyer agency agreements will be mandatory and must be signed before a showing is conducted.
- Buyer agent commissions must be disclosed.
- Buyer agent commissions must be agreed to by the buyer and not simply reliant on potential agreements of cooperating compensation.
- Buyer agents will no longer be entitled to keep commissions over and above what the buyer has agreed to pay.
- Buyer agents cannot advertise that their services are “free.”
- Sellers must approve of any cooperating compensation offered to a buyer agent.
- Agents must disclose that commissions are not set by law and are fully negotiable.
- Off MLS cooperating compensation and/or buyer concessions will be allowed.
Over the next few months, NAR will be working to revise the Code of Ethics and the MLS rules in order to comply with the settlement terms. It is expected that the edits will be released mid to late summer this year, as early as July. NC REALTORS® will continue to keep members posted as we learn more about the coming edits.
As to some of the settlement terms above, you may be thinking that we already comply with a lot of them in North Carolina. You would be correct. Some jurisdictions will have a heavy lift to come into compliance. Other jurisdictions, such as ours, will not.
Nevertheless, NC REALTORS® has already called additional meetings to discuss edits to our forms. Certain forms, such as Form 220 (Confirmation of Compensation, Agency, and Appointment), need to be revised so that agents can easily negotiate cooperating compensation in compliance with the new rules. NCR’s Forms Committee has already worked hard this year to recommend forms changes in response to the jury verdict in Burnett last October. Those changes will be need to be modified again to comply with the settlement terms. Rest assured, whenever the new rules are released, the forms will be ready so that agents can continue to do what they do best: help their clients buy and sell real estate.
Aside from forms changes, NC REALTORS® leadership and staff have already begun updating educational resources, creating a campaign to promote the value of REALTORS® to the public, and making sure that REALTORS® are receiving current information as it becomes available. There is little doubt that the changes stemming from the settlement will be significant, and in the short term there will be both anticipated and unanticipated effects. NC REALTORS® remains committed to being transparent and providing support in order to help members through this transition.
As a final note, we understand that a lot of our members are emotional and defensive given this outcome, especially when faced with inaccurate media coverage and social media posts. NC REALTORS® and NAR are both working to make sure that the reporting is accurate, and we encourage members to remain professional in their interactions with the public, whether on social media or otherwise. We also strongly recommend that online discussions comply with antitrust laws. As a group, REALTORS® are creative problem solvers and dedicated to their clients. These core values, with support, will make this transition an opportunity to improve and be better going into the future. Check out facts.realtor for more information and resources.
Release Date: 3/21/2024
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