NAR Lawsuits

There has been extensive media coverage regarding the recent lawsuits against the National Association of REALTORS® (NAR.) Unfortunately, some of this coverage is inaccurate so this is an attempt to explain the lawsuits and some of the changes that will soon affect all buyers and sellers under the currently proposed settlement agreement. 

The NAR is the countryʻs largest trade organization with approximately 1.5 million real estate agents and others in the industry. The original class action lawsuits were filed in Illinois and Missouri and several copycat lawsuits followed. The argument was that sellers have been damaged by listing brokers who offer to share their commission with buyersʻ brokers which has led to fixed and inflated commissions. The bottom line is that some sellers felt that there has not been enough transparency regarding how real estate agents are compensated. 

Instead of spending years litigating, the NAR has decided to accept the proposed settlement agreement which will change how agents do business. The settlement agreement has yet to be finalized, but as of this writing, we can expect to see changes as of mid-July. Sellers will now be banned from advertising the commission paid to buyer agents in the Multiple Listing Service (MLS.) Buyers will not be able to view properties for sale until they sign a “Buyer Representation Agreement” which formalizes the relationship and expectations between the buyer and the agent. If the seller does not wish to compensate a buyerʻs agent, the buyer will have to pay the agent. This could be a real dilemma for buyers with limited funds. 

As with any big change, the fees and services will likely evolve as everyone gets accustomed to this new way of doing business. The most important thing to understand is that real estate commissions have always been negotiable. Complete transparency by all parties is the key to trust, integrity, and ethical behavior.