Real Estate Agent Magazine Law and Ethics Unveiling the Reality of the NAR Settlement Agreement

Unveiling the Reality of the NAR Settlement Agreement

Misinformation has spread widely regarding real estate commissions in the media. Here are the facts you should know.

Since the National Association of REALTORS(r) unveiled a settlement agreement to resolve litigation brought on behalf of home sellers regarding broker commissions, there has been much discussion of real estate commissions nationwide. Brokers and agents alike face their own set of challenges while trying to answer consumer inquiries while keeping informed on any misinformation that may emerge in headlines about real estate commissions.

Let’s make the situation clear: No doubt the litigation, including copycat lawsuits filed after the Sitzer-Burnett verdict, caused considerable uncertainty for an industry already struggling under low inventory and rising interest rates. The proposed settlement must first be approved by a judge; but once finalized it could provide real estate professionals, REALTOR(r) associations, brokerages, MLSs and other industry stakeholders a path forward; most importantly NAR members could focus on fulfilling their core mission to support buyers and sellers more efficiently.

Facts First
Media coverage has often mischaracterized NAR’s settlement agreement, which will require it to pay $418 million over four years. Some outlets have reported that NAR previously set or guided commission rates at 6%; even former President Joe Biden made incorrect claims that commissions are now negotiable due to this settlement agreement.

Your statement is false; NAR doesn’t set commissions and they were negotiable long before this settlement took place. Brokers and their clients remain free to negotiate these matters directly between themselves, while housing prices are determined by market forces that lie beyond members’ influence.

Correct facts are paramount, especially given the complexity of this settlement agreement. NAR continues to work with media to correct inaccurate reporting about it, while members should refer to official NAR sources such as for the latest and most accurate information about what this settlement means for consumers.

The proposed settlement accomplishes two key goals: protecting members to the greatest extent possible while upholding consumer choice. The settlement:

Resolution of claims against NAR and nearly every member; state, territorial and local REALTOR(r) associations; association-owned MLSs; and brokerages with an NAR member as principal who reported residential transaction volumes under $2 billion during 2022.

Cooperate compensation should remain an option for consumers seeking to buy or sell homes – provided any such offers of compensation take place off of the Multiple Listing Service (MLS).
NAR advocated for a broad release that covered all industry players; however, large settlements reached by other corporate defendants dictated the negotiations. NAR engaged with various members throughout this settlement process in order to consider their perspectives and interests.

“Continuing litigation would have had devastating results for our members and their small businesses,” NAR Interim CEO Nykia Wright noted in her statement. “Thus, this agreement represents the best result we could attain under these difficult circumstances, providing a roadmap forward for both industry members (representing nearly one fifth of American economic output) and NAR. For over 100 years now, NAR has protected and advanced real property ownership rights across this nation; our priority will remain fulfilling that core mission.”

How to Check If You Are Covered
NAR’s Release Agreement covers nearly every member. However, those affiliated with HomeServices of America – one of the defendants in Sitzer-Burnett litigation – and employees of defendants involved in Gibson and Umpa cases were specifically exempt.

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