Updated August 9, 2024
NAR's Settlement and the MLS
On March 15th, the National Association of Realtors® (NAR) entered into a settlement agreement with plaintiffs that would end litigation of claims brought on behalf of home sellers related to broker commissions across the United States.
The settlement now has preliminary approval which is a strong marker that it will gain final approval. The agreement would release NAR, over one million NAR members, all state/territorial and local Realtor® associations, all association-owned MLSs, and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below from liability for the types of claims brought in many national cases on behalf of home sellers related to broker commissions.
Below you will find information and guidance on how the proposed settlement will affect the MLS platform, policies and procedures. These MLS changes will apply to all MLS subscribers and participants. Keep in mind that the Association of Realtors® and the MLS are two separate entities and we work to enhance the business of all MLS members equally.
Know the Facts
Whether or not you are a Realtor® member, make sure you are aware of the facts around this settlement, which will have a large impact on our industry as a whole. In an effort to focus here solely on the MLS effects of the settlement, we won't recreate resources posted elsewhere. We encourage you to read the materials from the source.
To explore the material that NAR has posted, explore their Facts for Realtors® webpage. You might also like to jump straight to their extensive FAQs.
1. REVIEW THE CHANGES TO THE MLS PLATFORM: AUGUST 5
The NAR settlement terms, as negotiated by NAR, include discontinuing the inclusion of a listing broker's offer of buyers agent compensation in the MLS platform (or any similar platform).
The compensation field set has been removed from MLS Listing Input, as of August 5, 2024.
While this change in the settlement directly affects offers of compensation in the MLS, should a seller instruct their listing brokerage to offer compensation to a buyers agent, this can occur outside of the MLS - but no offer can be listed in any field in the MLS (including notes/remarks).
While this will be very different from what we are all used to, the result of this change will be more discussion, transparency, and collaboration between all parties, and is a required term negotiated by NAR in the national settlement.
It is important that CHS MLS members do not attempt to manipulate listings to insinuate what an offer of compensation may be. That practice would only make this transition more difficult for our industry. Do not use public or private remarks, photos, documents, or any other field. Doing so may incur a $500 fine for the first offense and $750 for the second. However, fines will not go into effect until January 2025. Additional fines information may be found in our Rules and Regulations.
NEW PRE-SALE CONCESSIONS FIELD
Under the terms of NAR’s settlement, MLSs are allowed to include concessions information for on-market listings. Inclusion of such data allows CHS MLS to support its members and their clients with clear and transparent information. The data will indicate that the seller may or may not be willing to pay some amount of concessions for the buyer’s needs.
As such, CHS MLS has added a new field into listing input: “Seller Concessions Negotiable”? It is a Y/N field that is not required and not searchable.
We hope that this new field contributes to a piece of our mission and vision – to provide relevant and trusted data intelligence to support a vibrant competitive marketplace by enabling collaboration and community.
PUBLIC REMARKS AND AGENT NOTES
Prior to the NAR settlement, concessions information was already allowed in either the Public Remarks field (publicly available) and the Agent Notes field (not publicly available).
Going forward, concessions information should be relayed via the Public Remarks field. You can certainly copy the info over to the Agent Notes field, but for consumer transparency, if the seller were to offer any concessions, they should be relayed in Public Remarks. Do not include any concessions that may be reserved for buyers agent compensation or specify what portion of the concessions could be.
Remember, concessions in the MLS are not binding. Put relevant details in your contracts.
POST-SALE CONCESSIONS ENTRY
Currently, there are two concessions fields when closing a listing: an amount and open text notes. CHS MLS will retain the Concessions Amount numerical field, but in order to comply with all terms of the NAR-negotiated settlement, the Concessions Notes field will be removed August 20th. You may enter the full numerical amount of concessions in the Concessions Amount field.
2. CONFIRM YOUR BUYER BROKER AGREEMENT PRACTICES
The settlement terms, as negotiated by NAR, mandate that MLSs must require all participants working with a buyer to have a written agreement before touring a listing. That agreement must describe the broker’s compensation, the amount must be objectively ascertainable and not open-ended, and the broker may not receive compensation from any source that exceeds the amount in the agreement.
This required change will go into effect with the updated CHS MLS Rules & Regulations updates adopting the settlement changes on August 5th, 2024.
Not doing so may incur a $500 fine for the first offense and $750 for the second. However, fines will not go into effect until January 2025. Additional fines information may be found in our Rules and Regulations.
3. REVIEW OTHER REMINDERS
Alongside the larger changes noted above, these items are part of the NAR-negotiated settlement as well. While some of these are already in effect in our Rules & Regulations, please review the full list.
No advertising services as free.
MLS participants and subscribers are not permitted to represent their services as free.
Participant disclosure regarding offers.
MLS participants and subscribers are required to disclose to sellers and obtain seller approval for any payment or offer, if any, the listing broker or seller makes to another broker, agent, or representative (e.g., attorney) working with a buyer.
Participant disclosure regarding commissions.
MLS participants and subscribers are required to disclose to sellers and buyers that commissions are not set by law and are fully negotiable in listing agreements, in their buyer broker agreements, and in pre-closing disclosure documents, if any (unless it’s a government specified form).
No filtering.
MLS may not facilitate filtering out listings based on the existence or level of compensation offered to the broker assisting the buyer.
Off MLS offers permitted.
The above changes do not prevent offers of compensation to buyer brokers outside of the MLS.
Concessions in MLS permitted.
Sellers may offer buyer concessions on the MLS (e.g., for buyer closing costs), so long as they are not limited to or conditioned on the retention of or payment to a cooperating broker.
4. STRENGTHEN YOUR PRACTICES
Even though the MLS changes will not be in place until late Summer 2024, you can do several things to strengthen your business now. If you are not sure where to begin, check in with your Broker-in-Charge or reach out via this form.
1. Stay Informed: We encourage you to stay informed about this case and its implications for our industry.
2. Professional Conduct: Continue to uphold the highest standards of professional conduct and ethical
behavior in all your transactions.
3. Transparently Discuss Costs: Ensure that you continue to clearly and transparently explain all costs,
including commissions and fees, to your clients. It's crucial that clients are fully aware and
understand the financial aspects of their transactions.
4. Buyer Broker Agreements & Showings: Ensure Buyer Broker Agreements are signed and transparent prior to touring a home. These agreements should include
a. a specific and conspicuous disclosure of the amount or rate of compensation the Participant will receive or how this amount will be determined, to the extent that the Participant will receive compensation from any source;
b. the amount of compensation in a manner that is objectively ascertainable and not open-ended.
c. a term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
d. a conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.
Additional Resources
please download and share!
If you are looking for updated forms, those are handled by the South Carolina Realtors® (SCR), not MLS, and can be found here.
Frequently
Asked
Questions
We recommend that you also explore NAR's FAQs which are very specific to why they entered into this settlement, who is covered, recommendations for compensation and buyer broker agreements, and NAR operations going forward. Whether or not you are a Realtor® member, the information offers some clarity for our industry.
If you have questions on form changes required to meet the terms of the settlement, visit the South Carolina Realtors® FAQs, as CHS MLS does not manage the forms in Zipforms.
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Why are these changes happening?
NAR announced that a settlement agreement had been reached that would end litigation of claims brought on behalf of home sellers related to broker commissions across the United States on on March 15. The settlement would release claims against many parties and also cover some copycat lawsuits. The changes outlined are all part of the settlement agreement terms. Read more about thecases and settlement details at NAR's webpage here.
Are all of these details final?
The settlement agreement has preliminary approval. Final approval is scheduled to be granted in November.
When will these changes go into effect?
NAR requires that these changes be in place by August 17, 2024. We will transition through the changes outlined above by late Summer 2024. The compensation fields were removed August 5, 2024.
Can my seller still offer compensation to the buyer broker?
Yes. The settlement states that this is allowed but cannot be included in your MLS listing. Ensure that your commission details (always - for list or buy side) are transparent and negotiable, and that your client is fully educated on those details.
Can my seller's offer of compensation be entered on my listing in the MLS?
No! According to the NAR settlement agreement, which requires that the compensation fields be removed from the MLS, this information is not allowed in the MLS database, IN ANY FIELD. Please do not manipulate your listing to insinuate what the offer may be in any area of your listing. This important piece of the settlement of course applies as well to MLS-enabled products and tools such as ShowingTime, CloudCMA, and more.
If I have an on-market listing, will the compensation info automatically be removed?
Yes. Once we make the required change to remove the compensation fields on August 5, this will also remove existing compensation data on any on-market listings.
If I have an off-market listing, will the compensation info automatically be removed?
Yes. When the compensation fields were removed on August 5, it also removed existing compensation data on off-market listings as well. The settlement mandates that no compensation information be in the MLS database at all. If you have any compensation data in open text fields such as Remarks or Notes, please remove it manually.
Do I need to start changing anything in my business?
Check with your Broker-in-Charge to see if there are any brokerage-level changes being implemented now. Otherwise, continue as normal and ensure you are operating under the items listed in the "Strengthen your Practices" section above. If you are a buyers agent, work on being able to clearly demonstrate your value so that you are ready as the industry adapts to the changes that will evolve from this settlement.
What if my clients ask about the lawsuit(s)?
Whether you are a listing or buyers agent, this question is arising. We recommend sharing the NAR resource page Facts for Realtors® as a way to offer a high level overview of the Sitzer/Burnett case facts. As always, involve your Broker-in-Charge and legal counsel.
Where can I find more information?
We will regularly post relevant updates on this page as it relates to the MLS facets of the NAR settlement. Also, keep an eye out for CHS MLS emails (let Support@CHSMLS.com know if you don't receive our monthly newsletters). You can find the full settlement details at NAR's Facts for Realtors® and Frequently Asked Questions page, where they are posting regular updates as well.
Can I enter an offer of compensation in other areas of MLS?
No. Including compensation anywhere on your MLS listing would open up you and your brokerage to potential legal action as it would go against the terms of NAR’s settlement.
How can I market that my listing includes an offer of compensation?
While an offer of compensation is not permitted on MLS, if a seller has authorized such an offer, there are many off-MLS options eligible for sharing this info. We would defer to your BIC for specific examples, but we like the sky writer option (kidding).
Can I put an offer of compensation on my website?
If your broker allows it, and the seller gives you permission, the NAR settlement does permit the offer on your own website on your own listings, but you should check with your BIC for company specific policies on this and defer to legal counsel.
What concessions information do I add to my listing when I close it?
You can enter the full concessions amount in the numerical field on the closings page. The Concessions Notes field currently on the closing page will be removed August 20th in order to comply with NAR’s settlement.
How do I know if a listing brokerage if offering compensation to a buyer broker?
Call the listing agent! Or text, email, etc. This change will result in more communication with your peers. Make sure your MLS profile is complete! If you need some help building out your profile, explore the help guide here or email Support@CHSMLS.com.
What is the difference between concessions and compensation?
Concessions are something that the seller may concede in order to aid the buyer. Compensation is an offer of commission paid from the listing brokerage to a buyer brokerage for bringing a buyer to the transaction.
What form should be used for the required buyer broker agreement?
CHS MLS cannot dictate which form should be used. Please discuss this with your Broker-in-Charge as it is a brokerage level decision.
Our Commitment to You
We are committed to providing you with the most advanced tools and technology to support your real estate practices, especially in these challenging times. Our MLS platform is continuously updated to ensure you have access to the best resources for listing, marketing, and data analysis. As we navigate the implications of the settlement, we will also explore how our technological solutions can be adapted or enhanced to align with any new industry standards or regulations that may emerge.
Our priority remains to empower you with the resources you need to succeed in your real estate endeavors.
