The real estate landscape in the United States is on the brink of significant transformation as the National Association of Realtors (NAR) recently agreed to pay a whopping $418 million in damages to settle commission lawsuits. This landmark settlement will not only reshape how millions of sellers and buyers transact but also how agents and brokers get paid.
Central to the settlement is the abolishment of the infamous “Participation Rule,” which mandated sell-side agents to offer compensation to buyer brokers. This rule change, coupled with a ban on NAR establishing any compensation-setting rules for buyer agents, marks a pivotal shift in the industry dynamics. Moreover, the settlement mandates the elimination of fields displaying broker compensation on MLSs and removes the requirement for agents to subscribe to MLSs for compensation-related purposes.
Additionally, under the terms of the settlement, MLS participants must enter into written buyer broker agreements, with these changes set to take effect in mid-July 2024. NAR, however, maintains that cooperative compensation remains permissible, provided it is pursued off-MLS. Notably, the settlement agreement, while a significant step forward, is not an admission of guilt on NAR’s part.
Despite this monumental settlement, not all players in the industry are off the hook. While the agreement resolves claims against NAR, its state and local associations, and certain brokerages, it does not cover others, such as HomeServices of America. The ongoing legal battle highlights the complex nature of the commission lawsuits, which allege collusion among real estate industry players to inflate agent commissions.
In a parallel legal battle, the Department of Justice (DOJ) has intervened in commission lawsuits, advocating for an end to cooperative compensation practices. These legal developments underscore a broader push for transparency and fairness in the real estate market, with implications likely to reverberate throughout the industry for years to come. As the dust settles on these legal proceedings, stakeholders brace for a new era in real estate, characterized by increased competition, transparency, and consumer choice.
https://www.housingwire.com/articles/nar-settles-commission-lawsuits-for-418-million/
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