The Facts on the NAR® Settlement and changes for future realtors

The real estate landscape has been abuzz with discussions surrounding commissions, particularly since the National Association of REALTORS® (NAR) announced a settlement agreement aimed at addressing litigation concerning broker commissions on behalf of home sellers. Amidst this backdrop, brokers, agents, and consumers alike are grappling with uncertainties and misinformation circulating in the media.

To set the record straight, it's crucial to clarify certain misconceptions. Contrary to some reports, NAR does not set commission rates, nor does the settlement suddenly make commissions negotiable—this has always been the case. Commission rates have long been subject to negotiation between brokers and their clients, and market dynamics largely dictate housing prices.

The settlement agreement, which is subject to judicial approval, represents a significant milestone for the real estate industry. It offers a way forward for real estate professionals, brokerages, MLSs, and other stakeholders, allowing them to refocus on their core mission of serving buyers and sellers.Amidst the flurry of misinformation, it's essential to understand the facts surrounding the settlement. NAR will pay $418 million over four years as part of the settlement, which resolves claims against NAR, nearly all its members, and various associations, MLSs, and brokerages. 

Importantly, cooperative compensation—a cornerstone of real estate transactions—remains intact, provided such arrangements occur off the MLS.The settlement underscores NAR's commitment to safeguarding its members and preserving consumer choice. While NAR aimed for a broader release covering all industry players, negotiations were influenced by substantial settlements reached by other defendants. Throughout the process, NAR engaged with a diverse range of members to ensure their perspectives were considered.

Nykia Wright, NAR's Interim CEO, emphasized that while the outcome may not be perfect, it represents the best path forward for the industry, which constitutes a significant portion of the American economy. Protecting and advancing property ownership rights remains NAR's paramount objective.Understanding whether one is covered by the settlement is critical for members. The vast majority are covered, except those affiliated with certain brokerage groups. Additionally, members must adhere to practice changes outlined in the agreement, but no further action is required to benefit from the release.

The settlement also introduces two significant changes to business practices. Firstly, a new MLS rule prohibits offers of compensation on the MLS, while still allowing such arrangements off the platform through negotiation. Secondly, MLS participants working with buyers must enter into written agreements with their clients before home tours, aligning with NAR's longstanding advocacy for clarity and transparency in client relationships.

Despite these changes, NAR maintains its stance that cooperative compensation is in consumers' best interests. Members can leverage these changes as opportunities to educate clients about their options. Both rule changes are set to take effect in mid-July.

Throughout the litigation process, NAR weighed various legal options, ultimately opting for a settlement to avoid protracted litigation that could have jeopardized the association's financial stability.

NAR is committed to supporting its members through these changes, offering resources such as, a comprehensive platform regularly updated with information and FAQs. Additionally, NAR is providing members with free access to the Accredited Buyer's Representative (ABR®) designation course to help them prepare for the new MLS rule requiring buyer representation agreements.

Looking ahead, NAR remains focused on innovation and leading the industry forward, ensuring that buyers and sellers continue to have ample choices in real estate transactions. Members will continue to uphold their commitment to serving clients with skill, care, and diligence, navigating through this period of adjustment while delivering unparalleled value to consumers.
Source: NAR Realtor Magazine