Times are a Changing: Adjustment to the NAR Settlement Agreement

The NAR settlement agreement, which was announced earlier this year, has been an extremely hot topic for agents and potential homebuyers in the real estate world. This new settlement agreement became effective on August 17, 2024 and is designed to increase transparency in real estate transactions and change the way compensation is communicated and negotiated between parties. We have been aware of this for some time and have fully prepared ourselves for the changes this will bring. While this transition period may present challenges, we are confident that the proactive steps we have taken (and those of all other real estate companies) will enable a smooth adjustment, ultimately benefiting all involved.

But what are the practical aspects of this new arrangement? And what does this mean for the future of the real estate market? Well, this settlement targets Multiple Listing Services (MLS) in several ways, which will impact the real estate market. This serves as a crucial backbone of the real estate industry, but the changes introduced by the settlement will impact several aspects of how MLSs operate.

First, compensation offers are now being eliminated in MLSs, meaning they will no longer be displayed and no longer allow compensation offers to buyer agents. MLSs must remove all broker compensation fields and compensation information. This is a fundamental shift in the way real estate transactions are conducted and requires both agents and buyers to adapt to a new way of negotiating and communicating fees.

Another key takeaway from the new settlement agreement is that mandatory written agreements for buyer agents will be introduced. This means that MLS participants who work with buyers must enter into a written agreement with the buyer before viewing a property. These agreements should contain specific information about broker compensation and state that fees are negotiable. Additionally, beginning August 17, we will also see the ban on compensation offers, which means that MLS participants, subscribers, and sellers will not be allowed to make compensation offers in the MLS to buyer agents or other buyer representatives.

I’ve also seen real estate agents discussing what these new changes mean for the new disclosure requirements and use of MLS data. New disclosure requirements require agents to provide compensation information to sellers, as well as potential sellers and buyers. For the use of MLS data, MLSs cannot create or support a non-MLS mechanism for participants, subscribers or sellers to make compensation offers to buyer’s agents. Notably, the use of MLS data or feeds to create compensation offer platforms will also be prohibited.

Finally, there are two main points that are important to understand: the strengthening of the existing rules, what that means MLSs may not allow filtering or limiting of listings based on compensation offers or broker names and changes to the definition of “collaboration.” This essentially means that MLSs will maintain and redefine “collaboration” for MLS participation.

Finally, while the new settlement agreement means that compensation offers cannot be made through the MLS, it is important to note that these can still be negotiated outside of the MLS.

Eric Bramlett is the owner of Bramlett Residential.

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

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