The real estate landscape is evolving with the recent proposed settlement of the commission lawsuits by the National Association of Realtors (NAR). The settlement, preliminarily approved, introduces significant changes that will impact MLS policies. Here’s a detailed overview to help you prepare for these upcoming changes, which must be implemented by September 16, 2024, by Realtor MLSs, non-Realtor MLSs, and brokerages.
Key Changes to MLS Policies
According to NAR’s settlement FAQ page, here are the primary changes you need to know:
- Compensation Offers: The requirement for offers of compensation between listing brokers/sellers and buyer brokers/representatives in the MLS will be eliminated and prohibited.
- Defining Cooperation: The term “cooperation” will be retained and clearly defined for MLS Participation.
- Compensation Fields: MLS Participants, Subscribers, and sellers will no longer make compensation offers in the MLS. All broker compensation fields and information will be removed.
- Prohibited Mechanisms: MLSs are prohibited from creating, facilitating, or supporting non-MLS mechanisms for making offers of compensation.
- Data Usage: MLS data or data feeds cannot be used to establish or maintain platforms for compensation offers from multiple brokers or representatives.
- Listing Filters: MLS listings communicated to customers or clients cannot be filtered based on compensation offers or the name of a brokerage or agent.
- Compensation Disclosures: Mandatory disclosures of compensation to sellers and buyers.
- Buyer Agreements: MLS Participants working with buyers must enter into written agreements prior to home tours.
Implementation Timeline
NAR’s mandatory MLS policy changes will take effect on August 17, 2024. Realtor MLSs must implement these changes by this date to comply with NAR’s mandatory policy. Those opting into the settlement agreement have until September 16, 2024, to implement these changes and be considered Released Parties under the settlement.
Buyer Broker Compensation
While offers of compensation on the MLS will be prohibited, this does not mean buyers will forego using buyer brokers. Compensation for buyer brokers will continue through various methods such as:
- Fixed-fee commission paid by consumers.
- Seller concessions.
- Portions of the listing broker’s compensation. These compensations will remain negotiable between agents and consumers.
Addressing Misconceptions
- Buyer Broker Requirement: Consumers still have the choice to use a real estate professional. The value of a buyer broker remains significant, providing expert negotiation, marketing reach, and smooth transactions.
- Compensation Transparency: Although offers of compensation will no longer be communicated via the MLS, compensation can still be negotiated off-MLS through consultation with real estate professionals.
Ethical Duties and Fair Housing
NAR members are required to protect their clients’ interests and maintain transparency. The settlement ensures consumers retain the choice of compensation, supporting professional representation and fair housing opportunities.
Legal and Practical Considerations
Listing brokers must inform clients about the prohibition of compensation offers on MLS, and how offers can still be made off-MLS. Legal counsel should be consulted to ensure compliance with the new policies.
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