The real estate industry is poised for a significant transformation following the NAR settlement, scheduled to take effect in August 2024 (Updated May 24. However, recent developments involving the Department of Justice (DOJ) receiving court approval to intervene might influence the final terms, potentially leading to objections or further modifications. Realtors should prepare for the changes to take effect this summer and stay informed through available resources.
The National Association of Realtors has created an FAQ page that they will update as changes are made to the settlement, if any. Below is an overview of common topics in question and an explanation of the settlement as it currently stands.
Common Topics in Question from the NAR Settlement
Private Remarks and Compensation Disclosures
Realtors have queried whether compensation details for buyer’s agents can be included in private remarks within the Multiple Listing Service (MLS) or linked via disclosure. According to the NAR settlement, agents are prohibited from disclosing compensation offers in the MLS or any associated links. However, compensation can be displayed on independent sites, providing flexibility in how this information is shared.
Though, agents are allowed to post compensation offers on platforms outside of the MLS, such as Facebook or Zillow. This freedom ensures that while the MLS remains unbiased, agents can still communicate essential information through other channels.
Enforcement of Buyer Representation Agreements
The settlement mandates that all MLS members secure a buyer representation agreement before showing properties. While MLSs lack direct enforcement capabilities, violations might be addressed through grievance complaints within local Associations.
Handling Non-Disclosure of Existing Buyer Agreements
If discrepancies arise regarding a buyer’s representation status, it's advisable to maintain written records of all communications confirming their contractual status. This documentation can protect agents in disputes over representation and help prevent legal complications.
'Tour' in Real Estate Showings or Open Houses
As part of the ongoing adjustments to real estate practices influenced by the NAR settlement, a clear definition of what constitutes "touring" a home has been provided. According to the National Association of Realtors, "touring is defined as any instance in which a buyer and/or the MLS participant, or another agent under the MLS participant's instruction, physically enters a house. This also covers scenarios where an agent, directed by the MLS participant handling the buyer, provides a live virtual tour to a buyer who is not physically present."
Regarding whether written agreements like the Buyer Representation Agreement (BRBC) are necessary for casual walk-in viewings such as open houses or office visits, the current guidelines remain under review. NAR staff, in collaboration with the MLS Advisory Board, is tasked with integrating the new definitions and practices into the existing framework. Their goal is to ensure that all interactions, including casual walk-ins at open houses, adhere to the latest industry standards without imposing unnecessary barriers.
Cancellation of Buyer Representation Agreement
Buyers may terminate their representation agreements as stipulated within those contracts. For example, non-exclusive agreements can be ended with immediate written notice, while exclusive agreements typically can require a 30-day notice period. This cancellation right is dependant on how the contract is written.
Validity of Pre-Settlement Listing Agreements
Existing listing agreements will need amendments to align with the new regulations prohibiting the communication of compensation offers through the MLS. CAR is actively developing an amendment to ensure compliance post-settlement.
Listing Agent Showings
When listing agents act solely as agents or subagents for the seller, they are not required to secure a Buyer Representation Agreement (BRBC) before showing properties. This scenario applies when the listing agent is solely performing tasks for the seller, such as granting an unrepresented buyer access to a property or hosting an open house without engaging in brokerage services for the buyer.
Have more questions? Visit NAR Frequency Asked Settlement Questions
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