The NAR lawsuit Part 1 - an introduction
If you've been watching the news lately, you've probably noticed that the pending litigation against NAR (The National Association of Realtors) is being reported on much more frequently. There’s a lot of misinformation out there, and in the next series of updates I'll be breaking it all down and giving you an insider’s look at what's really going on.
Back in March, the National Association of Realtors reached an agreement to make significant changes to the way homes are bought and sold in the United States in a proposed settlement of lawsuits challenging the industry.
The proposed agreement would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, and all state and local REALTOR® associations. The changes are meant to add transparency to the way buyer agents are paid.
NAR said it worked with the plaintiffs in multiple lawsuits, the most notable being the Sitzer-Burnett class action suit, across the country to come up with a list of reforms and pay a $418 million penalty in an effort to protect the organization from recently filed lawsuits.
In addition to the financial payment, NAR has agreed to put in place new rules prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option that consumers can pursue off-MLS through negotiation and consultation between the buyers’ agent and the listing agent. Offers of compensation help make professional representation more accessible, and MLS participants will be required to work with buyers to enter into written buyer representation agreements before touring homes, according to a framework of the settlement, which has yet to be released publicly or filed in court.
The proposed settlement still needs to be approved in court and will likely be scrutinized by the Department of Justice. NAR noted that some litigation is still ongoing, suggesting that the settlement wouldn’t absolve brokerages and franchisers from the threat of litigation in all of the nearly two dozen cases filed across the country in recent months.
In my next update I'll be breaking down on what's being reported versus what we actually know, and as I mentioned above, what you've been seeing on the news is only a proposed settlement, and we won't know exactly what the final settlement will be until mid-July.
I hope you found this update to be useful and informative, and if you're curious as to what this all means to you and your home's value you can call/text/email me and we can discuss everything in detail.