What Realtors Need to Know About NAR’s $418M Settlement


In a landmark decision that promises to reshape the landscape of real estate brokerage, the National Association of Realtors (NAR) has reached a proposed $418 million settlement in a lawsuit concerning real estate commissions. This pivotal moment marks a significant shift in the way real estate services and compensation are managed, offering both challenges and opportunities for realtors. Here’s what you need to understand about the changes ahead…


The Essence of the Settlement

The NAR has brokered a deal to settle claims related to broker commissions, a move aimed at eliminating litigation for over one million NAR members and numerous real estate entities. This settlement, pending court approval, encompasses all NAR members, state/territorial and local REALTOR® associations, association-owned Multiple Listing Services (MLSs), and brokerages with an NAR member as principal with a residential transaction volume in 2022 of $2 billion or below.


Key Changes and Their Implications

  • Prohibition of Compensation Offers on MLS: Starting mid-July 2024, the settlement introduces a rule forbidding the display of compensation offers to buyer brokers on the MLS. This alteration does not end the practice of cooperative compensation but relocates it off the MLS, preserving consumer choice and ensuring the continued negotiation of compensation between real estate professionals and their clients.
  • Requirement for Written Representation Agreements: The settlement mandates that MLS participants working with buyers enter into written representation agreements before touring homes. This change aims to enhance transparency and understanding between consumers and real estate professionals regarding the services provided and the associated costs.
  • Compensation Practices: Realtors can still receive compensation through various means, including fixed-fee commissions paid by consumers, seller concessions, or a portion of the listing broker’s compensation. The negotiation of compensation remains a critical aspect of the realtor-client relationship, ensuring flexibility and choice for all parties involved.
  • Have questions… ask this custom made NAR Settlement Q&A GPT any questions you have about this settlement and how it impacts your unique circumstances! This custom GPT is trained on the full 108 pages along with fact sheets provided by NAR, the DOJ and other data.



Financing and IPCs Clarifications

The settlement has sparked questions about Interested Party Contributions (IPCs) and the financing of real estate commissions. It’s important to note that the settlement does not classify compensation paid by a seller or listing broker to a buyer broker as an IPC, maintaining the status quo in financing practices for buyers. Additionally, real estate commissions cannot currently be financed under the structure of the residential mortgage finance system, preserving traditional payment methods without immediate changes to lending practices.



Acknowledging the Complexity and Providing Resources

We recognize that this settlement brings many moving parts and uncertainties, yet it also offers considerable clarity on numerous aspects. To assist realtors in navigating these complexities, a custom GPT called NAR Settlement Q&A GPT has been developed. This AI tool is designed to answer your questions, incorporating all the knowledge from the 108-page settlement document and all the fact sheets released over the last several weeks. Real estate professionals are encouraged to utilize this resource to inquire about any aspects of the settlement. Access the NAR Settlement Q&A GPT and get the answers you need.



Looking Ahead: A New Chapter for Real Estate Professionals

This settlement represents a significant turning point for the real estate industry, emphasizing the importance of adaptation and innovation in professional practices. Realtors are encouraged to familiarize themselves with the forthcoming changes, ensuring they are well-prepared to navigate the evolving landscape and continue providing exceptional service to their clients.


For real estate professionals, the road ahead is paved with opportunities to redefine value and service in the real estate market. By embracing these changes with a forward-thinking mindset, realtors can continue to thrive, fostering successful transactions and satisfied clients in this new era.



Taking Action: What You Can Do Now

  • Stay Informed: Keep abreast of developments regarding the settlement and its implementation to ensure compliance and make the most of the new regulations.
  • Educate Your Clients: Help your clients understand how these changes affect their real estate transactions, reinforcing your role as a trusted advisor.
  • Revise Your Practices: Prepare to adapt your business practices to align with the new rules, particularly concerning the negotiation and communication of compensation.

As we step into this new chapter, let’s view these changes not as hurdles but as stepping stones to greater transparency, choice, and innovation in real estate. Together, we can navigate this transition, harnessing opportunities to enhance our services and strengthen the bond of trust with our clients.


Disclosure: I am not a lawyer, and nothing I say should be taken as legal advice. Also, I am not your broker and if you have additional questions I recommend you meet with your broker.


In the comments ask for a copy of the NAR fact sheets or the full 108 pages of the settlement, and I’ll send them over to you. Also I do recommend you engage with this custom ChatGPT AI: NAR Settlement Q&A GPT to get answers quickly to questions and then discuss with your broker to ensure all aspects of your situation are taken into account.



Brad McDaniel
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