The NAR settlement agreement, announced earlier this year, has been an extremely hot topic for agents and prospective homebuyers in the real estate world. This new settlement agreement was enacted on August 17th, 2024, and has been designed to increase transparency in real estate transactions and change how compensation is communicated and negotiated between parties. We have been aware of this for a while and have fully prepared for the changes this will bring. While this transition period may present challenges, we are confident that the proactive steps we have taken (as well as all other real estate companies) will allow for a smooth adjustment, ultimately benefiting everyone involved.
But what are the practicalities of this new settlement? And what does it mean for the property market moving forward? Well, this settlement focuses on Multiple Listing Services (MLS) in various ways which will impact the property market. This serves as a crucial backbone of the real estate industry, but the changes introduced by the settlement will affect several aspects of how MLSs operate.
Firstly, compensation offers will now be eliminated in MLSs, meaning that they will no longer be displayed or allow offers of compensation to buyer agents. MLSs must remove all broker compensation fields and compensation information. This is a fundamental shift in how real estate transactions are conducted and will require both agents and buyers to adapt to a new way of negotiating and communicating about fees.
Another key takeaway from the new settlement agreement is that mandatory written agreements for buyer agents will be enacted. This means that MLS participants working with buyers must enter into a written agreement with the buyer before touring a property. These agreements must include specific disclosures about agent compensation and state that fees are negotiable. Additionally, we will also see from August 17th the prohibition of compensation offers, meaning that MLS participants, subscribers, and sellers will be prohibited from making any offers of compensation in the MLS to buyer brokers or other buyer representatives.
I’ve also seen realtors discuss what these new changes mean for new disclosure requirements and MLS data use. For new disclosure requirements, agents must provide compensation disclosures to sellers, as well as prospective sellers and buyers. For MLS data use, MLSs cannot create or support any non-MLS mechanism for participants, subscribers, or sellers to make compensation offers to buyer brokers. Notably, the use of MLS data or feeds to establish platforms for compensation offers will also be prohibited.
Finally, two key points that are important to understand are the reinforcement of existing rules, which means that MLSs must not enable filtering or restricting listings based on compensation offers or brokerage names and the changes to the definition of “cooperation.” This, in essence, means that MLSs will retain and redefine “cooperation” for MLS participation.
In closing, while the new settlement agreement means that compensation offers cannot be made through the MLS, it’s important to note that they can still be negotiated off MLS.
Eric Bramlett is the owner of Bramlett Residential.
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