We hope this message finds you well. Today, we wanted to address a topic that has been making headlines recently: the National Association of Realtors® (NAR) class-action lawsuit settlement. With so much media coverage on this matter, it was paramount that we take a moment to provide you with the facts and offer guidance to help you navigate these changes, whether you're a buyer or a seller.
In 2023, a group of home sellers in Missouri filed a class-action lawsuit, known as the Sitzer-Burnett case, against NAR and other defendants. As part of the settlement, NAR has agreed to pay a $418 million fine and implement three significant changes listed below in its practices. This is pending court and Department of Justice approval. Once it is approved, we expect to have these changes go into effect around mid-July of this year:
- Compensation offers for the buyer’s agent will no longer be publicly communicated on the Multiple Listing Service (MLS). Instead, they will be negotiated privately by agents and clients.
- The seller will decide on compensation offers to the buyer's agent/brokerage, if any. This will not be built into the listing broker fee.
- All agents and buyers must enter into written agreements explaining compensation and fees before proceeding with representation, providing services, and touring homes.
Here's What You Need to Know
For Sellers:
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When signing a listing agreement, you will identify whether or not you are offering any buyer's agent compensation. This is your decision and is not required as a part of this settlement. Your agent will communicate with any buyer's agents/brokerages what compensation is offered, if any.
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If you do not offer commission when signing your listing agreement, you can negotiate it at the time an offer is made, if you choose.
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As your trusted real estate agent and advisor, we will provide you with the relevant data and facts so you can understand how offering the buyer’s agent compensation might impact market value, the logistics of the sale, and timing. This will help you decide what buyer’s agent compensation to provide.
For Buyers:
- Our brokerage under Colorado Law has always advised our customers and clients on buyer agency and required buyer representation agreements. However, with this settlement, we must have this agreement signed before any services are provided and properties are shown. This will ensure our clients and customers understand the fees being charged and who is responsible for payment of such fees.
- Since compensation offers for the buyer’s agent will no longer be publicly communicated on the Multiple Listing Service (MLS), we will communicate directly with listing agents to identify on your behalf if any compensation is offered for homes you are interested in. At the time of offer, you can negotiate compensation (if needed) for the property; the seller is not required or obligated to provide it. Any differences not negotiated and/or paid by the seller will be the buyer's responsibility in purchasing the property.
- If a seller is willing to cover the buyer's agent commission and/or fee, it may be covered within the mortgage loan in the form of a seller concession. However, the buyer should be aware of the limitations of the concession percentage allowance. Many factors play into the concession percentage allowance that impacts the overall amount received, such as the loan amount and down payment.
- Historically, the buyer's compensation was included in the purchase price. How this might affect home prices is yet to be determined, especially with the low inventory of houses and high demand in some of our market areas.
At PorchLight, we remain committed to providing excellent customer service and transparency. You are welcome to reach out if you have any questions or require further information. Our agents are educated and trained to provide exemplary assistance along with services that go beyond what the traditional brokerage offers. Your satisfaction and best interests are always our top priority.
Thank you for entrusting us with your business. We'll keep you updated on any further developments.
Best regards,
Jolene Weinstein
President, PorchLight Real Estate Group
