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NAR Settlement and what it means for our clients.

The recent settlement agreement announced by the National Association of REALTORS® (NAR) regarding litigation related to broker commissions has generated significant attention and discussion nationwide. This settlement aims to resolve the legal disputes brought by home sellers concerning broker commissions. However, amidst the ongoing dialogue, there are various questions and concerns from both brokers/agents and consumers.


It's crucial to address these concerns and clarify any misconceptions that may arise from the coverage of this settlement. The litigation, which triggered additional lawsuits following the Sitzer-Burnett verdict, undoubtedly created uncertainty within the real estate industry. This uncertainty compounded existing challenges such as low inventory and interest rate increases.


The settlement, pending judicial approval, offers a way forward for all stakeholders in the real estate industry, including real estate professionals, REALTOR® associations, brokerages, and multiple listing services (MLSs). Importantly, it provides NAR members with the opportunity to redirect their focus towards their primary mission of supporting buyers and sellers in real estate transactions.


Amidst the noise and speculation, it's essential to separate fact from fiction. The settlement represents a step towards stability and clarity within the real estate market, enabling professionals to better serve their clients and move forward with confidence.

The Facts

There's been a lot of misinformation circulating about the recent settlement agreement from the National Association of REALTORS® (NAR), which would require the association to pay $418 million over four years. Some media outlets have incorrectly suggested that NAR previously set or guided commissions to a standard rate of 6%. Even President Joe Biden misspoke in suggesting that the settlement makes commissions negotiable for the first time.


However, it's important to set the record straight. NAR does not set commissions, and they have always been negotiable between brokers and their clients. This settlement doesn't change that fact. Housing prices are determined by market forces beyond the control of NAR members.


Correcting these misconceptions is crucial, given the complexity of the settlement agreement. NAR is actively working with the media to ensure accurate reporting, and members are encouraged to rely on official NAR sources for the most reliable information.


The settlement achieves two key objectives: protecting members and preserving consumer choice. It resolves claims against NAR and nearly every member, as well as various associations, MLSs, and brokerages. Importantly, it maintains cooperative compensation as an option for consumers, provided such offers occur off the MLS.


While NAR aimed for a release covering all industry players, negotiations were influenced by large settlements reached by other corporate defendants. Throughout the process, NAR engaged with a diverse range of members to consider their perspectives and interests.


NAR's Interim CEO, Nykia Wright, emphasized the importance of this settlement as the best possible outcome under the circumstances. It provides a path forward for the real estate industry, which plays a significant role in the American economy. NAR remains committed to its core mission of protecting and advancing property ownership rights in the United States.

Changing Business Practices According To NAR

The settlement agreement also mandates two key changes to the way members and MLS participants do business.


  1. NAR agreed to create a new MLS rule prohibiting offers of compensation on the MLS. This would mean that offers of compensation could not be communicated via an MLS, but they could continue to be an option consumers could pursue off-MLS through negotiation and consultation with real estate professionals.

  2. NAR also agreed to create a new rule requiring MLS participants working with buyers to enter into written agreements with their buyers before the buyer tours a home. NAR has long encouraged its members to use written agreements to help consumers understand exactly what services and value they provide, and for how much.



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