NAR Settlement and the MLS
What Happened: On March 15, 2024, The National Association of REALTORS (NAR) came to an agreement to settle litigation of claims brought on behalf of home sellers related to broker commissions.
What is Changing: NAR has agreed to put in place a new MLS rule 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 consumers can pursue off-MLS through negotiation and consultation with real estate professionals.
When is this Happening: NAR’s mandatory MLS policy changes, which implement the settlement’s required practice changes, will take effect on August 16, 2024.
Why did SmartMLS opt-in to the Settlement? It is important to note that SmartMLS was not party to this lawsuit and therefore had no opportunity to present our viewpoints, defend our practices, or negotiate the terms of the settlement. Nevertheless, each of the over 20,000 subscribers served by SmartMLS are NAR members (REALTORS®) and therefore obligated to comply with the rules agreed to by NAR in the settlement agreement. For this reason, we believe that opting in to the Burnett settlement is necessary for minimizing disruptions to the marketplace.
How does the settlement affect me?
The Buyer’s Agent Compensation (BAC) fields will be removed from the MLS (both connectMLS and Matrix) system-wide.
BAC information will no longer appear on any reports within the MLS. You will not be able to add any BAC fields to custom reports or exports.
You will not be able to search for any BAC information. BAC fields will not appear on any search screens, nor will you be able to add them to a search.
BAC information will be removed from CMAs (net seller proceeds).
Listings and photos will be closely monitored to ensure all agents are abiding by the new settlement rules.
- All BAC-related fields will be removed from Add/Edit for all property types.
- There cannot be any mention of BAC information (compensation, bonuses, etc.) in the Remarks fields.
- BAC-related information cannot be conveyed through listing media (photos and virtual tours).
As part of the settlement, NAR agreed to following "Practice Changes" all which have to be implemented by August 16, 2024
Eliminate and prohibit any requirement of offers of compensation on an MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
Require an MLS to eliminate all broker compensation fields and compensation information on an MLS.
Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home.
Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives. Such use must result with an MLS terminating the participant’s access to any MLS data and data feeds.
Require an MLS to not create, facilitate, or support any non- MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) or Participants, Subscribers, or sellers to make offers of compensation to buyer brokers or other buyer representatives.
Reinforce that MLS Participants and Subscribers must not, and MLSs must not enable the ability to filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
What fields will SmartMLS remove or modify?
On Friday, August 16, the following fields will be removed from the listing input in Add/Edit:
Buyers Agent Compensation Type.
Buyer Agent Compensation Amount.
Compensation Notes.
Dual/Variable Rate Commission.
There can be no mention of offers of compensation anywhere on the system. This includes any listings fields, photographs, documents, virtual tours, showing instructions, etc. Reports and displays will be modified to eliminate the buyer’s compensation fields on all Active, UC,UC-CTS and Temp off Market listings.
NOTE: Offers of compensation can be made through separate negotiations or broker communications.
Seller Concessions
Seller concessions have been a part of many transactions in the past and can continue post settlement. SmartMLS has always had a seller concession field when a listing is marked closed.
Reminders:
- Any willingness to consider a concession within a listing is non-binding, nor is it guaranteed.
- Concessions can be used for closing costs, repairs, buyer broker fees, and/or other expenses. Concession information cannot be used to communicate an offer of compensation (either percentage or dollar amount) to another broker, or limited to only paying buyer broker fees.
- Concessions are requested by the buyer during negotiations and memorialized in the sales contract.
- The buyer can specify what the concessions will be used for in the sales contract.
Important: Concessions CANNOT communicate compensation information, be limited to only payment of buyer broker compensation or conditioned on payment of buyer broker compensation.
Buyer broker agreements have been State Law for decades. The following are required items:
State conspicuously the specific amount or rate of compensation the buyer’s broker will receive or how this amount will be determined. Must be objective and not open-ended.
State conspicuously that commissions are fully negotiable and not fixed by state law.
State conspicuously that the buyer’s broker may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.
Frequently Asked Questions
For more information on FAQs, click here or visit www.nar.realtor/the-facts
Compensation Information
In the early morning hours on Friday, August 16, 2024, the Buyer’s Agent Commission (BAC) information will be removed from all Coming Soon, Active, Under Contract – Continue to Show, Under Contract, Temp and Withdrawn listings.
The BAC cannot be anywhere within the MLS. Including:
- The Showing Instructions
- ShowingTime Showing Instructions
- Agent-to-Agent Remarks
- Public Remarks
- Directions
- Photos
- Virtual tours
- Any document that is uploaded to the MLS and accessible to other agents or buyers
The NAR Settlement does not prevent offers of compensation to buyer brokers off of the MLS.
REALTORS® and REALTOR® MLS Participants may display offers of compensation to buyer brokers or other buyer representatives but only on listings from their own brokerage.
You may include a link that provides information that allows brokers to contact each other. However, this may not be used to circumvent the prohibitions of (a) making offers of compensation on an MLS to cooperating brokers or other buyer representatives (either directly or through buyers) or (b) disclosing on an MLS broker compensation or total brokerage compensation (i.e., the combined compensation to both listing brokers and cooperating brokers). For example, an MLS may not allow MLS listings to have an embedded link to a website which, with a single click on the MLS listing, would immediately display an offer of compensation.
No, this field is being removed.
Working with a Buyer
The NAR Settlement requires that all REALTOR® MLS Participants working with a buyer enter into a written agreement before the buyer tours any home. The written agreement must specify and conspicuously disclose the amount or rate of compensation the buyer representative will receive or how the amount will be determined (which must be objectively ascertainable and not open-ended).
No. In this case, since the MLS Participant is only working for the seller, and not the buyer, the MLS Participant does not need to enter into a written agreement with the buyer.
NAR has tasked the MLS’s with enforcement.
NAR is offering free Accredited Buyers Representative (ABR) training. The key
information and skills you need today when working with buyers, so you can be prepared to articulate and demonstrate your value and help buyers understand written buyer representation agreements
Yes, subject to compliance with CT agency disclosure requirements.
SmartMLS remains committed to actively monitoring the impact of the practice changes mandated by the agreement to determine whether they harm historically disadvantaged communities, low down payment buyers, and first-time homebuyers.
Forms Information
No, the requirements will not change.
Yes. The updated SmartMLS forms are available in the forms section of your SmartMLS dashboard under “Smart Agent Options” as well as the forms Icon in the upper left hand corner in connectMLS.
Concessions Information
