SFAR Members,

Please take a look at the resources below about the NAR Legal Settlement. We will be updating this page with new information as it becomes available. Please check back often for the latest updates. 

**Updated 4/29/24**

April 29, 2024 -- Updated Talking Points from NAR

The litigation and financing FAQs on facts.realtor have been updated. Please find in the links below the latest versions:

FAQ

April 24, 2024 -- Court Grants Preliminary Approval on NAR Settlement

On Tuesday, the Western District of Missouri granted preliminary approval. 
Read More Here

April 16, 2024 -- Dispelling Myths About Real Estate Commissions and the MLS 

This is an interesting article written by Bright MLS' Chief Economist Lisa Sturtevant, PhD addressing the misinformation surrounding the NAR Settlement as it relates to buyer commissions.

April 5, 2024 -- Updated Talking Points from NAR

The litigation and financing FAQs on facts.realtor have been updated. Please find in the links below the latest versions of both documents, including the following updates:

• Both FAQs have been organized into categories for easier navigation.
• Questions 44, 45, and 46 were added to the litigation FAQ.
• Answer to question 5 in the financing FAQ has been revised.

Litigation FAQs
Financing FAQs

________________________________________________________________________

Due to overwhelming demand, C.A.R. is holding additional Legal Townhall Webinars on NAR’s commission claims settlement.

Get your questions answered about the NAR settlement and potential impacts on the industry and on business practices.

https://www.car.org/meetings/virtual/narsettlement

March 22, 2024 -- New SFAR FORMS: Broker Compensation Advisory and Buyer Broker Compensation Addendum to Purchase Agreement Now Available at All SFAR Authorized Forms Platforms.

As mentioned earlier this week by SFAR’s 2024 President, Vanessa Gamp, new forms were fast-tracked for use pending the implementation of the NAR Settlement. These forms are now available for use by membership and can be found at all SFAR authorized forms platforms.

The two new SFAR forms are the:

·     Broker Compensation Advisory; and,

·     Buyer Broker Compensation Addendum.

The Broker Compensation Advisory, among other things, reminds that commissions are entirely negotiable. It also references various CAR agreements and forms available to assist with such negotiations.

The Buyer Broker Compensation Addendum is designed for use by buyers who wish to request sellers agree to pay any obligation of buyers to compensate their own broker. Its content is similar the provisions of Section 3, G(3) of the CAR RPA.

Both forms are for use in new transactions and should be provided at the same time as the agency disclosures for new matters. 

As always, please forward any questions to forms@sfrealtors.com.

Please watch the below video from Standard Forms Committee Chair Neal Corkery and SFAR President Vanessa Gamp to learn more about what these new forms do and how they relate to how commissions are paid.

_____________________________________________________________________________

March 19, 2024 -- SFAR EMAIL MESSAGE TO MEMBERSHIP FROM VANESSA GAMP 

Please take a moment to watch this special video message from SFAR President Vanessa Gamp, which includes updates on the NAR Legal Settlement.

If you have additional questions, we highly encourage you to join one, or both of the below webinars.

This week CAR will be hosting a Special Member Legal Town Hall on NAR Settlement on Thursday, March 21 at 10:30 a.m. The Zoom webinar is open for all CAR Members to attend. Please register by clicking the link below.

_____________________________________________________________________________

March 19, 2024 -- MESSAGE FROM NAR PRESIDENT KEVIN SEARS 

Fellow members,

Since Friday’s settlement announcement, many of you have reached out to the Leadership Team with questions. We recognize that the terms of the settlement are complex, and we are working diligently to ensure members and consumers understand what this proposed settlement will mean for our industry.

To help address frequently asked questions and support your ongoing conversations, I’m sharing a set of updated FAQs, which you can access on facts.realtor. Please note that we have removed the login requirement for the site. We will continue to update and reshare this document with you. I also encourage you to continue referencing the fact sheet, settlement agreement, press release, and my video with Katie Johnson – all of this is available on facts.realtor as well.

In addition, in response to the persistent inaccurate reporting suggesting that NAR rules set commissions at 6%, we issued a statement to media earlier this morning that is linked here and copied below for your reference. We encourage you to provide this statement in response to any reporting in your communities that inaccurately states or suggests that NAR or any REALTOR^® association sets commissions.

While the settlement will bring changes for all of us, it also allows us to move forward and continue doing our jobs. In the coming days, we’ll be sharing more materials and scheduling additional briefings and town halls. Thank you for your continued hard work in service of our industry, and please continue to reach out to me, as well as other NAR leaders, if you need support.

_____________________________________________________________________________

March 20, 2024 -- MESSAGE FROM KEN FEARS, NAR SENIOR POLICY REPRESENTATIVE FOR BANKS, LENDING AND HOUSING FINANCE FOR THE NATIONAL ASSOCIATION OF REALTORS®.

Please click the above link and log into NAR to see Ken's full message, which covers questions relating to buyers being able to obtain a mortgage after the settlement and questions relating to whether or not real estate commissions can be financed. 

_____________________________________________________________________________

March 15, 2024 - NAR SETTLEMENT FACT SHEET  

Settlement Factsheet

NAR and plaintiffs have reached a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned Multiple Listing Services (MLSs), and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. The settlement is subject to court approval.

Ultimately, we believe this was the best outcome we could achieve in the circumstances. The large settlements that other corporate defendants have already reached were important factors going into what NAR could achieve in this settlement.

Coverage of NAR’s Release

Implications for Members

• Over one million NAR members are released from liability nationwide.
• NAR’s release covers all members other than agents affiliated with HomeServices of America and its related companies (the last corporate defendant still litigating the Sitzer- Burnett case), and employees of the remaining corporate defendants named in the cases covered by this settlement.

Implications for Brokerages Owned by Members

• Brokerage entities owned by members that had a residential transaction volume of $2 billion or below are released from liability nationwide.
• While we would have preferred to protect all industry players, ultimately NAR could not persuade the plaintiffs to include the largest brokerages.
• The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion to obtain releases efficiently if they choose to use it.

Implications for NAR and other REALTOR® Associations

• NAR is released from liability nationwide.
• Any officers, directors, or other participants in NAR activities are released from liability nationwide for their role or participation in NAR.
• All state/territorial and local associations of REALTORS® are released from liability nationwide.

Implications for Association-Owned MLSs

• The release includes all MLSs that are wholly owned by one or more REALTOR® associations.

Implications for Other MLSs

• The agreement provides a mechanism for other MLSs to be covered by it if they choose to use it.
• This mechanism includes opting into the MLS practice changes that are a part of the agreement and paying a per-subscriber fee to the Settlement Fund.
• While we would have preferred to protect all industry players, the MLSs not wholly owned by a REALTOR® association were excluded by plaintiffs.

Practice Changes

• We were able to retain the right of consumers to continue to have cooperative compensation as an option so long as they pursue it off-MLS through negotiation and consultation with real estate professionals.
• NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. The change will go into effect in mid-July 2024.

Implications for members

• There will continue to be many ways in which buyer brokers could be compensated, including through offers of compensation communicated off MLS — as we have long believed that it is in the interests of the sellers, buyers, and their brokers to make offers of compensation — but using the MLS to communicate offers of compensation would no longer be an option.
• The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:
  • Fixed-fee commission paid directly by consumers
  • Concession from the seller
  • Portion of the listing broker’s compensation
• Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

Implications for home buyers and sellers

• This settlement would preserve the choices consumers have regarding real estate services and compensation.
• After the new rule goes into effect, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers could not be communicated via the MLS.
• The settlement expressly provides that sellers may communicate seller concessions — such as buyer closing costs — via the MLS provided that such concessions are not conditioned on the use of or payment to a buyer broker.

New rule about written agreements

• NAR has long encouraged its members to use written agreements because they help consumers understand exactly what services and value will be provided, and for how much.
• The settlement provides that MLS participants working with buyers must enter into written representation agreements with those buyers.
• This change will go into effect in mid-July 2024.

Implications for members and home buyers and sellers

• After the new rule goes into effect:
  • MLS participants acting for buyers would be required to enter into written agreements with their buyers before touring a home.
  • These agreements can help consumers understand exactly what services and value will be provided, and for how much.

Other cases concerning the MLS cooperative compensation Model Rule

• Because the agreement would not end litigation as to all defendants, litigation concerning cooperative compensation may continue.
• In Batton I (N.D. Ill.), NAR’s answer to plaintiffs’ amended complaint is due on April 14, 2024. There is a status hearing on May 7, 2024.

Next steps in settlement process

Court approval and opt outs

• There are strong grounds for the court to approve this settlement because it is in the best interests of all parties and class members.
• We can expect the process of court review to take several months or more.
• In large class action settlements like this one, objections and opt outs are common, and the plaintiffs and NAR will handle them as they come.

NAR operations

• Nothing about this settlement changes NAR’s commitment to lead our industry forward and support our members.
• One of the critical advantages of this agreement is that NAR would be able to pay the settlement amount over time.
  • NAR would pay $418 million over approximately four years.
  • This is a substantial sum, and it will be incumbent on NAR to use our remaining resources in the most effective way possible to continue delivering on our core mission.
• We will continue to deliver unparalleled value to, and advocacy on behalf of, REALTORS®, including through our learning opportunities and resources, research, and member tools.
• NAR has evolved multiple times in its history, including by introducing the MLS Model Rule in 1990s in response to calls from consumer protection advocates for buyer representation, and is doing so again now.
• Our leadership and staff remain focused on their work to deliver the value that has set this association apart for so many years.

Why settling now makes sense

NAR explored settling throughout the litigation and also carefully considered the other legal options available to us. These included:

• Appealing: A win on appeal would only have addressed the verdict in the Sitzer-Burnett case (not any of the copycat cases) and may only have resulted in a new jury trial, leaving members and consumers with continued uncertainty.
• Chapter 11 reorganization: In theory, Chapter 11 would have enabled NAR to eliminate its own liabilities while pursuing an appeal of the Sitzer-Burnett verdict. But we believe that would have left members with continued uncertainty and potential liability risk. Chapter 11 would also have paused the litigation against NAR but not the other defendants in the cooperative compensation cases.

Ultimately, while NAR continues to believe that it is not liable for the home seller claims related to broker commissions and that we have strong arguments challenging the Sitzer-Burnett verdict, we decided to reach this settlement to put claims to rest for over one million NAR members and other parties who would be released under the agreement.

What’s next

• The practice changes will go into effect in mid-July 2024.

• The settlement is subject to court approval, which is a process that we can expect to take several months or more and will include an opportunity for interested parties to object. In large class action settlements like this one, objections are common.
• We will move to have litigation about the MLS cooperative compensation Model Rule stayed, or paused, as to NAR pending the settlement approval process.
• NAR will also continue to provide updates about the settlement process as it unfolds on competition.realtor.

_____________________________________________________________________________

March 15, 2024 - NAR ANNOUNCEMENT DAY TALKING POINTS 

• Today NAR announced a proposed settlement agreement that would end litigation of

claims brought on behalf of home sellers related to broker commissions.

• Throughout its history, NAR has evolved to adapt to the ever-changing real estate

landscape. This settlement represents a pivotal moment for the association and the real

estate industry, and I have full confidence in NAR’s ability to evolve once more to do

what is needed to lead its members for years to come.

• There was no perfect option for resolving this litigation. This settlement will bring

changes for all of us, but this resolution also means we can continue to do our jobs.

• Since the litigation began, NAR has worked consistently to reach a resolution with the

plaintiffs. In the months since the Sitzer-Burnett verdict, our leaders redoubled those

efforts.

• You can imagine that reducing the significant strain on our members and provide a path

forward for the industry has always been a focus.

• Two critical achievements of this resolution are the release of most NAR members and

many industry stakeholders from liability in these matters and the fact that cooperative

compensation remains a choice for consumers when buying or selling a home.

• The settlement, which is subject to court approval, makes clear that NAR continues to

deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative

compensation model rule (MLS Model Rule).

• A few key details of the settlement agreement are as follows:

o The agreement would resolve claims against NAR, over one million NAR

members, all state/territorial and local REALTOR® associations, all association owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.

▪ For nearly all brokerage entities that had a residential transaction volume

in 2022 that exceeded $2 billion, and for MLSs not wholly owned by

REALTOR® associations, NAR also secured in the agreement a

mechanism to obtain releases efficiently if they choose to use it.

▪ NAR fought to include all members in the release and was able to ensure

more than one million members are included. Despite NAR’s efforts,

agents affiliated with HomeServices of America and its related companies

— the last corporate defendant still litigating the Sitzer-Burnett case —

are not released under the settlement, nor are employees of the

remaining corporate defendants named in the cases covered by this

settlement.

o Under the terms of the agreement, NAR would pay $418 million over

approximately four years.

o In addition to the financial payment, NAR has agreed to put in place a new MLS

rule prohibiting offers of broker compensation on the MLS.

▪ Offers of compensation could continue to be an option consumers can

pursue off-MLS through negotiation and consultation with real estate

professionals. And sellers can offer buyer concessions on an MLS (for

example—concessions for buyer closing costs) via the MLS provided that

such concessions are not conditioned on the use of, or payment to, a

buyer broker.

▪ This change is expected to go into effect in July of this year.

o Further, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers.

▪ Using buyer brokerage agreements will mandate what we have long

encouraged our members to do — enter into written agreements that help

consumers understand exactly what services and value will be provided,

and for how much.

▪ This change is also expected to go into effect in July of this year.

• The decision to settle was not made lightly.

• Throughout the settlement process, our leaders engaged with a diverse range of

members and stakeholder groups and considered their perspectives and interests while

fighting to protect all industry players as best they could.

• NAR explored settling throughout the litigation and also carefully considered the other

legal options available to us. These included:

o Appealing: A win on appeal would only have addressed the verdict in the

Sitzer-Burnett case (not any of the copycat cases) and may only have

resulted in a new jury trial, leaving members and consumers with

continued uncertainty.

o Chapter 11 reorganization: In theory, Chapter 11 would have enabled

NAR to eliminate its own liabilities while pursuing an appeal of the Sitzer Burnett verdict. But we believe that would have left members with continued uncertainty and potential liability risk. Chapter 11 would also

have paused the litigation against NAR but not the other defendants in the cooperative compensation cases.

• Ultimately, NAR leadership believe this was the best outcome we could achieve in the circumstances.

• The large settlements that other corporate defendants have already reached were

important factors going into what NAR could achieve in this settlement.

• Nothing about this settlement changes NAR’s commitment to lead our industry forward and support our members.

• As mentioned, the settlement is subject to court approval. That is a process that we expect will take several months or longer, and in large class action settlements like this one, objections and opt outs are common. NAR will advocate for court approval throughout this process.