A guide for buyers and sellers for navigating the National Association of Realtors (NAR) class-action lawsuit settlement

It's imperative to clearly and simply communicate the NAR settlement and its meaning to buyers and sellers. At Porchlight, we remain committed to providing personalized service and transparency from start to finish. With many systems in place to ensure continued clarity throughout the process, this transition will be smooth and welcomed.  

A bit of history:

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. For the settlement, NAR agreed to pay a $418 million fine and implement three significant changes listed below (pending court and DOJ approval) for implementation in July 2024.

• Compensation offers for the buyer’s agent will no longer be publicly communicated on the MLS and will be negotiated privately by agents and clients. 
• The seller will decide on compensation offers to the buyer’s agent/brokerage, if any, and it won't 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.

For Sellers - Here’s What You Need to Know

• 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 rep what compensation is offered, if any.

• If you do not offer commission when signing your listing agreement, should you choose, you can negotiate it at the time an offer is made. 

• I will provide you with the relevant data and facts to understand how offering the buyer’s agent compensation might impact market value, the logistics of the sale, and timing. That way, you'll have all the information to make the best decision about what buyer’s agent compensation to provide!

For Buyers - Here’s What You Need to Know

• With this settlement, we must have this agreement signed before any services are provided and properties are shown. This ensures that our clients understand the fees being charged and who is responsible for the payment.
• We have always used buyer representation agreements, and per law and Porchlight requirements, we will continue to do so. 
• Since compensation offers for the buyer’s agent will no longer be publicly stated on the MLS, we will speak directly with listing agents to identify on your behalf if any compensation is offered for homes you are interested in. When writing an offer, you can negotiate compensation (if needed) for the property but 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 (same as the buyer's representation agreement states.)
• If a seller is covering the buyer’s agent's 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 has been included in the purchase price. In the future, if the buyer's agent fee is not represented in the sales prices, it may affect home prices, especially with the low inventory of houses and high demand in some of our market areas.
  
  

Thank you for trusting me as your real estate collaborator, and I'll keep you updated on any further developments!

~ Emelie