FRANKFORT, Ky. — Kentucky Realtors are reacting to news that the National Association of Realtor announced Friday a settlement that includes a $418 million payment to end litigation of claims brought on behalf of home sellers related to real estate 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, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.
The settlement bans any rules allowing a seller’s agent to set compensation for a buyer’s agent through commissions.
The settlement specifies fields displaying broker compensation on MLSs must be eliminated, there is a blanket ban on the requirement that agents subscribe to MLSs to offer or accept compensation and buyers’ agents must have written agreements.
It is being viewed as the end of nearly uniform 6% commission payments for residential sales. The Hollywood Reporter’s headline questioned whether the era of the star real estate agent would come to an end.
Kentucky Realtors President Pam Featherstone issued this statement:
“Dear Kentucky REALTORS®,
In light of the news from NAR that was announced on Friday, March 15th, we want you to know that we are well aware of the changes that will be coming with the proposed settlement (which still needs court approval) that will need to be implemented.
“We have already been working on a Buyer Broker Agreement that we feel has all of the components that are needed to address the numerous issues that have to be discussed when representing a buyer as well as how we need to educate our sellers.
“Kentucky REALTORS® have always conducted our business practices to the best of our ability and this only provides us with the ability to better educate our current REALTORS® as well as the ones that are just now coming into the business. We know that the average home buyer and seller do not understand all of the nuances, legal procedures, and liabilities that are present in selling and buying land. We proudly represent each one and will continue to do so.
“Education has always been at the forefront of what we do and this will only assist us with increasing that as well as the awareness of needing professionals to guide everyone through this process.
“We will continue monitoring the news and information that is distributed, but we would like to caution you not to accept everything that is being printed that speaks of numbers when discussing compensation or other bits of misleading information that we have already seen come out just last week.
“We are in this together and have your, as our members, best interest at heart.”
NAR has released information relating to the settlement. Key terms of the settlement include:
- Compensation offers moved off the MLS: NAR has agreed to put in place a new rule prohibiting offers of 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). This change will go into effect in mid-July 2024.
- Written agreements for MLS participants acting for buyers: While NAR has been advocating for the use of written agreements for years, in this settlement we have agreed to require MLS participants working with buyers to enter into written representation agreements with their buyers. This change will go into effect in mid-July 2024.
- Settlement payment: 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. NAR’s membership dues for 2024 will not change because of this payment.
- NAR continues to deny any wrongdoing: NAR has long maintained — and we continue to believe — that cooperative compensation and NAR’s current commissions policies are good things that benefit buyers and sellers. They promote access to property ownership, particularly for lower- and middle-income buyers who can have a difficult time saving for a down payment. With this settlement, NAR is confident it and its members can still achieve all those goals.
