With the help of Idaho REALTORS® and the Intermountain MLS, Boise Regional REALTORS® would like to provide members with a bank of information surrounding the recent NAR settlement announcements.
Speculation and unproductive conversation can be detrimental in making progress when faced with new changes. Therefore, BRR will be working hard to compile resources from NAR, IR, and other reliable sources to help educate our members and consumers as details are released.
IDAHO REALTORS® FORM UPDATE VIDEOS
*Please take time to read IR’s important disclaimer at the start of their videos*
- Consumer Guide: Offers of Compensation. What are offers of compensation and why are they a compelling strategy for sellers to consider when marketing their property? These questions and more are answered in the latest resource in NAR’s “Consumer Guide” series. Download and share the resource with your members, who can then give it directly to inquiring consumers.
- Fact sheets on what the practice changes mean for homebuyers and home sellers. These resources—one for sellers and one for buyers—outline what buyers and sellers should expect after Aug. 17 and the value agents who are REALTORS® provide to consumers in these transactions.
- A broker’s guide to upcoming practice changes. These slides provide an overview of the settlement, information on corresponding practice changes and implementation, and guidance on how to help consumers understand what these changes mean for them and their homebuying or selling transactions.
- A template compensation disclosure for active listing or buyer agreements as of Aug. 17. The template disclosure can be used for active agreements as of Aug. 17 that will need to be amended or supplemented with a separate disclosure to conspicuously note that compensation is not set by law and is fully negotiable. For more information on requirements for amending active listing or buyer agreements, please see FAQs #52, #53, #71, and #72.
PAST NEWS
Wednesday, April 24th | NAR received preliminary approval of their proposed settlements, kickstarting a 60-day deadline for Multiple Listing Services (MLSs) and protected brokerages to adhere to relevant affidavits (listed below). Intermountain MLS has confirmed completion of their required tasks. Please review NAR’s estimated settlement timeline for more information.
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- REALTOR® MLSs – which are MLSs wholly owned by REALTOR® associations. (See Appendix B)
- Brokerages with 2022 total transaction volume for residential home sales in excess of $2 billion (see Appendix C)
- Non-REALTOR® MLSs – which are MLSs that are not wholly owned by REALTOR® associations (see Appendix D)
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Friday, April 19th | NAR released a resource called “Dispelling 7 Myths about NAR’s Proposed Settlement” with corrections about the following 7 MYTHS:
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- Myth 1: The proposed settlement covers only a fraction of members.
- Myth 2: NAR left large corporate brokerages and affiliated agents to fend for themselves.
- Myth 3: NAR requires a standard 6% commission.
- Myth 4: NAR will raise dues to fund the settlement.
- Myth 5: Brokers representing buyers now have to work for free.
- Myth 6: The practice change will do away with offers of compensation to brokers representing buyers.
- Myth 7: NAR settled because the plaintiffs’ allegations are true.
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Monday, April 15th | Fannie Mae & Freddie Mac released letters explaining how they will handle buyer agent compensation that comes from the seller and how that would (or in this case, WOULDN’T) affect IPC limits in a transaction.
Sunday, April 14th | NAR received 48 hour notice prior to the filing of a Motion for Preliminary Approval. The filing could be expected as early as April 15th. The motion sets forth the plaintiffs’ position and asks the Court to grant preliminary approval. While we disagree with some of plaintiffs’ statements about NAR and real estate professionals, we agree that the settlement is fair, reasonable, and should be approved by the Court.
Friday, April 12th | The Judicial Panel on Multidistrict Litigation (JPML) ruled that centralization of the class action lawsuits is not necessary at this time because the settlement agreement NAR reached with plaintiffs on March 15 would resolve some, if not many, of the claims in the pending cases. NAR is pleased with the ruling. It reflects that NAR’s settlement, which, if approved by the court, would end litigation nationwide for NAR and other released parties in the cases brought by home sellers. To be clear, this JPML ruling does not affect the approval process for the settlement agreement. See our FAQ section on the Multidistrict Litigation for more info.
Idaho REALTORS®
Settlement Update
Barbara Corcoran
Interview with Fox Business
Leigh Brown
NAR Settles…Now What?
Leigh Brown
Unlocking Transparency
Leigh Brown
Unraveling Misconceptions
WHY REALTOR®? — A social media graphics series to help agents share their value as REALTORS® with consumers
KNOW THE FACTS: NAR SETTLEMENT — A social media graphics series with digestible answers to common settlement questions
NAR RESOURCES
OTHER RESOURCES
Social Media Graphics:
- “Why REALTOR®?” (A graphic series to help agents explain their value as a REALTOR® to consumers)
- “Know the NAR Settlement” (A graphic series focused on providing digestible answers to some of the most common NAR Settlement questions)
Notices from financial agencies:
- Federal Housing Administration’s FAQs for Seller-Paid Commissions
- Fannie Mae’s Seller’s Notice
- Freddie Mac’s Seller’s Notice
Articles/Discussion:
- “Will Dual Agency Become Common After NAR’s Settlement?” | Inman
- “The NAR Settlement may be a good thing” | The Hub
- “NAR Urges VA to Update Allowable Fees” | The Hub
- NAR Compensation Settlement – Flash Poll Synopsis Report | T360 Research
- “Real Estate Pro Says Don’t Nelieve National Association of REALTORS® Settlement Myths” | Harald-Tribune
- “Sorting Fact from Fiction in the Recent NAR Settlement and What’s Next for the Housing Market” | Atlanta Business Chronicle
Why was NAR so quick to settle after vowing to "Appeal, Appeal, Appeal" the verdict?
Since the start of the litigation, NAR had two goals:
- Preserve the choices consumers have regarding real estate services and compensation; and
- Move forward in a positive way for both members and consumers.
This proposed settlement achieves both of those goals and allows us to continue our work to preserve, protect, and advance the right to real property for all. This settlement is in no way an admittance of wrongdoing but a way for members to move forward while preserving consumer choice and improving the consumer experience. We’re pressing forward by emphasizing the importance of specialized training, negotiation skills, and customer service.
Will BRR or IMLS separate from NAR so it can make its own rules?
Currently there is a three-way agreement in place between local, state, and national REALTOR® associations and, at this time, BRR does not have plans to withdraw from the trade association.
As a wholly-owned subsidiary, the Intermountain MLS also does not have plans to separate.
What are the benefits of being a part of the REALTOR® association (BRR, IR, NAR)?
NAR, IR, and BRR have maintained their services throughout the settlement announcement. Here are a few of those services that members are provided:
ADVOCACY:
- NAR has been a driving force in protecting private property rights at the federal level (for example, NAR fought and won against the Federal Housing and Finance Agency’s proposed LLPA changes in 2023).
- BRR and IR have teamed up continuously to press forward on local and state issues, as well.
- See our 2023 Federal Advocacy Summary for more.
EDUCATION:
- Ethics training to ensure proper handling of transactions.
- Specialty CE to sharpen member skills, thereby boosting business and increasing productivity.
- Certification/designation programs to amplify consumer support.
EVENTS:
- Annual conferences focused on market analysis, industry updates, and advocacy efforts.
- Networking opportunities with leaders in the industry through luncheons, Mix & Mingles, and more.
Are REALTORS® who deal in commercial real estate covered under the terms of the agreement?
The settlement does not distinguish between REALTORS® who deal in commercial real estate from those who work in residential real estate.
What do these practice changes mean for commercial practitioners?
The proposed settlement agreement—like the Sitzer-Burnett lawsuit and the copycat lawsuits—is focused on residential real estate transactions. That means most commercial transactions will not be affected.
In many markets, commercial listings appear in commercial information exchanges (CIEs) and not multiple listing services (MLSs), and do not include an offer of compensation.
The settlement prohibits offers of compensation on the MLS and requires MLS participants working with buyers to enter into written agreements with their buyers. These practice changes will go into effect around late July.
How might VA buyers be affected by the proposed settlement?
NAR has engaged with the VA on this issue, and remain committed to working with the VA so that veterans are not left out of the market or forced to consider alternative loan products.
Can a buyer remain a client without signing the Buyer's Representation Agreement? Some of them are hesitant about signing.
Protecting your agency — the legal relationship between you and a consumer — is a pivotal aspect in real estate. A representation agreement ensures these conversations are taking place and also helps protect your business in the process.
Focus on educating your consumers on the services you provide and explaining the importance of contractual agreements during a real estate transaction. Being curious about the consumer’s hesitations in signing a representation agreement will also help you get clarity on their pain-points and how you can soothe those worries.
How will forms change to account for the proposed IMLS changes?
Boise Regional REALTORS® does not have control over forms changes which are handled by Idaho REALTORS®.
Their Forms Committee will be discussing the best means for altering form fields to capture these proposed requirements while still honoring member needs. Stay tuned for more updates from Idaho REALTORS® and be sure to tune into their webinars as they release information.
How will MLS listings change?
While BRR does not have direct input in how these changes would come to be, we do know that the Intermountain MLS’s Board of Directors will be reviewing any potential changes to MLS listing fields in accordance with the proposed settlement agreement. Keep current with IMLS newsletters, messages, and other updates from them for a smooth transition.
If I've agreed to _% on my Buyer's Representation Agreement but the seller has offered more than that, can I accept the higher percentage from the seller?
No, you can only accept the amount listed on your Buyer’s Representation Agreement.
Your Buyer’s Representation Agreement is a contractual agreement to the amount of commission you’ll accept at the end of a transaction. This not only protects your buyer but you, as well, should a buyer attempt to negotiate a lower amount as the transaction progresses.
If someone calls on a listing of mine (and is not working with an agent), do I need to get a Buyer's Rep Agreement signed by them in order for them to offer on my listing?
Yes, you would need to ensure that the buyer AND seller understand you’d be working in that situation as a “dual agent” (an agent working on both sides of the transaction). This changes the services you would provide to each client and would require an agreement from both, prior to moving forward with representing them.
It is important to familiarize yourself with agency requirements for your circumstance to ensure you are not in violation by representing both sides of the transaction.
Will I be able to market commission/co-op offerings outside of the MLS if these changes go into place?
While BRR does not have direct input in how these changes would come to be, we do know that both the Idaho REALTORS® Forms Committee and the Intermountain MLS’s Board of Directors will be reviewing any potential changes to forms and fields in accordance with the proposed settlement agreement. Keep current with IR and IMLS newsletters, messages, and other updates from them for a smooth transition.
If an MLS Participant hosts an open house or provides access to a property, on behalf of the seller only, to an unrepresented buyer, will they be required to enter into a written agreement with those buyers touring the home?
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.
How can an agent (including new construction agents) stay in compliance if an unrepresented buyer comes into an open house and wants to purchase my listing?
We LOVE open houses and understand the ambiguity of a prospective client attending without an agreement signed prior. Our recommendation (should the settlement be approved) is to bring blank representation agreements with you to your open houses.
Should a potential client walk through the home and show interest, you can have them sign the representation agreement at that time and still be in compliance. This is, however, still a matter of discussion amongst Idaho REALTORS® and the Intermountain MLS to solidify. Keep an eye out for any policy updates from both entities as more information is released.
It is also important to familiarize yourself with agency requirements for your circumstance to ensure you are not in violation by representing both sides of the transaction.
Will the buyer representation form be required before the first property showing?
Should the proposed settlement be approved by the court, we anticipate agents and clients will need to enter into a legal agreement prior to the showing of the first home.
Think of it this way: if you were to shop around for a painter and chose one you wanted to move forward with, you would be expected to sign a proposal/bid prior to the contractor coming in to sand, prime, and paint. This protects both the client (so they know what services to expect) and the contractor (so the client sticks to the proposed negotiation).
Will there be any scripts created for us to have access to in preparation for conversations with our Buyers and Sellers?
We understand that having answers to questions that buyers/sellers may approach you with is important in showing confidence in your business. With that said, it is also important that any canned responses surrounding negotiations are provided to you by your broker to ensure they fit brokerage values, processes, and goals.
While we cannot provide negotiation scripts, we have prepared a social media graphic series that will help you express your value as a REALTOR® to your consumers.
We invite you to our upcoming Real Estate Negotiation Expert course in June, as well. The course will help you navigate negotiations with greater ease while still allowing you to add your own approach to those conversations. You can register for that course here [Course provided in partnership with Idaho REALTORS®].
