As part of the settlement, NAR will agree not to create rules that would allow listing agents to set compensation for buyer’s brokers. American HomeServices is not included in the deal.
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The National Association of Realtors has agreed to settle a lawsuit upending the real estate industry, promising to pay damages to plaintiffs and revolutionize how homes are bought and sold in the United States.
NAR will pay $418 million in restitution over the next four years and agree to a number of reforms as part of the Sitzer | settlement. The group said Friday that Burnett and other lawsuits are piling up across the country.
NAR will agree not to create rules that would allow listing agents to set compensation for buyer’s brokers. Compensation offers will not appear in the Multiple Listing Service.
“We have always wanted to alleviate the significant stress our members are experiencing and provide a path forward for the industry,” NAR President Kevin Sears said in an email to members Friday morning. “That’s why today We are announcing a proposed settlement that will end litigation involving broker commission-related claims filed on behalf of home sellers. The settlement is subject to court approval.”
The agreement will address the needs of NAR, its more than 1 million members, all state and local REALTORS organizations, all multiple listing services owned by REALTORS associations, and all brokerage firms with NAR members as principals that have no more than 2022 residential transaction volumes. $2 billion), under the terms shared by NAR.
“This release does not include members who were at any time affiliated with our co-defendant HomeServices of America,” Chief Legal Officer Katie Johnson said. A representative for HomeServices said the company has not yet seen the settlement. , therefore declined to comment.
It also does not include MLSs that are not entirely owned by real estate brokerage organizations, but it does create an underwriting mechanism if they agree to change their practices and pay a per-subscriber fee to a settlement fund. NAR did not say whether member dues would be increased to cover the losses and said dues for 2024, which existing agents already pay, would not change.
The NAR has agreed to a new rule banning compensation offers in the MLS, which will take effect in mid-July.
“Consumers can continue to seek compensation options outside of the MLS through negotiation and consultation with real estate professionals,” NAR said. “Sellers can offer incentives to buyers on the MLS (e.g., buyer’s closing cost discounts).”
MLS participants will be required to work with the buyer to enter into a written Buyer Representation Agreement prior to touring the home.
NAR said buyer’s agents can still negotiate compensation packages outside the MLS, but such communication cannot occur through the MLS.
Agents can still negotiate compensation through a flat-fee commission paid directly by the consumer, concessions from the seller, or a portion of the listing agent’s compensation.
“The Settlement Agreement expressly provides that sellers may convey seller concessions, such as buyer closing costs, through the MLS, provided that such concessions are not conditioned on the use of or payment to a buyer’s agent,” NAR said.
For decades, NAR has defended the rules and requirements it helped create and enforce. The company had vowed to appeal the $5.3 billion verdict until a settlement was reached on Friday.
NAR said it had considered filing for bankruptcy as a way to resolve the existential crisis caused by the Sizer decision and other lawsuits.
But it said it decided not to go down that route, which would have put its 1.5 million members at risk.
“Chapter 11 would also suspend litigation against NAR, but not other defendants in the cooperative compensation case,” the group said.
Still, many in the industry expect the group to reach settlements with a growing list of plaintiffs who accuse the trade group of overseeing an illegal conspiracy to boost commissions and keep them high.
The proposed settlement, which requires court approval, could end a wave of lawsuits filed in recent months by NAR after it lost a landmark class-action case in Missouri.
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The proposal is likely to come under scrutiny from the U.S. Department of Justice, which has said it will not accept settlements it believes do not bring enough reforms to the industry.
The U.S. Department of Justice is calling for rules requiring buyers to negotiate broker compensation themselves. The NAR has apparently agreed to take steps in this direction, according to reports.
Researchers believe competition will cause real estate commissions to decline if commissions are decoupled.
NAR did not respond to a request for comment or confirm era” Report. Michael Ketchmark, lead attorney for the plaintiffs in the Sitzer case | Ethan Glass, lead attorney for the Burnett lawsuit and NAR, did not immediately respond to requests for comment.
This story will be updated.
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