You may have seen recent headlines about the National Association of REALTORS® (NAR) lawsuit and proposed settlement. If you are considering a career in real estate, you may wonder how this news will affect your chances of succeeding in the industry. We understand your concern – there’s a lot of information to unpack. So, here’s a brief overview of the court case and proposed settlement to help those interested in becoming a real estate agent.
Please note: Colibri Real Estate will cover this ongoing news event in a series of blogs. For a full report on the proposed NAR settlement and its impact on the industry, read our Guide for New Real Estate Agents.
About The NAR Lawsuit: Burnett v. NAR, et al. Verdict
On October 31, 2023, a federal jury in the U.S. District Court for the Western District of Missouri found the NAR and some brokerages liable for inflating buyer agent commission fees.
The lawsuit targeted the industry practice of seller agents advertising a specific commission to buyer agents through their Multiple Listing Service (MLS). Opponents of this practice say that the practice encourages buyer agents to promote properties to their clients that would yield them a larger commission.
NAR responded to these allegations with the following statement: “NAR does not set commissions, and commissions were negotiable long before this settlement. They are and will remain entirely negotiable between brokers and their clients.”
Proposed NAR Lawsuit Settlement
In March 2024, NAR and plaintiffs reached a proposed settlement agreement to end litigation of claims brought on behalf of home sellers related to broker commissions. The settlement, subject to court approval, will take effect on July 1, 2024.
One of the results of the proposed settlement is that buyer agents who are REALTOR®️ members will be required to enter into written buyer agency agreements with buyers before offering them services, such as showing properties or submitting offers on their behalf. The buyer agent compensation will be an integral part of this agreement and may be based on a percentage of the sale or a flat rate.
The Impact of the Proposed NAR Lawsuit Settlement
As previously mentioned, one of the key changes mandated by the settlement includes measures to enhance transparency of commissions and fees. However, there are additional potential effects that will give more options to consumers and will level the playing field in the real estate market. Learn more about these changes and what they mean to new real estate agents by downloading our free report.
One thing that won’t change after the proposed settlement is that prospective agents will still need to earn their state-specific real estate license to work in the industry. Learn about your state’s requirements from Colibri and get started on the licensing process today.
