In 2024, the National Association of Realtors agreed to pay $418 million in damages over approximately four years to settle the case Burnett et al. v. The National Association of Realtors et al., alleging violation of federal antitrust laws. As part of the settlement, a $208.5 million fund was established to compensate qualifying homebuyers. While the claims deadline has passed, here are five takeaways potential residential buyers and sellers should be aware of:
“Participation Rule” is abolished
The “Participation Rule” required a seller’s broker to offer compensation to a buyer’s broker as part of the real estate transaction. As a part of the settlement, that rule is abolished and a seller’s broker cannot be required to compensate a buyer’s broker.
Offers of compensation no longer listed on MLS
The Multiple Listing Service (MLS) will no longer list offers of compensation to buyers’ brokers. Compensation paid to the buyer’s broker must be separately negotiated between the buyer and the broker. If a seller chooses to offer compensation to a buyer’s broker, those offers must be communicated off of the MLS. Sellers are permitted to offer other concessions on the MLS, such as for buyer closing costs.
Written buyer representation agreement requirement
Buyers and their brokers must now enter into a written agreement prior to touring a property. The agreement must outline the amount or rate of compensation payable to the broker or how the amount will be determined. While the negotiated compensation may be a percentage of the sales price, flat fee, hourly rate, etc., the agreement may not state that the buyer’s broker will be paid based on the fee offered by the seller and the compensation may not be open-ended.
Potential for lower costs and flexibility
The changes resulting from the settlement are designed to give the buyers and sellers more control over their choice of representation and flexibility in how properties are marketed. If rates are negotiated, there is the potential for lower commission costs, which could mean more funds for the seller.
Increased transparency
One goal of the settlement is to more clearly state each broker’s compensation. If a listing broker chooses to offer payment to another broker acting for buyers, the listing broker must first obtain the seller’s approval, make the disclosure in writing in advance of any payment or agreement to pay, and disclose the payment amount or rate.
See Corrected Settlement Agreement, Burnett, et al. v. Nat’l Ass’n of Realtors, et al., No. 4:19-CV-00332-SRB, Doc. No. 1458 (W.D. Mo., Apr. 19, 2024). The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. While every effort has been made to ensure the accuracy of the content, the author and publisher make no guarantees and accept no responsibility for any errors or omissions. Readers should consult a qualified professional for advice specific to their situation.