Executive Summary

The Sitzer/Burnett settlement has been approved as of November 26, 2024, settling the class action claims related to broker commissions. NAR’s goal was to protect as many NAR members as possible while preserving consumer choice in their approach to buying or selling a home. In addition to the practice changes that went into effect on August 17, 2024, NAR agreed to a settlement payment over the course of four years. Click here to view the Sitzer vs. NAR court documents. Click here to view the Burnett vs. NAR court documents.

Section 1: What does this mean for representing home buyers?

• All MLS subscribers are now required to use written buyer representation agreements; failure to do so will result in disciplinary action.
• The written buyer agreement must be in place prior to touring a home; this is considered “working with a buyer,” and establishes a relationship.
• The written buyer agreement must detail agreed upon compensation for REALTORS® for their services.
• NAR details FAQ’s for buyer representation, #’s 71-91, click here to see them expanded.

Section 2: What does this mean for representing home sellers?

• Compensation may no longer be offered via the MLS. Compensation continues to be negotiable and may be offered off-MLS.
• The settlement makes very clear that NAR continues to deny any wrongdoing related to the cooperative compensation model and MLS.
• NAR’s FAQ page details seller representation in life, post settlement. Click here and look at #’s 44-70.

Section 3: Dos and Don’ts Post Settlement

• DO be optimistic about these changes. They foster consumer choice. Clients buying or selling property will pick REALTORS® because of a reputation they can trust and verify. As a part of the NAR Code of Ethics, all REALTORS®'s primary responsibility is to put their clients’ best interests at the forefront.
• DO continue to negotiate for your clients as well as your own business. No one has ever asked you to work for free; your value as a REALTOR® will influence your compensation. Being a great negotiator is critical for alternative compensation such as a fixed fee paid by buyer(s), concessions from seller(s) or a portion of listing broker compensation.
• DO be creative with your negotiations. Waiting for a paycheck has not always been feasible for some. Compensation can come in many forms, an hourly rate, flat fee or a percentage of the purchase price. More options give you and your buyer more solutions.
• DO what others won’t. The practice changes may include adjustments to your business practices. “The old way of doing things,” is out. Be nimble, make decisions independently or with the counsel of your Designated Managing Broker to compete in this changing landscape. Capitalize on the opportunity created by the NAR settlement because that must be your mindset: opportunity is now.
• DON’T panic about these changes. Education and information remain in your best interest. Perhaps now more than ever before, the REALTOR® with the best information will offer their clients the most competitive edge. Mainstreet offers education courses and networking events year-round to ensure our members have the most up-to-date coursework possible from top-flight instructors. We want you to be the go-to resource for agents in your office as well as your clients, because that’s what we are here for - our members. Click here to view our upcoming courses and event calendar to register for a class you need.
• DON’T cancel your Mainstreet REALTORS® membership. It is perfectly natural to feel mixed emotions about the NAR settlement but it was also designed to protect you. REALTORS® are a trusted source of advice and stand ready to help clients navigate their real estate journeys and help their clients make choices that work best for them. We have your back, like always.
• DON’T try to cut corners. That is a one-way ticket to the wrong kind of attention and possible consequences. Ideas like creating your own website to list offers of compensation for your marketplace’s listings or a database to house this kind of information could potentially result in discipline. Follow the rules and stay consistent.
• DON’T be a social media crusader. Comments agreeing to fix any amount of compensation or discussions regarding collusion in the comment section of a colleague’s social media post could appear as violations of federal anti-trust laws for price fixing. You may not think it was serious but facts are facts; those comments on social media can be used to levy millions of dollars in fines for an individual and more for corporations. Let’s just scroll past that idea, huh?

Section 4: Consumer Transparency

• Prospective home buyers and sellers may sit on the opposite sides of the table but they do sit at the same table. Meaning, both parties deserve a fair and honest representative negotiating for their best interests. Moreover, consumers choose to work with REALTORS® because of that fairness. Buyers want the best price and interest rate possible. Sellers want to earn a big return on investment after selling their home. It is up to their REALTORS® to ensure this happens.
• Additional forms, such as the now mandatory buyer representation agreement, make the most complicated purchase of most people’s lives that much clearer. These agreements leave no room for open-endedness. In fact, the NAR settlement states it specifically: “no open-ended compensation.” Buyers will see in black and white exactly what they are paying their Mainstreet REALTOR® to do.
• Buyers and sellers have more in common than they have differences. Namely, communication about the buying or selling process; specifically with the first-time home buyer. Buying a house or condo is a massive influx of new information and procedures, from touring and making offers to earnest money and home inspections. REALTORS® offer guidance, advice and suggestions about offers and subsequent negotiations. The transparency baked into this adventure is paramount to making it to the closing table. Consumer trust is impossible to substitute. Click here to view Mainstreet's Laws and Standards page for REALTORS®.

Section 5: Industry Shifts

• The NAR settlement has added a greater need for buyer transparency. The need for increased communication has further emerged as the compensation conversation onus rests on the REALTOR®. Questions like, “how will I get paid?” have rarely been a question before now. Life post NAR settlement is different. You MUST be upfront about outlining your professional services and what you will be paid for those services.
• It is a real possibility that a buyer and their REALTOR® will not know how much compensation a seller may be willing to offer, if at all. This reinforces the need to create greater transparency for our buyer clients. A buyer must understand how compensation will impact their offer and negotiations.
• Similarly, a seller also deserves to have an outline of your professional services and what you will be paid for those services. This includes how offering compensation (or lack thereof) could impact the pool of potential buyers, how and where to market that compensation and how compensation might impact the offers received. These are all at their discretion and guided by a REALTORS® expertise.

Section 6: What are “Minus Fees”?

In this context, “minus fees” are fees that a brokerage may charge to reduce the compensation owed to another brokerage. When compensation was offered through the MLS and a minus fee was applicable, it was deducted from the listing brokerage ‘s payment of compensation to the buyer brokerage. Now that compensation is no longer offered through the MLS, these fees may still appear but have become more confusing, depending on how compensation is agreed upon and by whom. 

When dealing with “minus fees” all parties — buyer, seller, listing broker and buyer broker — must understand the following:

• Who is the agreement for compensation between?
• If the listing brokerage continues to offer compensation to buyer brokerages and the listing brokerage charges a “minus fee,” this fee should be reflected in any compensation agreement between the listing and buyer brokerages.
• Please note that a buyer brokerage can negotiate compensation offered from a listing brokerage. Especially when the minus fee may impact their buyer client financially, based on the compensation reflected in any written buyer representation agreement.
• If the seller is offering compensation and that compensation is reflected in a contract to purchase, the agreement for compensation exists between the buyer and seller NOT the listing brokerage and buyer brokerage.
• When a buyer and seller agree to a different compensation amount than what is reflected in a listing agreement, or a buyer representation agreement, the buyer and seller need to address that difference with their REALTOR® and attorney based on their contractual representation agreements. When in doubt, ask your attorney.
• It is NEVER appropriate for a REALTOR® to change the compensation amount to add or remove a minus fee without the express written consent and agreement of the buyer and seller, since the agreement for compensation is reflected in their purchase agreement.

Section 7: Illinois License Law Changes

• Illinois will also be following suit with changes to the Real Estate License Act of 2000, taking effect Jan. 1, 2025. All real estate licensees will be required to use written brokerage agreements when they act as agents for all types of real estate brokerage business, including with buyers in residential sales transactions, as required by the NAR settlement.

Continue to visit NAR’s website: nar.realtor/the-facts for the latest updates related to the settlement and how the practice changes may continue to shift our industry. Mainstreet REALTORS® is committed to ensuring that you have the most up to date information and tools possible to address the impact to your business and to the consumer.