The recent settlement with the National Association of REALTORS® (NAR) has brought significant changes to how compensation offers are handled in real estate transactions.

This article aims to break down these changes for real estate agents and leaders, providing clarity on the prohibitions and offering practical alternatives to ensure compliance.

To ensure you have a clear and accurate understanding of these changes, we are including the key provisions directly from the settlement documents. This not only provides transparency but also ensures that you are fully informed of the exact language and intent of the agreement. There’s a lot of misinformation and confusion out there, and our goal is to help you separate the truth from the speculation to better navigate this new real estate reality, avoid potential pitfalls, and confidently adjust your practices to remain in compliance. 

Related reading: 5 Ways to Manage Fear in the Wake of the NAR Lawsuit Settlement

Key Provisions Directly from the NAR Settlement Agreement 

Let’s start by looking at what the actual settlement agreement says about what agents can (and cannot) do when it comes to advertising their compensation.

Prohibition on Disclosure and Non-MLS Mechanisms:

1. Prohibition of Compensation Disclosure on MLS:
   • “Prohibit REALTOR® MLS Participants, subscribers, other real estate brokers, other real estate agents, and their sellers from (a) making offers of compensation on the MLS to buyer brokers or other buyer representatives (either directly or through buyers) or (b) disclosing on the MLS listing broker compensation or total broker compensation (i.e., the combined compensation to both listing brokers and cooperating brokers).”
2. Prohibition of Non-MLS Mechanisms:
   • “Agree not to create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for listing brokers or sellers to make offers of compensation to buyer brokers or other buyer representatives (either directly or through buyers); however, this provision is not violated by (a) a REALTOR® MLS providing data or data feeds to a REALTOR®, REALTOR® MLS Participant, or third party unless the REALTOR® MLS knows those data or data feeds are being used directly or indirectly to establish or maintain a platform for offers of compensation from multiple brokers (i.e., the REALTOR® MLS cannot intentionally circumvent this requirement); or (b) a REALTOR® or REALTOR® MLS Participant displaying both (1) data or data feeds from a REALTOR® MLS and (2) offers of compensation to buyer brokers or other buyer representatives but only on listings from their own brokerage.”

These provisions make it clear that REALTORS® and MLSs cannot use third-party platforms to disclose or make offers of compensation. The intent is to ensure that compensation arrangements remain private and are not facilitated or supported through external mechanisms outside the direct agreement between the seller and their agent.

Related reading: NAR – The Truth About the NAR Settlement Agreement

Now, what does this mean in “plain language”?

We took the entirety of the settlement agreement and ran it through powerful AI tools to help break down a layman’s version of dos and don’ts when it comes to using third party platforms to advertise commission rates to Buyer’s Agents. Here’s what we came up with:

What REALTORS® and MLSs Can’t Do:

• No Non-MLS Platforms: REALTORS® and MLSs cannot create, help, or support (that means using them) any method outside of the MLS (Multiple Listing Service) to offer compensation to buyer brokers or their representatives. This includes not sharing listing information with websites or other platforms that would use it to make such offers.

Exceptions to the Rule:

• Providing Data: If a REALTOR’S® MLS gives data to a REALTOR® or a third party, it’s okay as long as the MLS does not know that the data will be used to set up or run a platform that makes offers of compensation from multiple brokers. The MLS can’t intentionally bypass the rule by doing this.
• In-House Listings: REALTORS® or MLS participants can show both the data from the MLS and the compensation offers on their own websites, but only for listings from their own brokerage. This means they can share this information if it’s just for their own company’s properties, not for multiple brokers’ properties.

The settlement prevents REALTORS® and MLSs from using any external methods to offer compensation to buyer brokers. They can still share listing data, but not if they know it will be used to offer compensation on a wider platform, and they can only show compensation offers for their own brokerage’s listings.

Alternative Approaches for Real Estate Agents

Given these restrictions, real estate agents need to find alternative ways to indicate the seller’s willingness to negotiate with the buyer’s agent their commission. Here are some phrases you can use in your listing descriptions, and according to our legal interpretation, would not be a violation of the settlement agreement:

• “ALL terms of the offer, including buyer’s agent considerations, are negotiable.”
• “ALL aspects of the offer, including additional terms, are open for discussion.”
• “Seller is open to negotiating ALL terms of the offer.”
• “Seller is willing to entertain various terms and conditions in the buyer’s offer.”
• “Seller is flexible with offer terms. Buyer’s agents are encouraged to discuss specific needs.”

We know navigating the complexities of the NAR settlement rules feels awkward right now. That’s normal in any state of change. We also know that it is essential for real estate professionals committed to staying compliant and maintaining their business integrity. We know that there is still dust settling on this topic, but we want you to get comfortable being a little uncomfortable as you put new business practices in play now.

Related reading: NAR Antitrust Lawsuit Strategy: New Commission Script for Sellers

A lot of your colleagues and competitors will still be trying to sift and sort this information and will spend a lot of time and energy trying to figure out a way to “beat the new system.” That’s a lot of wasted time and energy.  Instead, figure out your fee structure, get committed to your value, committed to learning how to 1000% communicate that value with confidence, and stay proactive and focused on having those strong buyer and seller conversations in the future. You’ve got this, and we’ve got your back every step of the way.

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