Realcomp’s NAR Settlement FAQs from 07/30/24

In answering these questions, the term “Seller Broker” has been used interchangeably with “Seller Agent” and the term “Buyer Broker” has been used interchangeably with “Buyer Agent”. Further, many of these questions are more appropriately addressed by brokers with their agents. The answers provided are general guidelines by Realcomp and its Counsel.

1. Who is responsible to ensure the buyer broker does have a purchaser agency agreement?

The Buyer Broker must have a compliant agreement with the Buyer before showing the Buyer the first home. The Seller Broker does not have to confirm that this is in place. If there is a dispute, the MLS is initially responsible for making sure the Buyer Broker has complied.

2. What method will be used to verify that the buyer agent does have a purchaser agency agreement?

If there is a dispute, the MLS is initially responsible for making sure the Buyer Broker has complied. The MLS will work with its Shareholder/Associations to develop a process for monitoring, adjudicating and settling disputes.

3. When scheduling showings, does the buyer/showing agent have to contact each listing agent to see what, if any, compensation is being offered?

Yes, the Buyer Broker should contact each Listing/Seller Broker to determine what if any compensation is being offered. This contact must be done off the MLS.

4. Do you think this whole change will make it even more difficult for buyers, especially 1st time buyers, to get into the market if they need concessions to go for closing costs and not commissions?

Sellers and Seller Brokers can still offer to pay the commissions of Buyer Brokers. The agreement just has to happen outside of the MLS. There are national commentators and watchdog groups that do believe that the new rules will hurt Buyers, particularly first time Buyers. Time will tell.

5. When was this issue raised to the court? What did you guys do to protect our rights and to save our business? We have been hearing that settlement gone against NAR but did NAR take necessary steps to help us? We do not think sellers will drop the price of the house because he/she doesn't need to pay buyer's agent commission. There are many reasons that cause the higher property price -- demand and supply is one of the main things. More and more people are trying to buy houses, but less new houses are getting built. What is the plan to protect our business?

These issues have been raised for decades by the DOJ and others. These issues became more urgent when the Sitzer and Moehrl cases were filed. NAR and the other defendants defended the rules and industry but were unsuccessful. Ultimately, a jury determined that the rules were anti-competitive and awarded hundreds of millions of dollars against the defendants. Realcomp did not have an active role in the litigation and was not a defendant per se.

6. I have questions regarding how this settlement affects the rental market: a) Do agents representing tenants need to have a written agreement before showing them properties? b) Do property managers need to have a written agreement with prospective renters before showing them any properties?

The Settlement does not require that Tenant Brokers get a written agreement before showing a property to be leased. But good business practices and a defense against potential future claims over leasing practices would suggest that getting such written agreements is advisable. Notwithstanding the foregoing, the MLS cannot allow offers of compensation to be made on the MLS for leasing transactions, commercial transactions or otherwise.

7. I am often the Buyer’s Agent and need help in how to handle my commission. I'd like to fully understand how we get paid, how much we charge and how to process that paperwork.

A Buyer Agent must have a written agreement with its Buyer before showing the first home. The agreement must meet the requirements of the Settlement. It must be in writing, must clearly spell out compensation and such compensation must be readily ascertainable and not open-ended. The Buyer Agent must not receive compensation that exceeds the amount in the agreement. All of this, however, does not mean that the Buyer Agent cannot be compensated by the Seller Broker or the Seller. It also does not mean that the Buyer Agent cannot amend its agreement with the Buyer to revise the commission it will receive if negotiations result in additional or different commissions.

8. The Listing Agent is asked to show a home. The Buyer is representing themselves (real estate attorney) and will not sign a buyer contract. Are we not allowed to show without a contract? Open Houses. We are showing to many. Obviously with no contract before they walk in the door.

The Listing Agent is not responsible for determining whether or not a Buyer has executed a written agreement with a Buyer Broker or anyone. Nevertheless, it is always good practice to ask if someone is represented by an agent or other professional.

9. I’m holding an open house. Someone comes, do I just ask if they are represented? If they are, do I ask for their agent’s info? Do we make sign in mandatory? If they say they are not represented, they look around and then tomorrow an agent brings me an offer from them. Is that all good? Open house protocol needs to be clarified. My agents are seeing a lot of videos online and I dont want them to think these videos are all correct. I want the real answer about open house protocol.

Again, the Listing Agent is not responsible for determining whether or not a Buyer has executed a written agreement with a Buyer Broker or anyone. Nevertheless, it is always good practice to ask if someone is represented by an agent or other professional. Further, the Listing Agent should have an agreement with the Seller. The Buyer Agent should have an agreement with the Buyer. The Listing Agent and the Buyer Agent can negotiate a co-broker/agent agreement to share commissions at the open house or otherwise just not on the MLS.

10. As of 08/17/24 or thereafter, a Buyer's Agent is required to have a Buyer under contract if they want to show listings. But as the Seller's Agent, do I need proof (like a copy of the Buyer's Client Agreement) BEFORE approving of the showing request? If so, how will ShowingTime be affected by that verification?

Again, the Listing Agent is not responsible for determining whether or not a Buyer has executed a written agreement with a Buyer Broker or anyone. Nevertheless, it is always good practice to ask if someone is represented by an agent or other professional.

11. If the Seller's Agent is allowed (required) to see proof of the Buyer's Client Agreement before approving of any showing requests... shouldn't the terms of co-op compensation be determined during the showing request (before showing) as well?

The Seller Agent is not required to see the Buyer Agent agreement with the Buyer, but it may be disclosed by the Buyer Agent with permission from the Buyer if desired. It is always advisable for commissions between agents to be determined prior to showings so that there is no confusion or disagreement, but it is not necessary.

12. As a Seller's Agent, if I get a call from a Buyer who is interested in my Listing (who is NOT working with an agent) ... do I need to have that prospective Buyer sign a Buyer's Client Agreement before I can show my Listing?

It is not necessary for a Seller Agent to have a Buyer sign an agreement if the Buyer is not working with an agent. If the Seller Agent wants to work with the Buyer as well, then that creates a dual agency relationship, and appropriate agreements should be signed.

13. As a Listing Agent with an "Exclusive Rights to Sell Agreement"... is there any legal reason why I cannot use the MLS for marketing purposes and exclude co-op agent participation in finding a buyer?

As a Listing Agent there is no reason that you shouldn’t use the MLS in all of the ways that you have previously. The MLS just can no longer be used to make offers of compensation. Compensation can still be paid to cooperating agents, it just has to be negotiated and agreed upon outside of the MLS.

14. The Seller has the option to separately negotiate the compensation with the Listing side and the Co-Op Agent side. Correct? Is it legal for the Seller to have variable commission(s) in mind while addressing several individual Buyer Agents or Buyers over the course of time?

Yes, the Seller has the option to separately negotiate compensation with the Listing Broker and any co-op Brokers/Agents. The Seller can negotiate different commissions with different agents if it so chooses. The Settlement just has to be complied with- namely, negotiated commissions off the MLS, commissions not open-ended and readily ascertainable, made in writing, and agreed upon before the Seller is bound and before the Buyer is shown the first house. The Realcomp Agreements including the Realcomp Co-Broker Agreement contemplate all of this.

15. As an appraiser, I am trying to determine the total brokerage fees paid for sold properties. In the past brokerage fees were considered typical costs and not adjusted for, however now that information is not disclosed and we can't determine if an unusual fee was paid. Does the new box on the sold listings titled "Seller's Closing Concession Amounts" exclude any brokerage fees from either listing or buyer broker?

Closing Concession Amounts must exclude any brokerage fees. Closing Concession Amounts should be those items normally included as sale-related closing costs such as repairs, warranties, closing costs and professional fees (other than broker commissions). Appraisers will have to contact the parties to determine total brokerage fees paid for sold properties otherwise brokerage fees/commissions should be handled in the same way as before for appraisal purposes.