The National Association Of REALTORS®’s $418 Million US Settlement

A recent The Canadian housing market could be affected by a landmark U.S. settlement.

Recently, the National Association of REALTORS® (NAR), a major U.S. group representing over one million realtors, announced a substantial settlement totalling $418 million US. This settlement will put an end to legal claims by home sellers who claimed that the NAR artificially inflates real estate commissions. In this agreement, NAR has agreed that it will revise its broker commission rules. It will also eliminate the standard 6% sales fee and other regulations related to commissions. The NAR does not deny any wrongdoing.

A proposed class action lawsuit is also being filed in Canada. This U.S. settlement may have an impact on the Canadian real estate industry, as it supports similar changes in Canada.

Statement by the National Association of REALTORS® 

On March 15, the National Association of REALTORS®It was announced that a significant settlement had been reached to resolve litigation regarding broker commissions for home sellers. This comprehensive settlement is pending court approval and encompasses over one million NAR members, all state and local REALTOR® associations, association-owned MLSs, and brokerages with NAR member principals involved in residential transactions totalling $2 billion or less in 2022.

According to the terms, NAR will pay out $418 million in approximately four years, while maintaining that it has done nothing wrong with the MLS cooperative model compensation rule established in 1990. 

The agreement has had a number of key outcomes, including the release of many NAR members from liability and the preservation of cooperative compensation for consumers in real-estate transactions. NAR also secured a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 of over $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if desired.

The settlement excludes agents affiliated with HomeServices of America, related companies and employees of the other corporate defendants.

NAR has agreed on a new MLS rule that prohibits offers of broker commissions. As a result, offers of broker commissions cannot be communicated through the MLS. However consumers can still pursue them via negotiation and consultation with seasoned real estate professionals. NAR agreed to implement a second new rule, which would require MLS members working with buyers enter into written agreements. These changes will come into effect in 2024.