NAR Settlement Summary - METRO MLS

NAR SETTLEMENT

Metro MLS has published new rules and changes in MLS practices to fulfill the NAR settlement terms.

NAR Settlement Requirements

NAR announced a proposed settlement agreement in March 2024 to resolve litigation concerning broker commissions on behalf of home sellers. The agreement dictates several key terms Metro MLS must adopt, most notably the prohibition of offers of compensation in the MLS.

Metro MLS members must make changes starting Aug. 14, 2024. Metro MLS has published new rules and changes in MLS practices to fulfill the settlement terms. The changes in the rules, policies and MLS practices are below.

KEY MLS CHANGES

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Compensation fields removed from the MLS (Flexmls, WIREX, Aligned Showings, IDX, etc.).

Metro MLS will remove compensation fields from data feeds on Aug. 1, 2024, and the MLS and other MLS products on Aug. 14, 2024. Metro MLS members can not add commission information to remarks, photos, documents or any field.

Concession fields going live in Flexmls starting Aug. 14, 2024

The new fields will be enabled on Aug. 14, 2024. All fields are unrequired.

  • Seller Offers Concession (Y/N) on Listing Input
  • Seller Offered Concession Amount on Change Sold Status
  • Seller Offered Concession Type: (% or $) on Change Sold Status

Broker-to-broker compensation can be offered optionally outside the MLS with permission from the seller.

From NAR: “Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

  • Fixed-fee commission paid directly by consumers
  • Concession from the seller
  • A portion of the listing broker’s compensation
  • Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

Written agreements need to be made with a buyer before showing properties.

Metro MLS will not collect buyer agreements. However, Metro MLS may ask for agreements at any time. Metro MLS does not provide or require a specific agreement form. WRA will be releasing various forms soon.

From NAR: “The written agreement must include:

  1. A specific and conspicuous disclosure of the amount or rate of compensation the Participant will receive or how this amount will be determined to the extent that the Participant will receive compensation from any source.
  2. The amount of compensation in a manner that is objectively ascertainable and not open-ended.
  3. A term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
  4. A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.

Sellers must be notified that commissions are not set by law and are fully negotiable.

From NAR:

MLS Participants working with sellers must disclose in conspicuous language that broker commissions are not set by law and are fully negotiable. MLS Participants must include the disclosure in the listing agreement if the listing agreement is not a government-specified form. If the listing agreement is a government-specified form, a separate disclosure would satisfy the requirement.

Through a feed or export, MLS data cannot be used to compile commission information from other brokerages.

From NAR:

Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives.  Such use must result with an MLS terminating the Participant’s access to any MLS data and data feeds.

Brokers may display commissions on their websites.

Brokers may display your brokerage commissions on your website. Since Metro MLS will no longer have your commission information, your IDX vendor or webmaster may need to assist you, if you choose to display this information.

From NAR: “MLS Participants may augment MLS data or data feeds with offers of compensation to buyer brokers or other buyer representatives for only listings of their own brokerage.

TIMELINE

ANNOUNCEMENT

July 9, 2024

Start educating members on the new rules and field changes.

REMOVE FIELDS

Aug. 1, 2024

Metro MLS will remove 6 compensation fields from data feeds.

LAUNCH

Aug. 14, 2024

Metro MLS will remove 7 fields and enable 3 new fields in Flexmls.

FREQUENTLY ASKED QUESTIONS

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Why did Metro MLS opt-in to the settlement?

As an MLS owned by REALTOR® associations, Metro MLS opt-in to help reduce future liability for our participants and MLS. Ultimately, this was the best path forward.

NAR says: “NAR continues to deny any wrongdoing: NAR has long maintained—and we continue to believe—that cooperative compensation and NAR’s current policies are good things that benefit buyers and sellers. They promote access to property ownership, particularly for lower- and middle-income buyers who can have a difficult-enough time saving for a down payment. With this settlement, NAR is confident it and its members can still achieve all those goals.

What is the value of the MLS?

MLSs have always provided significant value beyond communicating offers of compensation.

MLSs:

  • Enable comprehensive marketplaces: Access to inventory and widespread advertising incentivizes local broker participation.
  • Ensure reliable data access: NAR guidelines for local MLS broker marketplaces enable hubs of trusted, verified information where all participants have equitable access.
  • Create connections: Local MLS broker marketplaces create the largest opportunity for connections between real estate agents with properties to sell and those with clients looking to buy.
  • Advance small business: Compiling housing information that is accessible to all businesses, in one place, allows smaller real estate brokerages to compete with larger ones.
  • Encourage entrepreneurship: Because of lower barriers to entry enabled by local MLS broker marketplaces, new market entrants can advance technology, consumer service and other innovations.

Does an Open House count as a showing, requiring a written buyer agreement?

Generally, an Open House is not considered a showing. Therefore, no written buyer agreement is required. NAR says:

Theworking with a buyerlanguage is intended to distinguish MLS Participants who provide brokerage services to a buyer—such as identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on behalf of the buyer, presenting offers by the buyer, or other services for the buyer —from MLS Participants who simply market their services or just talk to a buyer—like at an open house or by providing an unrepresented buyer access to a house they have listed.

“If the MLS Participant is working only as an agent or subagent of the seller, then the participant is notworking with the buyer.In that scenario, an agreement is not required

because the participant is performing work for the seller and not the buyer. Authorized dual agents, on the other hand, work with the buyer (and the seller).

Can buyers and buyer brokers rely on an offer of compensation on the MLS before the effective date of the MLS policy changes?

NAR says:

“If the sales contract is executed before the MLS policy change, the buyer broker should be able to rely upon the offer of compensation even if closing occurs after the date of the policy change.

“But if a sales contract is not executed before the date the participant’s MLS implements the policy changes, the offer on an MLS will not be valid and buyers and buyer brokers may wish to protect themselves in writing with the listing broker or seller through a broker agreement or by including the offer of compensation in the sales contract.

Does the settlement only apply to REALTORS?

The new rules and practice changes apply to all Metro MLS members regardless of trade affiliations or memberships.

What should listing brokers advise their clients about the prohibition of offers of compensation in the MLS?

Listing brokers should inform their clients that offers of compensation will no longer be an option on an MLS.

This change will not prevent offers of cooperative compensation off an MLS. And it will not prevent sellers from offering buyer concessions on an MLS (ex. concessions for buyer closing costs).

Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.

How will offers of compensation be communicated if brokers can't use the MLS?

Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions that can be used for buyer closing costs).

The settlement does not change the ethical duties that NAR members owe their clients. REALTORS® are always required to protect and promote the interests of their clients and treat all parties in a transaction, honestly (Article 1, COE).

NAR members will continue to use their skill, care and diligence to protect the interests of their clients. NAR remains dedicated to promoting transparency in the marketplace and working to ensure that consumers have access to comprehensive, equitable, transparent, and reliable property information, as well as the ability to have affordable professional representation in their real estate transactions.

Why did Metro MLS choose Aug. 14 instead of Aug. 17?

Metro MLS chose Aug. 14, 2024, to give members time to make changes prior to the Aug. 17, 2024, class certification by the courts.

From NAR: “In accordance with mandatory NAR policy, REALTOR® MLSs must implement the practice changes by August 17, 2024.  If they do not, they will not be in compliance with NAR mandatory policy. NAR recommends all MLSs opting into the settlement implement the practice changes by August 17, 2024. NAR’s accelerated rule change process, during which it released the exact language of the practice changes in early May, gives MLSs over three months to implement the changes by August 17, 2024.”

Another MLS has different rules than Metro MLS, why?

While most of the terms of the settlement are universal, some items have been left to the local MLS to decide.

Does the release of liability in the settlement only cover past activity/transactions?

Yes. Future liability is not covered. Failure to comply with the settlement terms can create future liability for agents/brokers and the MLS.