On March 15th, 2024 The National Association of Realtors® announced that it had entered into an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement seeks to resolve claims against NAR, over one million NAR members, all state/territorial and local Realtor® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.
The settlement is subject to final court approval, a hearing on final approval is not expected until Q4 of 2024. The MLS policy changes however, must be implemented by August 17th, pursuant to mandatory NAR policy. The MLS policy changes were approved by the NAR leadership team and a summary of the changes can be found below.
- Eliminate and prohibit any requirement of offers of compensation in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
- Retain, and define, “cooperation” for MLS Participation.
- Eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation in the MLS to buyer brokers or other buyer representatives.
- Require the MLS to eliminate all broker compensation fields and compensation information in the MLS.
- Require the MLS to not create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for Participants, Subscribers, or sellers to make offers of compensation to buyer brokers or other buyer representatives.
- 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 the MLS terminating the Participant’s access to any MLS data and data feeds.
- Reinforce that MLS Participants and Subscribers must not, and MLSs must not enable the ability to, filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
- Require compensation disclosures to sellers, and prospective sellers and buyers.
- Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home.
Policy Changes for MRMLS
As is outlined above, the MLS policy changes from NAR are mandatory and as a result MRMLS has taken the following actions on Monday, August 12th, to comply with the August 17th, deadline.
- Compensation fields including “Buyer Agency Compensation”, “Buyer Agency Compensation Type”, “Sub-Agency”, “Sub-Agency Compensation”, “Sub-Agency Compensation Type”, and “Dual Variable Compensation” will be removed from the listing input form for all new future listings.
- Compensation fields including “Buyer Agency Compensation”, “Buyer Agency Compensation Type”, “Sub-Agency”, “Sub-Agency Compensation”, “Sub-Agency Compensation Type”, and “Dual Variable Compensation” will be removed from display for all historical listings in the MRMLS database.
- To coincide with the policy changes, an updated version of the MRMLS rules and regulations was published on August 12th, which includes the NAR mandated MLS policy change language. The updated MRMLS rules and regulations will go into effect on August 17th. The full text of policy changes can be found on The Facts for Realtors® website, and the summary of the changes is outlined above.
NAR has a comprehensive resource available on their site which includes background information and resources for Realtor® members. The information is centered around and focused on upcoming policy changes stemming from the settlement. We encourage all MRMLS participants and subscribers to familiarize themselves with the contents and information on the facts.realtor website including the FAQ section which is updated frequently.
What Do These Policy Changes Mean for Consumers?
MLS Specific Frequently Asked Questions
How will offers of compensation be communication if brokers can’t use MLSs? Doesn’t this just make broker compensation less transparent?
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.
Can buyers and buyer brokers rely on an offer of compensation that was on an MLS prior to the effective date of the MLS policy changes?
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.
What additional provisions must be included in written listing agreements because of the practice changes?
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.
What provisions must be included in written buyer agreements?
The written agreements must include: 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.
The amount of compensation in a manner that is objectively ascertainable and not open-ended.
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
A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.
If the seller or the listing broker offers a bonus or financial incentive in addition to the offer of broker compensation, can the buyer broker accept the extra compensation?
The buyer broker many not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.
Can a listing broker communicate offers of compensation on a broker website which has an IDX or VOW feed?
Yes, 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.
Does this prohibition affect the compensation amount paid to the listing broker?
No. Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent, as NAR’s policy has required for decades.
What property types do these policy changes apply to?
Removing compensation from display on historic listings in the MRMLS database as well as the input form for future listings will apply to all property types. However, according to NAR a written agreement is not required prior to showings for commercial transactions.
Does this mean buyers won’t have to use a buyer broker to purchase a property?
As always, the consumer chooses whether to use a real estate professional. Research has confirmed that consumers find great value in the services provided by a buyer broker, and we continue to believe it is imperative for buyer brokers to clearly articulate what services and value they are providing to consumers.
Does this prohibition affect the compensation amount paid to the listing broker?
Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent.
Should active listing or buyer agreements—meaning there is no accepted offer—entered into before the MLS policy changes go into effect on August 17, 2024 be amended to include a conspicuous disclosure that compensation is not set by law and is fully negotiable?
MLS Participants must make this disclosure. Active agreements can either be amended or a separate disclosure can be provided to satisfy the requirement.
Should active listing agreements entered into before the MLS policy changes go into effect on August 17, 2024 be amended to address the settlement agreement’s prohibition on offers of compensation being communicated on an MLS?
If the listing agreement instructs the listing broker to make an offer of compensation without reference to an MLS, no change to the listing agreement is needed, as the listing broker can comply with that instruction without violating the MLS policy change.
But if the listing agreement specifies that offers of compensation be made on an MLS then the listing broker should work with the seller to amend the listing agreement before the MLS policy change is implemented, to make it clear the listing broker will not make an offer of compensation on an MLS and to determine whether the seller instructs the listing broker to make an offer of compensation outside of an MLS.
If an MLS Participant hosts an open house or provides access to a property, on behalf of the seller only, to an unrepresented buyer, will they be required to enter into a written agreement with those buyers touring the home?
No. In this case, since the MLS Participant is only working for the seller, and not the buyer, the MLS Participant does not need to enter into a written agreement with the buyer.
Are written buyer agreements required when MLS Participants perform ministerial acts?
Yes. The obligation to enter into a written buyer agreement is triggered just prior to an MLS Participant taking a buyer to tour a home, regardless of what other acts the MLS Participant performs for the buyer.
An MLS Participant performing only ministerial acts—and who has not taken the buyer to tour a home—is not working with the buyer and therefore does not yet need to enter into a written buyer agreement.
In the buyer agreement, can buyers and buyer brokers agree to a range of compensation?
No. Under the settlement, any compensation agreed to in the written buyer agreement must be objectively ascertainable and not open-ended.
For example, a written buyer agreement cannot have a commission that is “buyer broker compensation shall be whatever amount the seller is offering to the buyer” or "between X and Y percent."
Importantly, NAR policy will not dictate the amount of compensation agreed between buyers and buyer brokers (e.g., $0, X flat fee, X percent, X hourly rate).
Should active buyer agreements entered into before the MLS policy change be amended to make sure any compensation is not open-ended and is objectively ascertainable?
Yes. MLS Participants working with a buyer after the effective date of the policy should take steps to ensure that the buyer has agreed to the necessary terms required by the settlement agreement.
Should active buyer agreements entered into before the MLS policy change be amended to remove any provision that authorizes the buyer broker to keep any offers of compensation exceeding the amount of compensation agreed with the buyer?
Yes. MLS Participants working with a buyer after the effective date of the policy should take steps to ensure that the buyer has agreed to the necessary terms required by the settlement agreement.
Should active buyer agreements entered into before the MLS policy change be amended to remove any provision that authorizes the buyer broker to keep any offers of compensation exceeding the amount of compensation agreed with the buyer?
Yes. MLS Participants working with a buyer after the effective date of the policy should take steps to ensure that the buyer has agreed to the necessary terms required by the settlement agreement.