By now, you have likely heard about the new changes in real estate stemming from the NAR Settlement and the Sitzer-Burnett case. As of August 17, 2024, these changes have been implemented, and they are set to impact the way real estate transactions are conducted moving forward.
The recent Sitzer-Burnett case and its settlements have brought about significant changes in the real estate industry. These developments are reshaping how real estate commissions are handled and altering the role of the MLS (Multiple Listing Service). As buyers and sellers navigate this new landscape, understanding these changes is essential for a smooth and successful home-buying or selling experience. Here’s what you need to know to help guide you through this process.
What You Need to Know About the Sitzer-Burnett Case
The Sitzer-Burnett case involved a class-action lawsuit filed by home sellers in Missouri against the National Association of Realtors (NAR) and several major real estate companies. The plaintiffs argued that real estate commission rates were excessively high and that certain practices outlined in NAR’s Code of Ethics and MLS Handbook contributed to this issue. The lawsuit was classified as an antitrust case, focusing on the industry’s alleged anticompetitive practices surrounding commissions.
Key Settlements and Their Impact
In recent months, several major players in the real estate industry, including Anywhere, RE/MAX, Keller Williams, and NAR, have reached settlements in this case, leading to important changes in how business is conducted.
These settlements mark the beginning of a broader industry-wide shift in how commissions are managed.
Changes in Industry Practices Post-Settlements
As a result of these settlements, there are several key changes in real estate practices:
- No More Mandatory Compensation Offers: NAR will no longer require sellers or listing brokers to make offers of compensation to buyer representatives. The MLS will also remove the field for listing broker compensation, so compensation offers will no longer be a standard part of MLS listings.
- Written Agreements with Buyers: Buyer’s agents must now enter into written agreements with buyers before they tour any homes. This change is intended to clarify the agent-buyer relationship and ensure that compensation is clearly negotiated and documented.
- Prohibition of Non-MLS Compensation Mechanisms: The use of non-MLS mechanisms for making offers of compensation, such as internet aggregator websites like Zillow or Homes.com, is now prohibited.
- Transparency and Negotiability: It’s now mandatory to clearly inform both sellers and buyers that commissions are negotiable and not set by law. Additionally, agents are not allowed to filter or present listings based on the level of compensation offered.
Adapting to the New Real Estate Reality
The real estate industry is evolving, and we understand that it can be challenging to keep up with these changes. But don’t worry—we’re here to help make things a little easier. If you have any questions or need assistance with your home buying or selling process, the Mary Clark Team is just a call away. Reach out to us today, and let’s navigate this new landscape together!