National Association of Realtors Settlement

In 2019, a group of home sellers filed a class-action lawsuit against the National Association of Realtors (NAR). It claimed antitrust violations and alleged the association's practices inflated commissions. The DOJ was concerned that Real Estate agents were making consumers feel like they couldn't negotiate commissions, especially on the buyer side.

In March of this year, NAR signed a settlement agreement to 1) pay out a ton of money and 2) make some rule changes.

I use the term “buyer agent” and “buyer broker” interchangeably to simplify. Buyer agents are independent contractors of brokers and working on behalf of the broker, and any compensation earned by the agent is filtered through their broker first.

WHAT STAYS THE SAME for buyers after this settlement

Compensation is STILL fully negotiable. There has never been a standard of what Realtors charge; it was, and is staying, negotiable. There has never been price fixing between agents/brokerages. There was never a standard or minimum commission to list on MLS.

Buyer agreements STILL state how much a buyer agent is compensated. Here it is in the exclusive buyer representation agreement.

Part of the Buyer Representation Contract: Exclusive (08/2024) provided by MN REALTORS®.

Those things have been in Minnesota forms. Quality control was the piece missing - are agents discussion forms with buyers thoroughly? A core piece of the settlement is an attempt to increase and clarify these conversations between buyers and agents.

WHAT THE SETTLEMENT CHANGES

Buyers must sign a written agreement with an agent before touring a home. It can be as temporary as a one-time showing agreement to an exclusive buyer representation. Agents CANNOT communicate offers of compensation on the MLS or subsidiaries. We used to be able to see the compensation a seller was offering online. Not anymore. 

Now, buyer agents must contact the listing agent directly to get information about compensation. Listing agents can add compensation to emails, personal websites, lawn signs, etc. but cannot share it on any MLS or via MLS-owned spaces.

CONCLUSION

Buyers should understand how their agent is getting compensated. They should have before, they REALLY should now. Talking about agent compensation is a key piece of every buyer meeting I have. It’s something I never understood before becoming an agent myself.

This is the biggest purchase ever and it’s crucial that buyers entering the market understand where their money is going and how others involved in the transaction are paid. How do you build a strong and trusting relationship if pretty key aspects are lurking in the unknown?

Listing Contract: Exclusive Right to Sell

An exclusive right to sell listing contract is a two-way agreement that allows us to work together without hesitation, without any conflict of interest, and without any division of duties or loyalty. It allows me, as your exclusive agent, to represent you and look out for your best interests when you make a purchase and throughout the process.

WHEN IS IT SIGNED?

When we decide to work together at our first meeting.

HOW LONG DOES IT LAST?

It can be written for as long as you want – 1 month, 60 days, 6 months, etc. and ends when the property is sold. We can easily extend the agreement if circumstances around selling change, and this contract can be cancelled at any time by either party.

IS THERE A FINANCIAL OBLIGATION?

Yes, there is a financial obligation that is triggered by the sale of your home. This contract ensures I am paid when your home is sold, and ensures that the commission is shared with a buyer’s agent, if party to the transaction. There is also a $495 Broker Administrative fee charged at the successful close of your transaction that is added into your closing costs.

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Download a copy of the Listing Contract: Exclusive Right to Sell to familiarize yourself:

Disclosures, Waivers, and Acceptances (2020-2021 update)

The Disclosures, Waivers, and Acceptances form previews items that will come up during the purchase process and pre-emptively gets you and I on the same page. We will see most, if not all, of these questions again when we make an offer on a property and go through the steps of writing a Purchase Agreement.

WHEN IS IT SIGNED?

At the same time the Exclusive Buyers Representation contract is signed.

HOW LONG DOES IT LAST?

It is effective until your transaction is closed or your Exclusive Buyers Representation Contract expires - whichever comes first.

IS THERE A FINANCIAL OBLIGATION?

Nope, there is no financial obligation.

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The Minnesota Attorney General’s office has a Homebuyer’s Handbook that is an excellent resource. Dive in here. You can also download a copy of the Exclusive Buyer Representation Contract to familiarize yourself:

Exclusive Buyer Representation Contract (2020-2021 update)

An exclusive buyer representation agreement is a two-way agreement that allows us to work together without hesitation, without any conflict of interest, and without any division of duties or loyalty. It allows me, as your exclusive agent, to represent you and look out for your best interests when you make a purchase and throughout the process.

WHEN IS IT SIGNED?

When we decide to work together at our first meeting.

HOW LONG DOES IT LAST?

As long as you want – 1 day, 6 months, 1 year, etc. We can easily extend the agreement or call it quits. This contract can be cancelled at any time by either party.

IS THERE A FINANCIAL OBLIGATION?

No, there is no financial obligation to you! I am paid by the seller’s agent. This contract ensures I am paid by the seller of the home you ultimately purchase.

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The Minnesota Attorney General’s office has a Homebuyer’s Handbook that is an excellent resource. Dive in here. You can also download a copy of the Exclusive Buyer Representation Contract to familiarize yourself: