D.C. Circuit Court of Appeals Decision
Update from Katie Johnson, NAR Chief Legal Officer and Chief Member Experience Officer
We recognize that some of you have raised questions about NAR’s recent settlement agreement and what effect, if any, it will have on commercial transactions.
I want to clarify that the proposed settlement agreement—like the Sitzer-Burnett lawsuit and the copycat lawsuits—is focused on residential real estate transactions. That means most commercial transactions will not be affected.
Below I have included a handful of clarifying points that can be used with commercial practitioners in your associations. I’ve also included the top Q&A on this subject to help you respond to questions.
As always, you can find additional information about NAR’s commercial program at commercial.realtor. For additional information about the settlement agreement, please visit facts.realtor.
Talking Points
- The proposed settlement agreement—like the Sitzer-Burnett lawsuit and the copycat lawsuits—is focused on residential real estate transactions. That means most commercial transactions will not be affected.
- In many markets, commercial listings appear in commercial information exchanges (CIEs) and not multiple listing services (MLSs), and do not include an offer of compensation.
- The settlement prohibits offers of compensation on an MLS and requires MLS participants working with buyers to enter into written agreements with their buyers. These practice changes will go into effect around late July.
- For properties listed on an MLS, offers of compensation continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals—as is the case for most commercial transactions.
- In addition, sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs, tenant improvement allowances, etc.) provided that such concessions are not conditioned on the use of or payment to a buyer broker.
- For all transactions, the types of compensation available for buyer/tenant brokers continues to take multiple forms, depending on broker-consumer negotiations.
- For all real estate professionals, compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.
Q&A
1. Are REALTORS® who deal in commercial real estate covered under the terms of the agreement?
The settlement does not distinguish between REALTORS® who deal in commercial real estate from those who work in residential real estate.
If you are an NAR member, you are covered by the settlement unless:
- You are an employee of: At World Properties, LLC; Compass, Inc.; Douglas Elliman, Inc.; Douglas Elliman Realty, LLC; eXp Realty, LLC; eXp World Holdings, Inc.; Hanna Holdings, Inc.; HomeSmart International, LLC; Howard Hanna Real Estate Services; Keller Williams Realty, Inc.; Real Broker, LLC; The Real Brokerage, Inc.; Realogy Holdings Corp.; Realty ONE Group, Inc.; Redfin Corporation; RE/MAX, LLC; United Real Estate; or Weichert, Realtors® OR
- You are an independent contractor or employee associated with HomeServices of America or one of its affiliates.
2. What do these practice changes mean for commercial practitioners?
The proposed settlement agreement—like the Sitzer-Burnett lawsuit and the copycat lawsuits—is focused on residential real estate transactions. That means most commercial transactions will not be affected.
In many markets, commercial listings appear in commercial information exchanges (CIEs) and not multiple listing services (MLSs), and do not include an offer of compensation.
The settlement prohibits offers of compensation on the MLS and requires MLS participants working with buyers to enter into written agreements with their buyers. These practice changes will go into effect around late July.
