The Realtor Lawsuit: What does it mean?

By JESS BARRON, Lindsey’s Inc. Realtors

Maybe you have heard, maybe you have not. Earlier this year, the National Association of Realtors (NAR) reached an agreement to resolve nationwide claims brought by home sellers.

This agreement will resolve claims against NAR, over one million NAR members, all state and local Realtor associations, association-owned multiple listing systems (MLS) and brokerages with a transaction volume of $2 billion or less in 2022. The settlement makes clear that NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation (NAR). NAR is set to pay $418 million over approximately four years as part of the agreement.

So, what caused these lawsuits to occur? Essentially, home sellers that filed these lawsuits felt deceived by Realtors regarding commission and compensation. Some home sellers were told they must provide a commission to the buyers’ agents. Other home sellers were not told how much the buyers’ agent was being paid for a cooperative deal. As you might imagine, other similar and copycat lawsuits have been filed. For those that filed suits, compensation and commission were not clearly conveyed to sellers and buyers. Communication and disclosure are essential and will be moving forward.

The commission is and always has been negotiable. While six percent commission is popular as a seller, it is not “required.” We see commissions all over the board here in Coweta County and across different types of real estate: residential, commercial, land, and industrial. Each brokerage has their own policy on commission as well. Your Realtor should be having an open conversation with you regarding commission and cooperative deals, as well as compensating a buyers’ agent.

Moving forward, the MLS’s will not be able to show a cooperative commission for a buyers’ agent. The buyers’ representative will need to call the sellers’ agent to discover if the seller is offering a commission to the buyers’ agent. What if the seller does not offer a commission?

In order to view a property with a Realtor moving forward, a buyer will need to have a signed buyer brokerage agreement that specifically dictates the compensation a buyers’ representative will receive, as well as who will be paying the buyers’ Realtor. Will the buyer or seller be responsible for paying the buyers’ agent? The buyer paying for their agent is actually common practice in commercial, industrial and large land deals/development.

This shake-up in the real estate industry has created a lot of controversy and worry. It will cause some changes for sure. Most of the changes are good in my opinion. It is a shame and not right that some agents deceived the public, but there is an opportunity for the good Realtors to do right. I believe the good Realtors will rise to the top moving forward and the public will have a better understanding of their real estate transaction.

Jess Barron is an Associate Broker with Lindsey’s Inc. Realtors and former President of the Newnan-Coweta Board of Realtors.