National Association of Realtors logo and silhouettes of business people
Illustration by Lanette Behiry/Real Estate News

NAR clarifies new rules for MLSs, agents — and extends deadline 

The organization has revised its MLS handbook and beefed up its FAQ to help explain what’s changing, while giving NAR members until Aug. 17 to comply.

May 3, 2024
5 minutes

Key points:

  • The Aug. 17 deadline coincides with the earliest date class notices for the $418 million settlement will be sent out.
  • Updates to MLS policies clarify rules around offers of compensation and emphasize that MLSs should not support workarounds that run afoul of the rules.
  • NAR also updated its FAQ with more details about buyer agreements and when they are needed.

The real estate industry will get a little more time to implement the changes coming out of NAR's commissions settlement — and a clearer idea of what to expect.

The National Association of Realtors announced today that rule changes included in the settlement will go into effect on Aug. 17. That's about a month later than originally planned and coincides with the earliest date class notices are sent out.

While the rule changes are happening this summer, a hearing for final approval of the $418 million settlement is scheduled for Nov. 26.

MLS policy changes clarified: compensation field and more

NAR also announced that it has revised its MLS policy handbook to reflect the MLS-specific changes included in the settlement deal. 

One of the biggest changes for multiple listing services is the removal of the offer of compensation field, where listing agents could specify the compensation available to buyer brokers or other buyer representatives, and the general prohibition of offers of compensation on the platform. 

But NAR also provided other details — and made it clear that MLSs should not try to circumvent the new rules. Among the policy updates, MLSs must:

  • Retain, and define, "cooperation" for MLS participation.

  • Not enable or support any non-MLS workaround for members or sellers to make offers of compensation to buyer agents — including providing listing data to online aggregators that might want to display offers of compensation.

  • Not allow the use of its data or feeds for the purpose of establishing a platform of offers of compensation from multiple brokers or other buyer representatives.

The Aug. 17 deadline is for Realtor-owned MLSs, which are covered by the NAR deal; non-Realtor MLSs that choose to opt-in to the settlement have until Sept. 16 to update their platforms.

The trade organization also recently updated its lengthy FAQ page, offering more details about buyer agreements and other topics. These are some key takeaways for agents and brokers:

When is a buyer agreement needed?

NAR clarified when an agreement is necessary, when it isn't, and what it might include.

One basic question: What does it mean for an agent to be "working with" a buyer, which triggers the need for a written agreement? NAR said agents can still market their services to buyers or talk with a potential homebuyer on a seller's behalf — for example, answering questions at an open house — without needing an agreement in place. 

In general, if an agent isn't providing a specific service and doesn't expect to be paid for the activity, a buyer agreement isn't required.

However, services like touring a home or arranging a showing do require a written contract — but it can be a short-term agreement that does not include the payment of a fee. Zillow's recently announced "touring agreement" is an example of a contract that aligns with the new rules.

NAR also explained that while buyer agreements will now be mandatory, the organization will not dictate the nature of the relationship between the agent and buyer (agency vs. non-agency, for example), the terms of the agreement (the duration, how many houses will be shown, etc.) or the services to be provided.

Instead, MLSs and brokerages have some flexibility to work out those details, as long as the agreements are in line with state laws.

Can the agreement include a range of compensation?

NAR reiterated that when coming up with a compensation amount, it must be "objectively ascertainable" and "not open-ended" — but also noted that the organization isn't dictating a particular payment system. Agents and their buyers can decide on a set amount, a percentage or an hourly rate, for example. 

In the case of an hourly rate, the exact amount of compensation would not be spelled out in the agreement (although hours could be capped at a certain amount), but that payment structure would still comply with the "objectively ascertainable" requirement. 

What the agreement cannot include, however, is a statement like "buyer broker compensation shall be whatever amount the seller is offering to the buyer," NAR specified.

What about agents who are already using buyer agreements?

Buyer agreements are already required in 18 states, so for many agents, the concept is nothing new. But the devil is in the details: By August 17, MLSs and brokerages with agreements in place will need to ensure they are updated to comply with the new rules. Any suggestion of open-ended compensation, or language that refers to offers of compensation through the MLS, will need to be revised or removed.

That also means agents who have a signed agreement in place — and are still working with the buyer after the changes take effect in August — may need to amend the agreement, or have the buyer sign a new one, to keep the contract compliant under the new rules.

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