NAR Class Action Law Suit

Mar 26, 2024 | Salt Lake City, SLC Homes, SLC News

On Friday, March 15th, the National Association of Realtors (NAR) agreed to settle the Sitzer/Burnett Class Action Lawsuit relating to the offer of compensation rule. In this settlement, the NAR agreed to pay $418,000,000 in damages to the plaintiffs over four years. The settlement is still pending court approval, and if approved, the terms of the settlement will take effect this July. The NAR has agreed that it will not appeal this settlement.

This settlement covers all brokers with a transaction volume of under $2 billion in 2022. Some big brokerages have settled and others have opted not to join the settlement, but SLC Homes is safe.

Since the settlement, it seems like everyone I’ve spoken with wonders how this will affect the public and how the relationship between home buyers and sellers and their Realtors will change. Over the last week, I’ve met with fellow brokers and done a ton of research to better understand this.

There are additional terms of the settlement that will change the way real estate agents and brokers operate.

The Participation Rule will be abolished

First, the Participation Rule will be abolished, which will prohibit cooperating compensation to be listed on the Multiple Listing Service (MLS). Cooperating compensation is the offer of a Buyer’s Broker commission (BBC).

Below is a screen shot of paragraph 2 “Brokerage Fee” from the Utah Association of Realtors Exclusive Right to Sell Listing Agreement and Agency Disclosure. You’ll notice that it already defines what the brokerage fee and buyer broker compensation will be, and that the seller initials this document when they sign the agreement.

I looked back at my archived files for my listings and it looks like this change happened in Utah nearly five years ago, around May of 2019. Guessing we were ahead of most states in clarifying this.


Important Changes to Buyer Representation Agreements in Utah Real Estate

Next, all Realtors that are MLS participants that are representing a buyer will need to have a written agreement with their buyer before they show any homes to that buyer. So the common practice of having the Exclusive Buyer Broker Agreement and Agency Disclosure signed when the buyer makes an offer, will no longer be acceptable.

In addition to this, the amount of the Buyer Broker Commission that the buyer’s agent expects to be paid, must be listed on the Exclusive Buyer Broker Agreement. The current Utah Association of Realtors Exclusive Buyer Broker Agreement already has a place for this on that form, it’s been there for years. There were 39 states that didn’t have an Exclusive Buyer Broker Agreement, now they all will.

It also states that the Buyer can negotiate with the Seller if the BBC is less than the amount that is on the Exclusive Buyer Broker Agreement and Agency Disclosure. I looked back at my archives and I’m not sure when the Buyer Brokerage Fee was added to the Exclusive Buyer Broker Agreement and Agency Disclosure, but I found one file from 2005, and it was on that agreement. So this is nothing new in Utah.

The screen shot below is paragraph 2 “Brokerage Fee” from the current Utah Association of Realtors Exclusive Buyer Broker Agreement and Agency Disclosure.


Implications of Commission Disclosure on Buyer Representation Costs

So now that a commission is required to be written on this form, will the buyer have to pay for their buyer representation?

First, the lawsuit hasn’t gained court approval yet, so at this point I’m speculating, but the seller is still allowed to offer cooperating compensation, it just can’t be listed on the MLS.  And I believe it’s in the best interest of the seller to offer it, the system works.

So let’s say a buyer has agreed to pay their buyer’s agent/broker 2.5%, and the seller is offering 2.0%.  When the buyer’s agent writes the offer for the buyer, the amount of the Buyer’s Broker Commission (BBC) will be submitted with the offer for seller approval.  As I mentioned above, the Exclusive Buyer Broker Agreement allows for this.

The Utah Association of Realtors already has a “Real Estate Brokerage Payment Addendum” in our standard forms. This form can be used to clarify the BBC that the buyer has agreed to.

Empowering Buyers Through Proactive Document Review

The purchase and sale of real estate is one of the biggest financial decisions and life choices that people make, and the need for a buyer’s agents hasn’t changed. There is so much to know about buying and selling real estate, and much of that is learned from working with buyers and sellers over the years, and closing transactions. If you only buy a home every five or ten years, you’re not going to know the process.

Now that the Exclusive Buyer Broker Agreement and Agency Disclosure needs to be signed up front, I think this is an opportunity to review all the documents up front that the buyer will be signing when they eventually make an offer. So they are familiar with them in advance. I see this as the way forward.

Building Trust Through Repeat Business and Referrals

If you enjoyed reading this newsletter, please share it with your friends, family and colleagues, and if you have any questions about buying or selling residential real estate in or around Salt Lake, wonder what your home is worth, or know someone who needs help buying or selling, please contact me.

Over 90% of the people I help buy and sell homes are repeat customers and referrals from the people I know. I love what I do, and I truly can’t do it without you!😊

Thank you!



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