Tim
In a recent email to members, the National Association of Realtors (NAR) announced a proposed settlement agreement that could potentially reshape the real estate industry. The agreement aims to resolve litigation surrounding broker commissions, sparked by the Sitzer-Burnett verdict and subsequent copycat cases across the United States. While this doesn’t directly Liquid or our Investors, as an OZ fund, we do believe this proposal could change deal structures for oz projects in Austin.
Here’s a breakdown of the key points:
Background: The litigation raised concerns about the practices of real estate professionals and how consumers hire and compensate them.
Settlement Proposal: NAR has been working diligently to reach a resolution with plaintiffs and has now proposed a settlement agreement, subject to court approval.
Scope of Agreement: If approved, the settlement would cover over one million NAR members, all state and local REALTOR® associations, association-owned Multiple Listing Services (MLSs), and brokerages with a 2022 residential transaction volume of $2 billion or less.
Goals Achieved: The proposed settlement aims to achieve two primary goals: release liability for NAR members and preserve consumer choices regarding real estate services and compensation.
Liability Release: The agreement would release NAR and eligible entities from liability related to claims brought by home sellers regarding broker commissions.
Compensation Changes: A new rule would prohibit offers of compensation on the MLS, with compensation options remaining negotiable off-MLS. Additionally, MLS participants working with buyers would be required to enter into written representation agreements.
Settlement Payment: NAR would pay $418 million over approximately four years, maintaining membership dues for 2024.
Denial of Wrongdoing: NAR maintains its position that cooperative compensation and current policies benefit buyers and sellers, especially lower- and middle-income buyers.
Implications:
Coverage: Over one million NAR members and various entities would be released from liability.
MLS Changes: The agreement introduces new rules regarding compensation and written agreements for MLS participants.
Future Litigation: While this settlement addresses many issues, litigation concerning cooperative compensation may still continue.
Court Approval: The settlement is subject to court review, expected to take several months. Objections and opt-outs are anticipated.
NAR Operations: The settlement would enable NAR to pay the agreed amount over time, maintaining its commitment to members and industry advancement.
Timeline: Practice changes are slated for mid-July 2024, pending court approval.
Conclusion: This proposed settlement represents a significant milestone in the real estate industry, aiming to address ongoing litigation concerns while preserving consumer choices and protecting industry players. As the process unfolds, NAR remains committed to providing updates and support to its members.
For further details, members can refer to the provided materials and stay updated via competition.realtor. To learn more about our income-focused investment products please see our Bonds page for details.
