Skip to content

Misconception of NAR Lawsuits and MLS Compensation

Misconception of NAR Lawsuits and MLS Compensation

Understanding Real Estate Lawsuits and MLS Compensation Shifts

If you've been following the recent national news and reading social media chatter concerning ongoing lawsuits involving NAR, major MLSs, and broker franchises across the country, you're likely aware of recent settlements involving large national franchises such as RE/MAX and Anywhere Real Estate. While reports of these settlements have raised some concerning issues, including several misleading ones, we urge you to carefully read this entire post.

In the current legal landscape, certain large brokerage franchise organizations are now providing their individual brokers and franchisees with the option to join REALTOR associations. Historically, some of these franchises mandated franchisees to be association members. Conversely, other brokerage organizations are choosing not to join associations in locations where MLS access doesn't necessitate membership. This has been a viable option for brokers in specific states and within broker-owned MLS marketplaces for many years.

It's crucial to comprehend that East Tennessee REALTORS MLS, along with approximately 2/3 of the U.S.'s MLSs, are REALTOR-owned MLSs that require broker participants to be REALTOR members. The East Tennessee REALTORS MLS operates as a committee of the association, not a distinct entity. Being a REALTOR member entails belonging not only to the local association but also to the state and national associations. Legal decisions in relevant locations have consistently supported this requirement.

East Tennessee REALTORS plays an instrumental role in building and maintaining the local MLS with its truthful and accurate data in conjunction with our efforts in government affairs to sustain a healthy brokerage and MLS business environment. We also develop forms to facilitate transactions, advocate for consumer protections and professional representation, uphold property rights, and promote a transparent marketplace. The leadership of brokerage organizations overwhelmingly recognizes and supports the value and benefits of this work for our members' businesses and their communities.

In addition to the aforementioned brokerage franchise settlements, some MLSs have recently amended their policies to allow a $0 offer of cooperative compensation by the listing broker. Recently, NAR clarified its policy, stating that participants must communicate an offer of compensation to other MLS participants, and this offer can be any amount, including $0. NAR emphasized that its policies aim to efficiently distribute information to facilitate real estate transactions for the benefit of buyers and sellers. As long as cooperating brokers are aware of the offers made by listing brokers, the purpose is achieved. NAR also highlighted that listing brokers and their clients determine the amount and makeup of the offer to cooperating brokers. While NAR acknowledges the nominal difference between one dollar and $0, it emphasizes that offers are always negotiable, and always have been. These policies ensure brokers share information efficiently through their local, independent broker marketplaces. NAR, however, is not mandating nor encouraging MLSs to change their data fields to permit $0. East Tennessee REALTORS continues to encourage all participants to make an offer of compensation that best serves their clients' interests in the sale of their property.

Undoubtedly, the real estate industry is undergoing significant changes. Choice, competition, and innovative business models should be embraced across the industry. As lawsuits progress through the courts, settlements are reached, and decisions are rendered, it's imperative for all of us to stay well-informed. Keep a vigilant eye on your local and state newsletters, various NAR communications, and other reputable and non-biased industry-related news sources for developing updates.

Powered By GrowthZone