Dear Friends and Clients,

At this time you’ve probably heard a tentative settlement agreement was reached last Friday regarding the Sitzer/Burnett class action lawsuit originating from Kansas City, Missouri.

Currently, there is a collective effort among real estate brokerages, agents, buyers, and sellers to comprehend the implications of this agreement and adapt to the new regulations. I'd like to take a moment to share some insights.

The National Association of Realtors (NAR) serves as a trade organization advocating for its members.  NAR also owns numerous multiple listing services nationwide, mandating Realtors' membership in both NAR and these listing services for compensation on home sales. Furthermore, it became common practice for clients to offer compensation in order to on the MLS, a practice deemed anticompetitive by the courts.

The settlement framework has been established, yet to be approved by the courts, but if approved will take effect in July 2024. It encompasses three key provisions:

  1. Prohibits a seller's listing broker from offering compensation to the cooperating broker via the multiple listing service (MLS).
  2. Requires Realtors to have their buyers sign a Buyer Representation Agreement and Broker Compensation Form (BRBC), outlining services provided, the nature of the relationship, exclusivity, and commission agreements.
  3. Forbids Realtors from mandating any specific compensation to cooperating brokers to sellers.

Regarding the first provision, sellers can still compensate cooperating brokers but not through the MLS. Brokers will now publish this fee on their company website, or selling agents will inquire with listing agents about offered commissions before showing a property. Likewise, the agent representing you can still advertise and promote the cooperating compensation to agents representing buyers. 

The second provision necessitates clear communication between REALTORs® and buyers, delineating services, relationship terms, and commission arrangements.

As for the impact of these changes, it's anticipated that some home sellers will not elect to pay for the buyer’s agents’ commissions.  This can potentially create an added burdened for buyers. With closing costs and other expenses, buyers will likely prefer sellers to finance their agent's commission through a higher sale price rather than paying it directly. This will lead to the emergence of new commission structures and strategies, benefiting our clients.

It is interesting to note that the attorneys who pursued this lawsuit petitioned the courts for 40% of the proposed settlement.   They stand to collect $167,200,000.00.

Watch the upcoming video on the history of Real Estate agency, the development of NAR, commission payment practices within Real Estate since the industry was established with regulations, organized with professionals, licensing requirements and exclusive agreements which eliminated the period of unscrupulous sales agents during an era known as the “Wild West” of real estate.

If you have any questions or concerns, please feel free to reach out to me at your earliest convenience.

               Subscribe to my YouTube Channel for an alert on this video future updates.

About the author:  Corrie Sommers a REALTOR®, selling real estate throughout Los Angeles. Corrie Sommers has been licensed in California since 2004, has a background in Finance; worked in the Mortgage Industry, Financial Planning, has trained real estate agents and currently mentors several agents.  Corrie lives in Los Angeles and sells throughout Los Angeles.  Corrie Sommers represents home buyers and home sellers.   Corrie works as both a buyer's agent and a listing agent.


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