Buyer Representation & NAR Litigation Hub

With the recently proposed settlement from NAR and a new Oregon law, Buyer Representation Agreements and client conversations about real estate broker compensation will become more important than ever. Please utilize the resources available below to become more knowledgeable about buyer representation agreements, what the proposed settlement says about cooperative compensation, and tools to have transparent and informative discussions with your clients about these issues. Navigate the changing landscape with comfort and ease with Oregon REALTORS® Forms.

Also, check out Oregon REALTORS® relevant updates on the ongoing NAR litigation below, and learn more about the National Association of REALTORS® resource hub.

Buyer Representation & NAR Litigation Resource Hub Intro Video

Form 9.4 Buyer Representation Agreement

Use this form to establish the duties and expectations between you and your client, and how you will be paid.

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Form 1.1 Residential Sale Agreement

Form 2.24 Seller Payment to Buyer Broker Addendum

Does your buyer want to ask the seller to contribute toward the buyer agent’s fee? Use section 4f. of our Sale Agreement + our new Form 2.24. It’s easy!

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April 24, 2024

The Plaintiffs’ counsel has filed a Motion for Preliminary Approval of the agreement with the federal court in the Western District of Missouri. Judge Bough granted that motion which means that as of April 24, 2024, the settlement agreement is preliminarily approved. Settlement class members are now enjoined from filing complaints or prosecuting any claims based on the type of conduct at issue in Sitzer-Burnett and the other settled Actions on behalf of home sellers related to broker commissions against NAR or other parties that are released under the settlement.

Two important reminders:

1. Individual NAR members and their brokerages with 2022 total transaction volume for residential home sales below $2 billion do not need to take any action to be covered by the settlement.

2. The following entities that choose to be covered by the settlement must execute the relevant affidavit by June 18, 2024:

REALTOR® MLSs – which are MLSs wholly owned by REALTOR® associations (see Appendix B)
Brokerages with 2022 total transaction volume for residential home sales in excess of $2 billion (see Appendix C)
Non-REALTOR® MLSs – which are MLSs that are not wholly owned by REALTOR® associations (see Appendix D)

The settlement is still subject to final court approval, and plaintiffs have requested a hearing on final approval of the settlement to be held on November 26, 2024.

April 16, 2024

In a letter unveiled on 4/15/24, Fannie Mae and Freddie Mac provided clarity on how the two mortgage industry giants will handle buyer agent compensation that flows from either the listing agent or Seller. According to the guidance from Fannie and Freddie, “If a seller or seller’s real estate agent continues to pay the buyer’s real estate agent commission in accordance with local common and customary practices, these amounts are not required to be counted towards the IPC limits for the transaction.” In effect, Buyers will continue to have access to financing as before, even when their agent is being compensated by the Seller.

Read the letters from Fannie Mae and Freddie Mac here.

April 12, 2024

The Judicial Panel on Multidistrict Litigation (JPML) ruled that centralization of the class action lawsuits is not necessary at this time because the settlement agreement NAR reached with plaintiffs on March 15 would resolve some, if not many, of the claims in the pending cases.

NAR is pleased with the ruling. It reflects that NAR’s settlement, which, if approved by the court, would end litigation nationwide for NAR and other released parties in the cases brought by home sellers. To be clear, this JPML ruling does not affect the approval process for the settlement agreement.

What is this decision about?
1. As you may recall, in January, the Sitzer Burnett plaintiffs filed a motion with the Judicial Panel on Multidistrict Litigation (JPML) that supported centralizing and transferring various cases related to broker commissions to federal court in Kansas City. NAR opposed that motion and argued in favor of centralization in the Northern District of Illinois.
2. Today, the JPML ruled that centralization is not necessary at this time since the settlement agreement NAR reached with plaintiffs last month would resolve some, if not many, of the claims in the pending cases.
3. The JPML did not reach the question about whether centralization would be appropriate had the settlement not been reached.

What is NAR’s position on this ruling?
NAR is pleased with the ruling. It reflects the effect of the settlement, which, if approved by the court, would end litigation nationwide for NAR and other released parties in the cases brought by home sellers.

Does this ruling affect the settlement?
No. In its ruling, the court recognized the breadth of the releases in the settlement and the potential that it could resolve many of the outstanding cases.

What happens now that the JPML has made this ruling?
The cases related to broker commissions will not be centralized at this time and will remain in the jurisdictions where they were brought.

March 15, 2024

NAR reached a proposed settlement in the Sitzer/Burnett lawsuit and related cases. Under the settlement (if approved by the court) a series of changes would take effect July 2024 including required use of buyer representation agreements by NAR members and prohibitions of offers of compensation from listing agents to buyer’s agents in the MLS.

Oregon HB 4058—requiring the use of buyer representation agreements—was passed into law and signed by the Governor. Under the law, buyer representation agreements will be required to be used by all real estate licensees by as of January 1, 2025.

As more details on the NAR settlement and the upcoming NAR rule changes become clear, Oregon REALTORS® will continue to update the resources below and please check our education calendar for upcoming classes as we will be offering many opportunities for you to get prepared. For now, the videos, tools and resources below will help you navigate buyer representation agreements and compensation conversations before the new rules take effect.

For more in-depth details on the NAR settlement, click here.

View and download our Understand the NAR Settlement PDF

View and download our PDF of helpful FAQs by clicking here

A New Normal: Navigating the Industry After Proposed NAR Settlement

Concerned with the recently proposed NAR settlement and what it could mean for your business and our industry as a whole? Required buyer representation agreements and no cooperative compensation offers in MLS’s might sound scary, but you already have the skills to successfully navigate this new normal – you just need to know how (and when) to apply those skills. Join our panel of expert practitioners to learn: How they’ve been successfully negotiating buyer representation agreements for years, what processes buyers’ agents should have in place, and how to talk to your clients about agent compensation.

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Signing Buyer Broker Agreements: Protecting You And Your Client

It’s no secret Buyer Representation Agreements are good business – they protect you and your client and clearly layout expectations. But how do you present these agreements to your client so that they understand the benefit as well? In this 1 hour webinar, you will learn about sharing the value of Buyer Representation Agreements with clients, ways these agreements can protect you, and other important considerations.

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The Nitty Gritty: How to Talk to Your Clients About Buyer Broker Agreements

Scared to talk to your buyers about representation agreements? Want to hear tips and learn strategies from brokers who are comfortable using Buyer Representation Agreements? 2024 Oregon REALTORS® President Ashleigh Fordham and her team are going to get into the nitty gritty of how they navigate client representation agreements and what advice they have for agents using them for the first time.

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BBA’s as Law? How Washington Brokers are Navigating Required Buyer Broker Agreements

It’s no secret Buyer Representation Agreements are good business – they protect you and your client and clearly layout expectations. But how do you present these agreements to your client so that they understand the benefit as well? In this 1 hour webinar, Oregon REALTORS® Past Presidents Rick Harris (2004) and Jeff Wiren (2022) will share how they convey the value of Buyer Representation Agreements with clients and their team, ways these agreements can protect you, and other important considerations

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Financing with Buyer Broker Agreements

While much is unknown about the impacts and ultimate resolution of the recent verdict in the Sitzer/Burnett v. NAR case, one thing is certain: you and your clients should be using buyer representation agreements. Curious about how buyer representation agreements impact the lending and financing side of the transaction? Aaron Nawrocki with Capital M Lending will be diving into financing of Buyer Broker Commissions and coordinating disclosures. Bring your notebooks and questions and leave feeling more confident in navigating the financing considerations of buyer representation agreements.

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Accredited Buyers Representative®

This course covers how you can promote yourself in the buyer’s market as a buyer’s rep and grow your business using ABR® designee member benefits. Learn how to create a buyer representation agreement, conduct a successful buyer consultation, and communicate your value to clients. Understand every piece of the transaction puzzle, including the search-showing-selection process, offers and negotiations, appraisals, and closing on the property.

WATCH THROUGH NAR (NO CE)

Guide to Broker Commissions in Real Estate Transactions Client Handout

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179 Ways Agents who are REALTORS® are Worth Every Penny of Their Compensation

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105 More Ways Agents who are REALTORS® are Worth Every Penny of Their Compensation

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Why Work With a REALTOR®

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Oregon REALTORS® Commitment to Antitrust Compliance

Oregon REALTORS® is a not-for-profit trade association devoted to improving business conditions of the real estate industry. Oregon REALTORS® meetings and events often include real estate professionals and other industry stakeholders who compete with each other or work for competing businesses. Oregon REALTORS® is committed to conducting all meetings and events in a professional, ethical, and lawful manner, including in adherence to all antitrust laws. To that end, the topics for this meeting will focus on advancing the interests of real estate professionals and consumers of real estate services, increasing competition, reducing risk for all parties involved in real estate transactions, and sharing insights on business best practices. The following discussion topics are always prohibited:

Fixing, controlling, recommending, or suggesting the commissions or fees charged for real estate brokerage services
Fixing, controlling, recommending, or suggesting the cooperative compensation offered by listing brokers to potential cooperating brokers
Disparagement of competitors
Limiting product or service offerings
Allocating geographical territory or customers
Refusing to deal with any market participants

Any discussion inconsistent with this policy will not be tolerated.

Do You Have Feedback?

Do you have any comments or suggestions on content that would be helpful for this resource hub? Please email us at info@oregonrealtors.org

What are the primary practice changes agreed to in the NAR settlement?Read More

The practice changes fall into two buckets. The first bucket deals with cooperative offers of compensation. The second bucket deals with written buyer agreements.

Cooperative Compensation

NAR may not require that listing brokers or sellers make compensation offers to buyer’s agents, nor require any compensation offers to be blanket, unilateral or unconditional.
NAR will prohibit offers of compensation to buyer brokers, disclosure of listing agent compensation, and disclosure of total compensation on the MLS. Compensation fields will be eliminated in the MLS and no other fields may be used for this purpose.
Participation in MLS may not be conditioned upon making or accepting offers of compensation to buyer brokers.
NAR and MLSs may not create, facilitate or support any non-MLS mechanism for listing brokers or sellers to make offers of compensation to buyer brokers.
Listing brokerages and listing brokers may still, through non-MLS mechanisms, display and communicate offers of compensation to buyer brokers for their own listings (such as through direct negotiation with buyers or buyer’s agents or on a brokerage website).
REALTORS® and REALTOR® MLS participants representing sellers must conspicuously disclose to sellers and obtain seller approval for any payment or offer of payment that the listing broker or seller will make to another broker, agent or representative of the buyer (including an attorney). Such disclosure must be in writing, provided in advance of any agreement to pay a buyer representative and specify the amount or rate of such payment.
REALTORS® and REALTOR® MLS participants and subscribers may not filter our or restrict MLS listings communicated to their customers or clients based on the existence or level of compensation offered to the buyer representative.

Written Buyer Agreements

All REALTOR® MLS participants must enter into a written agreement with buyers before touring a home with the buyer.
If buyer’s agent will receive compensation from any source the agreement must conspicuously disclose the amount or rate of compensation the buyer’s agent will receive or how this amount will be determined. The amount of compensation must be objectively ascertainable and not open-ended (no “buyer broker compensation shall be whatever the seller is offering”).
REALTORS® and REALTOR® MLS participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the written agreement with the buyer (buyer’s agent cannot accept cooperative compensation in excess of the fee they charge buyer in the agreement with buyer).
REALTORS® and REALTOR® MLS participants may not represent to a client or customer that their brokerage services are free or available at no cost to their clients unless they will receive no compensation from any source.

When will the changes agreed to in the NAR settlement and Oregon’s new buyer representation law take effect? Do I need to do anything now?Read More

The NAR settlement still needs to be approved by the court, and NAR still needs to write rules to effectuate the settlement. The earliest that is likely to happen is mid-July. Oregon’s new law requiring buyer representation agreements doesn’t take effect until January 1, 2025.

For now, this means NAR rules still permit that cooperative compensation offers on the MLS and written agreements with buyers are not required. Nevertheless, buyer representation agreements are and always have been a good idea and there is no reason to delay in using them.

When cooperative compensation offers are disallowed on the MLS, what options do buyers have to get assistance from the listing agent or seller in paying the buyer’s agent’s fee, and what impact will this have on financing?Read More

The buyer’s agent’s compensation will be set by the buyer representation agreement and the buyer will owe that agent the amount they agree to pay. However, there are at least two ways that a buyer can still get assistance from the listing side of the transaction to fund the buyer’s agent’s fee out of the proceeds of the transaction.

Cooperative compensation. Cooperative compensation (payment from listing agent to buyer’s agent) will still be allowed, it just won’t be able to be communicated via the MLS. Just as is done today, when entering into a listing agreement and establishing the listing agent’s fee, the listing agent and seller will discuss and agree on whether to offer a buyer’s agent cooperative compensation. The listing agent and seller can agree to a specific amount, they can agree to an “up to” amount, or they can just agree that they will entertain requests from buyers/buyer’s agents without setting a particular amount upfront. Remember, the Buyer’s agent’s fee will be set between the buyer and the agent in the buyer representation agreement. While sellers and listing agents can still choose to make “blanket” and “unilateral” offers of compensation, there will be no requirement that they do so. Listing agents and sellers who wish to offer cooperative compensation may decide that it’s best to negotiate cooperative compensation based on the particulars of the transaction and the buyer’s agent’s fee, rather than making blanket offers. Ultimately, any amount that is agreed to be paid as cooperative compensation from a listing agent to a buyer’s agent must be authorized by the seller in advance.
Seller Concessions. The other way that a buyer can get help from the listing side of the transaction in paying a buyer agent fee is by asking for seller concessions. This can be done in the sale agreement, and Oregon REALTORS® has already updated its sale agreement and created an addendum (Form 2.24) to facilitate this.

It’s yet to be seen how lenders will treat these contributions for purposes of “Interested Party Contribution” (“IPC”) limits for loans. Historically, cooperative compensation has not been considered an interested party contribution and there is no reason to believe that an off-MLS offer of compensation would be treated differently than an on-MLS offer of compensation, but until Fannie Mae and Freddie Mac weigh in, we are speculating.

With seller concession most lenders are currently treating seller concessions for buyer agent fees as an interested party contribution, but some are not. Again, until Fannie Mae and Freddie Mac weigh in on this (which we expect they will do if and when the settlement is finalized) the best strategy is for a buyer to consult directly with their lender about how these payments for buyer broker fees will be treated.

What are the details of the new requirements to use written agreements with buyers, both from Oregon law and the NAR settlement?Read More

First off, the Oregon law (HB 4058) doesn’t take effect until January 1, 2025 and the NAR settlement requirement won’t take place until mid-July 2024 at the earliest.

HB 4058 requires buyers agents to use a written representation agreements with their clients. The bill defines a representation agreement to be “a contract between an agent and buyer of real property that authorizes the agent, in exchange for compensation, to act on behalf of the buyer in purchasing real property or identifying real property for purchase.” The agreement must be in place before, or as soon as reasonably practicable after, the agent has commenced efforts to assist the buyer in purchasing real property or in identifying real property for purchase. In practice this means that the agent could have an initial conversation about the buyers needs or show a house before entering into the agreement, but the agent could not do ongoing work for the client without the agreement in place. Oregon REALTORS® believed that this degree of flexibility was necessary to allow agents and buyers to have some degree of interaction before deciding whether to move forward with an agency relationship and a written compensation agreement.

HB 4058 also states that the agreement must contain the statutory duties that a buyer’s agent owes their client, either directly or by referencing the Initial Agency Disclosure Pamphlet. It may not last more than 24 months, unless actively renewed by both parties.

The NAR settlement requires NAR to make a rule requiring agents who participate in the MLS to use written agreements with buyers before touring a home with the buyer. The details of the rule have not been written yet, so anything we say at this point is speculative. The settlement agreement does not specify that the written agreement must be a representation agreement. It could be a non-representation agreement (I’m showing you this house but I’m not your agent and I’m not going to write an offer for you.”) or it could be a limited scope or duration agreement (“I’ll show you this house and if you want to buy it I’ll write an offer for you, and here is what/how I expect to be paid, but this agreement does not extend beyond this particular house.”). Under the NAR settlement, the yet-to-be-written NAR rule must specify that if the agent expects to be compensated in any fashion in relation to the home they are showing or their work for the buyer, the written agreement must conspicuously specify the details of the compensation arrangement, which must be objectively ascertainable. “My fee is whatever the listing agent or seller is willing to pay me” is NOT ok. Until NAR writes the actual rule, we can’t get into any more detail.

The settlement says we can’t sort listings based on the existence or amount of compensation offered to the buyer’s agent but what if our buyer instructs us that they only want to see properties offering cooperative compensation?Read More

We will have to wait and see what the actual language of the NAR rule says. However, given that listing agents may be willing to negotiate cooperative compensation even if they are not advertising it, and given that buyers can ask for contributions to their agent’s fees as seller concessions, it is unclear why a buyer would only want to see properties offering cooperative compensation in advance. Everything is negotiable, and the buyer may find a house they really like where the listing agent or the seller is willing to assist in paying buyer’s agent’s fees even though they this was not advertised upfront.

What if a listing agent or seller is offering buyer agent compensation that is greater than what the buyer and buyer’s agent agreed to in the buyer representation agreement?Read More

The settlement agreement states that REALTORS® and REALTOR® MLS participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the written agreement with the buyer. At the same time, Oregon law prohibits commission sharing or rebates to non-licensed individuals, including clients. Thus, REALTORS® and MLS participants would need to reject any excess compensation. In practice, this would be a discussion and a negotiation between the listing agent and the buyer’s agent in coordination with their clients. Ultimately, the listing agent and buyer’s agent would agree on an amount of cooperative compensation that does not exceed the amount in the buyer representation agreement. This question highlights some of the considerations related to offering “blanket” or “unilateral” compensation in a world where buyer agent fees are set in the buyer representation agreement between the buyer and the buyer’s agent. While making off-MLS unilateral offers will be allowed, it will not be required and it isn’t well-tailored to the reality of how buyer agent fees will be established.

Will there be changes to forms?Read More

Yes. Oregon REALTORS® has already updated its forms to facilitate buyer requests for seller concessions to assist buyers in paying for buyer agent fees (Sale Agreement + Form 2.24). We also added a new form. (Form 9.10) to memorialize cooperative compensation agreements between agents. If the court approves the settlement and NAR writes new rules, we anticipate that we will make some additional updates to these documents, and also to our Listing Agreement and Buyer Representation Agreement.