NAR Settlement - ARMLS
NAR Settlement & rules changes have been announced. Learn More

NAR SETTLEMENT

Settlement practice changes & new rules start August 1.

CHANGES IN RULES AND REAL ESTATE PRACTICES - NAR SETTLEMENT

A settlement was reached in Moehrl v. National Association of Realtors in March 2024. ARMLS has opted-in to the settlement as the best path forward. In short: the spirit of the lawsuit is that buyer commission is not pre-defined before a relationship with the buyer. To fulfil the terms of the settlement, ARMLS has published new rules and practice changes. MLS participants and subscribers must make changes on or by August 1, 2024. Rule, policy and practice changes can be found below:

KEY CHANGES (CLICK TO EXPAND)

Compensation fields removed from the MLS (Flexmls, Aligned Showings, IDX, Rental Beast, etc.).

Compensation fields will be removed from the MLS in data-feeds and other ARMLS products on August 1, 2024 for all property classes. Concession fields will remain at the end of the transaction as closing information. Commission information may not be added to MLS in any form: remarks, photos, documents, or any field.

Broker to broker compensation can be offered optionally, with permission from the seller, outside the MLS.

From NAR: “Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:

  • Fixed-fee commission paid directly by consumers
  • Concession from the seller
  • Portion of the listing broker’s compensation
  • Compensation would continue to be negotiable and should always be negotiated
    between agents and the consumers they serve.

Written agreements need to be made with a buyer before showing properties.

ARMLS will not collect buyer agreements, however, ARMLS may ask for agreements at any time. ARMLS does not provide or require a specific agreement form. AAR will be releasing a form soon.

From NAR: “The written agreement must include:

  1. A specific and conspicuous disclosure of the amount or rate of compensation the
    Participant will receive or how this amount will be determined, to the extent that the
    Participant will receive compensation from any source.
  2. The amount of compensation in a manner that is objectively ascertainable and not
    open-ended.
  3. A term that prohibits the Participant from receiving compensation for brokerage
    services from any source that exceeds the amount or rate agreed to in the agreement
    with the buyer; and
  4. A conspicuous statement that broker fees and commissions are not set by law and are
    fully negotiable.

Every seller must be notified that commissions are not set by law and are fully negotiable.

From NAR:
MLS Participants working with sellers must disclose in conspicuous language that broker
commissions are not set by law and are fully negotiable.

MLS Participants must include the disclosure in the listing agreement, if the listing agreement
is not a government-specified form. If the listing agreement is a government-specified form, a
separate disclosure would satisfy the requirement

MLS data, through a feed or export, cannot be used to compile commission information from other brokerages.

From NAR – “Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives.  Such use must result with an MLS terminating the Participant’s access to any MLS data and data feeds.

You may display your and your brokerage commissions on your website.

You may display your (entire brokerage) commissions on your website. Since ARMLS will no longer have your commission information, your IDX vendor or webmaster may need to assist you, if you choose to display this information.

From NAR: “MLS Participants may augment MLS data or data feeds with offers of compensation to buyer brokers or other buyer representatives for only listings of their own brokerage.” ARMLS defines a brokerage as all offices with the same Designated MLS Participant (Broker).

WHAT IS STEERING?

STEERING DEFINED

Steering is often thought of as influencing a buyer’s choice of communities based upon one of the protected characteristics under the Fair Housing Act, which are race, color, religion, gender, disability, familial status, or national origin. However, it is also steering to influence a buyer based on the amount of broker compensation that is offered. This includes filtering or withholding information about available properties. This is still prohibited, even off the MLS.

There are also issues when a listing agent steers their seller to offer higher compensation based on the expectations of buyer’s agents. Regarding the settlement agreement, NAR says:

The listing broker should explain to her client the benefits and costs of the various types of marketing that can be done for a listing, and how potential buyers might respond to such marketing—including any buyer costs that the listing broker or seller may offer to pay.

A listing broker should inform the seller about costs the buyer will incur, how the buyer might react to those costs, and how the seller can market a house considering the buyer’s costs; but a listing broker (or agent) must not tell a seller that a broker (or agent) will steer buyers based on the amount that broker (or agent) is compensated.

TIMELINE

Fines for violating rules related to the settlement agreement range from $500 to long-term suspension from the MLS.

ANNOUNCEMENT
June 27, 2024
ARMLS will educate subscribers on the new rules with FAQ and other content.

EDUCATION PHASE
June 28 – July 31, 2024
ARMLS will not yet collect or accept violation reports for this policy.

LAUNCH
August 1, 2024
ARMLS will enforce the settlement, remove commission fields.

FREQUENTLY ASKED QUESTIONS

GENERAL

Why did ARMLS opt-in to the settlement?

As an MLS owned by REALTOR® associations, ARMLS was compelled to opt-in to help reduce future of liability for our subscribers and MLS. Ultimately this was the best path forward. NAR says: “NAR continues to deny any wrongdoing: NAR has long maintained—and we continue to believe—that cooperative compensation and NAR’s current policies are good things that benefit buyers and sellers. They promote access to property ownership, particularly for lower- and middle-income buyers who can have a difficult-enough time saving for a down payment. With this settlement, NAR is confident it and its members can still achieve all those goals.

Does the settlement only apply to REALTORS?

The new rules and practice changes apply to all ARMLS subscribers regardless of trade affiliations or memberships.

Does the release of liability in the settlement only cover past activity/transactions?

Yes. Future liability is not covered. Failure to comply with the settlement terms can create future liability for agents/brokers and the MLS.

Can I tell my seller that agents will steer buyers based on the amount offered to buyer's agents?

NAR says: “A listing broker (or agent) should inform the seller about costs the buyer will incur, how the buyer might react to those costs, and how the seller can market a house considering the buyer’s costs; but a listing broker must not tell a seller that a broker (or agent) will steer buyers based on the amount that broker (or agent) is compensated.

Why is commission information being removed from rentals / land / etc.?

ARMLS has decided to apply the prohibition of commission information to all property classes, including rentals and land.

Another MLS in the country/state has different rules than ARMLS, why?

While most of the terms of the settlement are universal, some items have been left to the local MLS to decide.

Why did ARMLS choose August 1? I've read August 17 or September 16 in other places

ARMLS chose August 1, 2024 to give subscribers more time to make changes prior to the August 17th class certification by the courts.

Can I use a data-feed to supply a commission aggregation website if it is non-REALTOR owned?

The ownership of a commission aggregation website is immaterial to the prohibition of the practice. MLS subscribers may not engage in this activity.

Will ARMLS hold training classes on these changes?

ARMLS is holding several broker events across the Valley (Email Brand@ARMLS.com for more details). Agents should work with their brokers on these changes first. Since the majority of changes require broker direction, ARMLS will not be holding agent training sessions. AAR also has several classes coming up.

REMARKS / FIELDS

Can I add commission information in Aligned Showings / Supra / Rental Beast

No, commission information may not be added in any MLS system. See FAQ about displaying your commission on your website.

Remember: MLS data – directly or indirectly, cannot be used to compile commission information from other brokerages.

Can I add websites / URLS in public remarks?

No, website addresses and URLS are not allowed in public remarks. However, website addresses are allowed in private or semi-private remarks if it is related to the listed property and the website does not lead directly to compensation information.

Can I hint that the seller is willing to offer commission in remarks?

Hinting, using coded language and/or replacing commission terms with analogs (cookies, bananas, etc.) is not allowed in any field, including remarks. Furthermore, indicating or signaling a seller is willing make an offer of commission is not allowed. Examples:

  • “Seller is prepared to offer bananas”
  • “Seller is Agent Friendly”
  • “Call Agent for BB”

Can I mention concessions in public remarks?

Yes, concession information may still be added in the public remarks. NAR says:

  • “…must ensure that the seller concessions are not limited to or conditioned upon the
    retention of or payment to a cooperating broker, buyer broker, or other buyer representative.
  • As a general matter, seller concessions usually aren’t binding until they are established in an
    executed contract such as a listing agreement or a purchase contract.”

Can a dedicated concessions field be added when entering a listing?

You may use the Public Remarks field to communicate concessions prior to closing. The dedicated Concession fields will remain as closing information in the listing.

NAR says:

  • “…must ensure that the seller concessions are not limited to or conditioned upon the
    retention of or payment to a cooperating broker, buyer broker, or other buyer representative.
  • As a general matter, seller concessions usually aren’t binding until they are established in an
    executed contract such as a listing agreement or a purchase contract.”

Can I mention my seller is willing to pay towards a buyer broker fee in remarks?

No commission information, including that the seller is willing to make an offer to the buyer broker, even without using numbers or percentages, may be in any MLS field.

How do these changes affect "sold price"?

Sold price does not change – it should always be entered as the gross price the home sold for.

FORMS / AGREEMENTS

Does an Open House count as a showing, requiring a written buyer agreement?

If an MLS subscriber hosts an open house or provides access to a property, on behalf of the seller, to an unrepresented buyer, they are generally not required to enter into a written agreement with those buyers touring the home. NAR says:

No. In this case, since the MLS Participant is only working for the seller, and not the buyer, the MLS Participant does not need to enter into a written agreement with the buyer.

When will AAR's new forms be publishing / where can I find them?

The Arizona Association of REALTORS® plans to publish their new forms on August 1, 2024. AAR forms will be posted online and in TransactionDesk when available. Drafts of the forms have been published here: https://www.aaronline.com/arizonabestpractices.

Is AAR's Buyer Representation Agreement form required?

A written agreement is required to show a property, however, ARMLS has no requirement that a specific form must be used. See your broker for their instructions as they may have requirements. NAR Says:

“The written agreement must include:

  1. A specific and conspicuous disclosure of the amount or rate of compensation the
    Participant will receive or how this amount will be determined, to the extent that the
    Participant will receive compensation from any source.
  2. The amount of compensation in a manner that is objectively ascertainable and not
    open-ended.
  3. A term that prohibits the Participant from receiving compensation for brokerage
    services from any source that exceeds the amount or rate agreed to in the agreement
    with the buyer; and
  4. A conspicuous statement that broker fees and commissions are not set by law and are
    fully negotiable.

Should active listing or buyer agreements, meaning there is no accepted offer, entered into before August 1, 2024, be amended to address the prohibition on offers of compensation being communicated on the MLS?

NAR Says:

“If the listing agreement instructs the listing broker to make an offer of compensation without reference to an MLS, no change to the listing agreement is needed, as the listing broker can comply with that instruction without violating the MLS policy change.

But if the listing agreement specifies that offers of compensation be made on an MLS then the listing broker should work with the seller to amend the listing agreement before the MLS policy change is implemented, to make it clear the listing broker will not make an offer of compensation on an MLS and to determine whether the seller instructs the listing broker to make an offer of compensation outside of an MLS.”

Can buyers and buyer brokers rely on an offer of compensation that was on an MLS prior to the effective date of the MLS policy changes?

NAR Says:

“If the sales contract is executed before the MLS policy change, the buyer broker should be able to rely upon the offer of compensation even if closing occurs after the date of the policy change.

But if a sales contract is not executed before the date the participant’s MLS implements the policy changes, the offer on an MLS will not be valid and buyers and buyer brokers may wish to protect themselves in writing with the listing broker or seller through a broker agreement or by including the offer of compensation in the sales contract.

Where did ARMLS' Exclusive Right & Exclusive Agency forms go?

In 2021, ARMLS sunset their Property Class 1 and 2 Exclusive Right & Exclusive Agency forms. ARMLS has elected to further sunset their ER and EA forms for Property Classes 4, 5, 6 and 7 due to low usage.

CHECK YOUR KNOWLEDGE

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Assuming your broker does not have their own requirement.

QUESTIONS?

Use our webform to ask our Data Integrity team about these changes.