We have all heard about the big NAR (National Association of Realtors) Sitzer-Burnett Lawsuit. The lawsuit began in 2019, with the verdict arriving in late October 2023. The trial lasted  leven days and the jury deliberated only three hours. The penalty assessed against NAR and two real estate companies was $1.78B. There were stories about NAR never giving up and  ppealing the verdict, but instead, NAR settled the lawsuit for $418,000,000 in March of this year. At the time, many rumors began to crop up, such as:

Realtors agree to axe 6% commission in NAR lawsuit.
Nothing was ever mentioned anywhere about maximum commissions.

NAR to cut commissions.
NAR never set commissions. Commissions are negotiable.

Realtor settlement to lower home sale prices.
Does anyone really know the answer to that question?

The Number of agents will drop 60 to 80% and income and fees will drop 30%.
These prognostications. They were quoted in several articles in March.

The comments were in a report by Keefe Bruyette Woods, an East Coast financial company in October 2023. This was before the verdict and before the settlement. They must have an  llencompassing crystal ball.

HOW ABOUT SOME FACTS?

You all have your different reliable sources. One of mine is Gov Hutchinson, Esq., Vice President and Assistant General Counsel, California Association of Realtors®. He is their Roving Storyteller presenting outstanding Purchase Agreement Courses all over California and leading panel discussions at CAR meetings. I have heard him speak many, many times, and keep going back.

Gov discussed the Settlement at the Orange County Realtors® Association Annual Meetings, March 25th in beautiful downtown Irvine. He did not disappoint. Some items discussed:

  1. Effective around mid-July all agents must get a Buyer’s Agency Agreement signed with any prospect before any property may be shown. 
  2. There must be a communication concerning commissions and a decision made as to who will be paying and how much will be done.
  3. No commission information or agreements can be posted on any MLS service. However, commission information could be posted on an agent’s website and other locations.
  4. Commissions can be paid by sellers or buyers, or a combination of the two.
  5. There is no information currently available on how the mandatory contracts will be handled when showing open houses. This will come later. Hopefully by July.
  6. The NAR agreement only covers residential, one to four, owner occupied transactions.

BUYER’S AGENT CONTRACTS:

Where can you get information about a BUYER REPRESENTATION AND BROKER COMPENSATION AGREEMENT (BRBC) before July? The California Association of Realtors (CAR) has had this contract for many years. There may have to be a few tweaks made before July according to Gov, but the contract should be studied now. Get it at your friendly CAR website.

The BRBC agreement is a three-page form. It discusses broker compensation, whether the contract is Non-Exclusive or Exclusive, payment by others, agency relationships, obligations of buyer and broker, and many other things. Required information for all of us.

WHAT’S NEXT?

Now that you have the form, what should be your next step? You should consider the NAR designation, Accredited Buyer’s Representative®. This designation has been available for many years, but we were told that there are only 31,000 ABRs at this time. With the new regulations coming in July the designation could be very valuable to you for the education that it offers.

To earn the ABR® designation you must be a member of NAR, complete the required courses, (the ABR® designation course and an elective course), and complete the required number of ABR® transactions. The ABR® course focuses on “the key information and skills you need today when working with buyers, so you can be prepared to articulate and demonstrate your value and help buyers understand written buyer representation agreements,” says NAR President Kevin Sears. NAR has announced that it will provide its members access to this course, at no cost, helping REALTORS® communicate their value to buyers in this ever-evolving real estate landscape. 

MORE INFORMATION ABOUT THE SETTLEMENT:

NAR has released a valuable FAQs entitled NAR Settlement Facts, dated March 26, 2024. It is 13 pages of interesting information. It is available at www.nar.realtor/sites/default/files/documents/nar-settlement-faq-03-26-2024.pdf. I recommend it unequivocally. Reading it will make you feel a little more optimistic and you will sleep better.

IN CONCLUSION:

There is a newly introduced bill in the California Assembly (AB 2992) that discusses the mandatory use of a Buyer’s Agent Contract. Remember that all the settlement talks and MLS discussions involve only Realtors®. Over 60% of the licensees in California are not Realtors®. And they also sell. This Assembly Bill would require all licensees to use Buyer’s Agent Contracts.

Finally, for those of you who think being a Buyer’s Agent is a new concept, I found an article of mine that was written in 1989 on Buyer’s Agents. I posted it to our blog recently without having to change one word.

Duane Gomer is the founder of Duane Gomer Education (DGE), a California company offering educational courses for real estate licensees, Mortgage Loan Originators, and Notaries Public. DGE is widely recognized for their outstanding instructors, comprehensive materials, and unmatched customer service.