Wisconsin REALTORS® Association: The Best of the Legal Hotline

The Best of the Legal Hotline

NAR Settlement Updates

 Tracy Rucka, WRA Director of Professional Standards and Practices  |    January 06, 2025
Hotline

Near the end of 2024, the U.S. District Court for the Western District of Missouri approved the settlement agreement between plaintiffs, the National Association of REALTORS® (NAR) and other defendants. During the process, there have been various questions and commentaries about the implementation and interpretation of the settlement terms for real estate practitioners. These discussions from the WRA Legal Hotline identify the questions, the settlement agreement provision and applicable commentary from NAR. NAR and the WRA do not endorse practices that would work around the terms of the settlement. 

Modifying a buyer agreement to receive additional compensation 

Can a buyer and the buyer’s firm amend the buyer agency agreement to increase the commission amount if the seller or listing firm offer more compensation than is in the buyer agency agreement?

Settlement agreement provision paragraph 58(vi)b:

The amount of compensation must be objectively ascertainable and may not be open-ended (e.g., “buyer broker compensation shall be whatever amount the seller is offering to the buyer”);

Although parties to a contract may amend an agency agreement, the underlying question is why the agreement is being modified. Keeping in mind buyer compensation may not be based on what a seller or listing firm is offering; an amendment to circumvent that tenet of the settlement would be ill advised. Explanation from NAR’s resource titled “Do’s and Don’t When Working with Buyers” clarifies as follows: “you should not amend an agreement for the sole purpose of ‘matching’ an offer of compensation that is greater than what you and your buyer agreed to.” The purpose of the amendment cannot simply be to match whatever the seller offers.

Collecting seller-paid or builder bonuses 

Can the buyer’s firm collect seller-paid or builder bonuses?

Settlement agreement provision paragraph 58(vi)c:

MLS Participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement.

Question 49 of NAR’s settlement agreement FAQs pertains to such bonuses: 

49. If the seller or the listing broker offers a bonus or financial incentive in addition to the offer of broker compensation, can the buyer broker accept the extra compensation? 

  • The buyer broker may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.

Ranges of compensation (minimum up to a maximum)

Can the buyer agreement state a range of compensation, such as a minimum up to a maximum?

Settlement agreement provision paragraph 58(vi)b:

The amount of compensation must be objectively ascertainable and may not be open-ended (e.g., “buyer broker compensation shall be whatever amount the seller is offering to the buyer”)

The commission provisions of a buyer agency agreement must specify and conspicuously disclose the amount or rate of any compensation the MLS participant will receive from any source, or how this amount will be determined. The concern with language that specifies the buyer’s firm’s commission by stating a range, for example, “X% to Y%,” is that the buyer agency fee is not objectively ascertainable and is open-ended.

Question 87 of NAR’s settlement agreement FAQs provides guidance about how a buyer’s firm’s compensation must be stated to follow the terms of the settlement agreement:

87. In the buyer agreement, can buyers and buyer brokers agree to a range of compensation?

  • No. Under the settlement, any compensation agreed to in the written buyer agreement must be objectively ascertainable and not open-ended
  • For example, a written buyer agreement cannot have a commission that is “buyer broker compensation shall be whatever amount the seller is offering to the buyer” or “between X and Y percent.” 
  • Importantly, NAR policy will not dictate the amount of compensation agreed between buyers and buyer brokers (e.g., $0, X flat fee, X percent, X hourly rate). (Updated 7/15/2024) 

More than one agreement/one property buyer agency agreements 

Can a firm have more than one agreement with a buyer? Can a firm craft property-specific agreements tailored to match the compensation offered by each respective seller?

Settlement agreement provision paragraph 58(vi)c:

MLS Participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement.

In Wisconsin, a buyer’s firm may conduct a one-property buyer agency agreement, so long as it complies with Wisconsin license law. Wis. Admin. Code § REEB 16.05 prohibits licensees from making a separate charge for completing approved forms in a real estate transaction, prohibits the unlicensed practice of law, and prohibits the completion of forms if not incidental to real estate practice.

As it relates to the terms of the settlement agreement, it would not be appropriate to enter into multiple one-property buyer agency agreements for the sole purpose of having the commission contained therein “match” what is being offered by a listing firm as cooperative compensation.

Questions 86 and 93 of NAR’s settlement agreement FAQs offer more insight:

86. MLS Participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement. Does this mean that brokerages can only have one agreement with the buyer?

No. The practice change empowers buyers and brokers to negotiate and agree to services and compensation that work for them. MLS Participants should work with consumers to ensure they fully understand the options available. Compensation continues to be negotiable and should always be negotiated between MLS Participants and the buyers with whom they work. 

At times, a new or amended buyer agreement may be appropriate, and the buyer and broker may agree to amended terms. However, amended agreements must also meet the requirements of the practice changes. The practice changes must be implemented fully and in good faith in the service of promoting consumer empowerment, choice, and healthy competition. 

NAR policy does not dictate:

  • What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).
  • The term of the agreement (e.g., one day, one month, one house, one zip code).
  • The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).
  • The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate). (Updated 7/31/24)

93. Does NAR’s settlement address the theoretical possibility of steering? 

  • Yes. In the agreement, NAR reaffirms its commitment to requiring that MLS Participants must not limit the listings their client sees because of broker compensation. 
  • Written buyer agreements, required by the NAR practice changes that will be implemented on August 17, 2024, will also outline that MLS Participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer. 
  • Since a broker working with a buyer cannot receive more compensation than the buyer has agreed to in that agreement, the amount of any offer of compensation is irrelevant to the buyer-broker’s compensation. 
  • Under these practice changes, NAR has eliminated any theoretical steering because a broker will not make more compensation by steering a buyer to a particular listing because it has a “higher” offer of compensation. (Added 5/29/24)

Touring agreements supplemented with brokerage agreements

Must agents require buyers to sign a pre-agency showing agreement for each property the agent shows that buyer? Can a showing agreement be supplemented with a full-service brokerage agreement at a different compensation rate?

Settlement agreement provision paragraph 58(vi)c:

MLS Participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement.
      
Question 8 of NAR’s settlement agreement FAQs provides additional detail:

8. How do the practice changes impact homebuyers?

The settlement empowers consumers with additional choice and transparency when buying a home.

As part of the new practice changes, you will need to sign a written agreement with your agent before touring a home.

Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much. 

The buyer agreement must include four components concerning compensation:

  • A specific and conspicuous disclosure of the amount or rate of compensation the agent will receive or how this amount will be determined.
  • Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate) — and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”). 
  • A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and, 
  • A conspicuous statement that agent fees and commissions are fully negotiable and not set by law.

It is not necessary to fill out a pre-agency showing agreement for each home being shown to the buyer. One pre-agency showing agreement would cover all homes during the time the agent shows properties to the buyer.

The pre-agency showing agreement allows an agent to show a home to a buyer. It is not an agency agreement, so the firm cannot bind the buyer — or the seller — to any terms that might be contemplated in a future buyer agency agreement or an offer to purchase. Any compensation negotiated in the pre-agency showing agreement is independent of any compensation the firm may charge under an agency agreement for brokerage services.

WRA Pre-Agency Showing Agreement for Wisconsin Properties

To help agents comply with the settlement agreement, the WRA created the WRA-PASA — Pre-Agency Showing Agreement for Wisconsin Properties form. This form is available in Transactions (zipForm Edition) and the WRA Forms Library, which are both included with WRA membership. The WRA-PASA outlines the nature of the pre-agency relationship and distinguishes between the roles of “customer” and “client” once negotiations commence. The form clearly states that it is not an agency agreement and that it does not authorize the agent to draft an offer to purchase. The WRA-PASA is not specific to a property and does not have a term. Either the firm or the buyer can terminate the agreement at any time, or they can transition from pre-agency to a customer or client relationship as they see fit.

The WRA-PASA includes a section for compensation. It will be up to each firm to decide whether the firm will charge buyers for showing properties to them and if so, how much the firm will charge. Some firms might charge; others might not. If a firm charges compensation to show properties to a buyer, the compensation must be paid to the firm and cannot be paid directly to the agent in accordance with Wis. Stat. § 452.19(2).

Resources

Copyright 1998 - 2025 Wisconsin REALTORS® Association. All rights reserved.

Privacy Policy   |   Terms of Use   |   Accessibility   |   Real Estate Continuing Education 

WRA Class Rules and Cancellation Policy

See WRA terms and conditions

WRA classroom policy

  • Check-in opens 30 minutes before class (may vary depending on location).
  • Late students are not allowed into class.

WRA cancellation and refund policy

Virtual/live classes 

  • The WRA reserves the right to cancel the course or event if not filled. Should a course be cancelled, registration fees will be refunded in full.
  • Student cancellations must be in writing prior to the start of the course or event and will be refunded minus a $25 cancellation fee. Some conferences and conventions have additional cancellation and refund restrictions.
  • Registrations cannot be transferred between students or attendees. 
  • Sales pre-license attendance policy: Attendance is mandatory. Missed hours must be made up and cannot be made up until conclusion of the classroom portion of the course. All make-ups must be completed within seven days after the conclusion of the classroom portion of the course. An individual will not receive a certificate of completion for the course until missed hours are completed. An absence of more than two days will result in termination of enrollment in the course with an option to attend the course at a later date or transfer to a distance learning format, which may involve a transfer fee. If absence results in termination of enrollment, no refund will be issued. 
Distance learning programs
  • Sales and broker pre-license students have six months from the date of registration to complete the course.
  • Student cancellations for distance learning programs must be in writing within two weeks of registration and prior to accessing the course work. Students will be refunded minus a $25 cancellation fee.
  • Course materials must be returned at a student’s expense and in reusable and resalable condition. The request for cancellation will not be processed until materials have been received by the WRA.
  • Registrations cannot be transferred between students.

Other WRA products and publications

  • WRA products and publications must be returned at student’s expense within two weeks of purchase. Refunds will not be processed until materials have been received by the WRA in reusable and resalable condition. 

 Technical colleges

  • Returns may be made for a 100% credit if made within 30 days of purchase. There will be a 15% restocking fee on returns made after 30 days but before 60 days from the date of purchase. No credit will be given on orders 60 days or older or on outdated materials. Technical colleges will be notified of pending publication changes 60 days prior to publication. All products must be returned in reusable condition. 
Special events (WRA Annual Convention, REALTOR® & Government Day, etc.):
  • Special events including the ones listed above may have additional cancellation restrictions. Consult event details on event webpage(s) for policy information. 

Extension policy

  • If additional time is needed to complete a pre-license course, WRA students can purchase a 30-day extension for $30. Pre-license extensions are available for students up to 6 months from expiration date, and multiple 30-day extensions are permitted.

The WRA reserves the right to revise these policies at any time without prior notice. 

Continue

Shopping Cart

There are currently no items in your shopping cart.
 Check Out

Exhibitor Information