Wisconsin REALTORS® Association: NAR Proposed Settlement: Education Update

NAR Proposed Settlement: Education Update

 Jennifer Lindsley, WRA Director of Legal Services and Licensing  |    July 01, 2024
Capitol building

As you may have heard, the National Association of REALTORS® (NAR) had entered into a proposed settlement agreement with the plaintiffs in the Sitzer/Burnett class-action lawsuit. This agreement will bring about some changes in real estate practices for REALTOR® members, with the implementation date set for August 17, 2024.

Offers of compensation

One significant change in August is the removal of the ability for a listing firm to make an offer of compensation to a cooperating firm via a multiple listing service (MLS). While listing firms can still offer compensation to cooperating firms, they will no longer be able to do so through the MLS. Any offer of compensation must now have explicit approval from the seller before being made or agreed upon.

As you might imagine, discussions of offers of compensation, specifically MLS offers of compensation, are woven throughout the WRA’s various education materials, like the sales pre-license, broker pre-license and various continuing education (CE) courses. To ensure our members get the very best real estate education, the WRA will edit all our education materials to remove content referring to MLS offers of compensation.

Any current CE course that mentions an MLS offer of compensation is being revised to remove that content. If you have already completed your 2023-24 continuing education, you DO NOT need to re-take it. Various WRA staff have received this question when chatting with members about the proposed NAR settlement agreement and its effect on WRA educational offerings. The WRA is simply updating existing educational materials so that once the practice changes go into effect, the education will reflect the reality of real estate practice in Wisconsin at that time.

For those of you who mentor soon-to-be agents, these practice changes DO NOT affect the licensing exam in any way. The WRA’s existing pre-license content does include some instruction on procuring cause, MLSs and MLS offers of compensation because that used to be information that a “Day One Real Estate Licensee” needed to know. This content has never been on the licensing exam because not all licensees pursue the professional upgrade to become REALTORS®. Going forward, the WRA’s pre-licensing education will not include content on procuring cause, MLSs or MLS offers of compensation because that will no longer be information a “Day One Real Estate Licensee” will need to know. It will be up to firms to educate their new agents on how that firm handles offers of compensation. 

Forms changes

The changes brought about by the NAR proposed settlement agreement have necessitated revisions to several WB forms, including listing contracts, buyer agency and tenant representation agreements, offers to purchase and the option to purchase. These forms will have an optional use date of July 1, 2024, and a mandatory use date of August 15, 2024.

Luckily, the modifications to these forms are not massively substantive but rather touch-ups to bolster compliance with the terms of the proposed settlement agreement. The listing contracts as well as buyer agency and tenant representation agreements are being updated to enhance language regarding the negotiability of commissions and offers of compensation. Language that references MLS offers of compensation is being removed from the listing contracts.

Language authorizing a firm to advertise seller concessions is being added to the listing contracts. The listing contracts will now contain language where a seller can approve of a listing firm offering compensation to cooperating firms. The buyer agency agreements are receiving additional language clarifying that a firm cannot represent its services as free unless the firm will not receive any compensation from any source. Additionally, a buyer’s firm’s fee must be objectively ascertainable and not open ended. Further, there is language being added to the buyer agency agreements stating that a buyer’s firm cannot receive compensation that exceeds what the buyer and firm have agreed to in the buyer agency agreement. Lastly, the offers to purchase and the option to purchase will include a new check box where the buyer can ask the seller to agree to pay compensation to the buyer’s firm. See more details about the specific changes to the forms in the July 2024 Wisconsin Real Estate Magazine article, “The Best of the Legal Hotline: Antitrust Lawsuit FAQs,” as well as a list of revised forms in the July 2024 Wisconsin Real Estate Magazine product showcase article, "Wisconsin Forms Update."

Educational materials provided by the WRA will be updated to reflect these form changes. CE, pre-license and professional development courses will all incorporate the new forms as needed.

The Line by Line forms training series may experience a temporary delay in revisions due to the volume of forms being updated. However, the WRA is prioritizing the most commonly used forms for immediate attention. Rest assured, any outdated forms explanations will be removed and replaced as soon as the updated training is available.

The WRA understands that since the NAR proposed settlement was announced on March 15, 2024, there have been lots of questions and sometimes not a lot of answers. We remain committed to providing you with the most up-to-date and best information we have about the proposed settlement. 

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