The news last Friday regarding the National Association of Realtors® (NAR) settlement of the Sitzer-Burnett class action lawsuit based on the claim of price fixing within the real estate community has resulted in rampant misinformation amongst the media. I did a few interviews on behalf of the Denver Metro Association of Realtors® (DMAR) to help inform the public what the settlement means specifically for the Denver Metro Area. Unfortunately, some of those stories focused on sensationalized headlines and created more confusion. Of all of the interviews I did, I believe 9 News reported a balanced story which can be viewed, or read, here.

Due to the confusion, I wanted to share some information that I hope will clarify the situation for you. As always, if you have any questions, or would like to discuss this further, please don’t hesitate to call me.

What does this all mean for the Denver real estate market?

In short, a group of sellers came together within a class-action lawsuit to sue a variety of real estate brokerages, along with the Realtor® trade association, NAR. The claim was that these organizations worked together to price fix sales commissions related to real estate transactions. It is important to note that the negotiated settlement that would end litigation for NAR still needs to be approved by the courts, which may take months.

The fact is, buyers and sellers have always had a choice as to how they want to transact real estate at a variety of price points. From For Sale by Owner (FSBO), to limited-service companies, to MLS “entry only” firms, to attorney facilitated purchase offers, to full-service brokers. This will not change.

What was included in this settlement? 

The key settlement components include the following;

• Release of liability
• Compensation offers will be moved off the MLS
• Written agreements for MLS participants acting for buyers
• Settlement payment
• NAR continues to deny any wrongdoing
• The change will go into effect mid-July 2024

How does the removal of compensation change how homes are bought and sold?

The removal of offers of compensation within the MLS (Multiple List Service) means that any cooperative agreement that has historically been listed within the MLS system will be removed.

I want to clarify that this does not mean that sellers will stop offering buyer agent commissions, or that buyers will be required to pay their own brokers. While these changes have been speculated amongst the media and the public, it is too early to tell how this settlement will change the industry, but any seismic shift will take years.

It will continue to be in a seller’s best interest to pay a co-operative commission to other brokers who bring a buyer to their home. These buyers will be vetted and will have their own representative who will help to navigate the process with the listing agent through the many complexities of the transaction, as no transaction is ever the same. When buyers are faced with paying their broker out of pocket, they sometimes decide to solely view listings with an offer of compensation included. It is, and always has been, a buyer’s choice which home they want to view.

Commissions have always been negotiated, and will continue to be negotiated, between consumers and their agents. Buyers will need to weigh the importance of experience, knowledge, and service when it comes to purchasing what is typically the largest investment of their lifetime.

What does it mean to have a written agreement?

Members of an MLS will need to have a written agreement with their buyer’s agent stipulating how their agent is paid. The good news is that Colorado has one of the most advanced contracts in the country.  As a result, commission fees, and how brokers are paid, have clearly been stated in our agreements for years.

When is this change taking place?

The change will go into effect mid-July 2024.  This is a developing situation, and we will know far more about the how these changes will affect our local real estate market as the weeks and months unfold.

While it’s too early to tell how these changes will affect the Denver real estate market, I am here to answer any questions you may have and would be happy to discuss this further with you.

If you found this article helpful, and you are looking for property within the Denver Metro Area, contact me!