Impact of the NAR Settlement

Impact of the NAR Settlement

Title Companies Should Be Adjusting Business Strategies

The National Association of Realtors (NAR) reached to end litigation of claims brought on behalf of home sellers related to broker commissions is only beginning to reverberate through the industry.

The agreement releases over one million NAR members and various other groups from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions. NAR also agreed to a new rule prohibiting offers of compensation on a Multiple Listing Service (MLS). Offers of compensation could continue to be an option consumers can pursue off- MLS through negotiation and consultation with real estate professionals. Sellers can offer buyer concessions on an MLS—reductions for buyer closing costs for example.

In addition, NAR agreed to require MLS participants working with buyers to enter into written agreements with their buyers before touring a home. (NAR has additional information at nar.realtor/the-facts)

The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model rule (MLS model rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation.

It remains to be seen whether the Department of Justice will accept the settlement or pursue further action. Until then, the impact on the title industry will probably not be immediately seen, but title companies should see this as an opportunity to support and assist real estate brokerages and showcase their value proposition.

“While the impact on the real estate industry remains unknown, the settlement will nonetheless affect how title companies get business, as well as their marketing and education efforts,” said Linda Grahovec NTP, senior vice president for the FNF Family of Companies, Fidelity National Agency Solutions (FNAS) Division. “There’s a lot of miscommunications in the field and unknowns on how the real estate ecosystem will respond, but title agents need to really understand how this could impact their source of business from Realtors.”

Mike LaRosa, an attorney and chief operating officer for Florida Agency Network, agreed that title agents should take advantage of the opportunity to connect with real estate brokerages and show value.

“There’s opportunity in chaos and the best Realtors will be fine,” LaRosa said. “There will be an obvious shift nationally toward a listing-driven market. For title agents, the trend toward mega real estate teams is on the horizon.”

 

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