NAR's Settlement is not the LAW! It's only a rule.

By Charles Jones

NARs new rules are not mandated by the State, it is only an agreement between NAR and the plaintiffs, they hold no legal standing unless you put your listings on a NAR MLS.

There is no legal mandate to follow NAR's rules.

Solution:

Put your listings on the Real Estate Listing System (RELS) and quit worrying about being anti-competitive.

RELS's Opinions:

Next Buyer Class Action Lawsuit - Coercion and Discrimination

NAR's new rule 58(vi): Forces all people to sign a written agreement before showing them a home.

• You may be discriminating against minorities and low-income people

  • if you refuse to show them a home even if they refuse to sign a contract to exclusively work with you.

  • If your compensation is not exactly the same for each and every person regardless of sales price or circumstance.

  • If you force them to sign your agreement, they can later claim coercion, and they would be right.

DO NOT follow rule 58(vi) of the settlement. If you force anybody to sign anything, you may get sued and probably lose. It is best to have potential clients who want to work with you exclusively to voluntarily sign an agency agreement after you have built a report and a relationship. By NAR mandating written agreements prior to touring homes, buyers by definition are coerced, and agents and brokers may lose in court.

I. Enforcement of Paragraph 58(iv) Risks Discrimination Against Minorities and Low-Income Individuals by impacting Equal Access.

The mandatory requirement for all potential buyers to sign a written agreement before touring homes disproportionately affects minorities and low-income individuals who may be less familiar with, or more cautious about, signing legal agreements without adequate consultation. This requirement can act as a barrier to entry, effectively discriminating against these groups by denying them equal access to housing opportunities. The provision would effectively prevent showing unless a potential buyer had access to an attorney to review the agreement.

II. Enforcement of Paragraph 58(iv) The Risk of Coercion in Mandatory Written Agreements

By forcing potential buyers to sign an agreement before even viewing properties, NAR's rule potentially coerces consent. Buyers may feel pressured to sign agreements without fully understanding the implications or having the opportunity to negotiate terms, leading to claims of coercion which could invalidate the agreements under contract law principles.

Contract law requires that consent be given freely and voluntarily for an agreement to be valid. Coercion to sign an agreement under the conditions set forth by NAR could lead to these contracts being challenged and potentially deemed unenforceable.

Next Seller Class Action Lawsuit - Breach of Fiduciary Duty

NAR's new rule 58(ii): Specifically prevents Sellers from voluntarily advertising offers of compensation on the MLS or other platforms that consolidate data.

• We believe it is counter to the best interest of the seller to prevent sellers from efficiently and effectively communicating any seller's desire to offer and advertise compensation to all other Brokers.

• If the most efficient way to sell a home is to market the home to other brokers who have current clients looking for homes, then forbidding this act is to the detriment to the seller and a breach of fiduciary duty to your client.

• We believe this rule would be unconstitutional if it were mandated by law, and a breach of fiduciary duty if instituted unilaterally by rule.

DO NOT follow rule 58(ii) of the settlement. If you agree and participate in a scheme to forbid sellers from voluntarily offering and advertising Seller-paid Other Broker Compensation (SOBC) you are participating in an anti-competitive arrangement that will harm your clients, thereby breaching your fiduciary duty and creating cause for another class action lawsuit against you.

I. Enforcement of Paragraph 58(ii) Restricts Market Efficiency & Imposes Anti-Competitive Restrictions

The efficient operation of the real estate market relies heavily on the ability of sellers to reach a broad audience of potential buyers, typically facilitated by buyer agents. By prohibiting sellers from advertising compensation to buyer agents, Paragraph 58(ii) restricts this reach, diminishing market efficiency and artificially limiting the pool of potential buyers. Such restrictions undermine the competitive process, which is designed to ensure that properties are sold at the highest price within the shortest possible time.

II. Enforcement of Paragraph 58(ii) Is a Breach of Fiduciary Duty to Sellers

Real estate agents are bound by fiduciary duties to act in the best financial interests of their clients—the sellers. By restricting the ability of these agents to advertise and negotiate the best possible compensation schemes openly, Paragraph 58(ii) limits agents' capacity to fulfill their fiduciary duties. This not only potentially lowers the sale price of properties but also extends the time on the market, contrary to the sellers' best interests.