The NAR Settlement's Implications for the NYC Market: What We Know

Ever since the National Association of REALTORS® (NAR) agreed to settle the Sitzer-Burnett lawsuit in March 2024, real estate agents nationwide have felt uncertainty about how it will impact the industry. New York City agents in particular, most of whom aren't members of NAR, might be under the impression that the agreement won't affect them. But with the Real Estate Board of New York (REBNY) and several national brokerages that operate in NYC opting into the settlement, that may no longer be the case.

StreetEasy® is here to support NYC agents like you in these moments of change, helping you adapt your business to succeed. Here's what we know about the NAR settlement’s implications for the NYC market.

StreetEasy is closely monitoring the NAR settlement and its impact on the NYC market. We'll be updating this article as more information becomes available.

For a list of known implications for the national market, see 9 Important Agent Takeaways From the NAR Lawsuit Settlement from Zillow.

NAR's policy changes go into effect August 17, 2024

Following the announcement of the settlement in March, NAR has established a set of policy changes applying to any REALTOR® Multiple Listing Service (MLS) and its members or participants. These new policies will take effect August 17, 2024.

Non-REALTOR® MLSs opting into the settlement must implement the policy changes by September 16, 2024

Non-REALTOR® MLSs that have opted into the settlement are required to implement the NAR policy changes by no later than September 16, 2024. For precise information, see the NAR settlement timeline.

With non-REALTOR® MLSs that operate in NYC opting into the settlement, the policy changes would apply to many NYC agents. For instance, should REBNY reach an agreement to join the settlement, its Residential Listing Service (RLS) would be a non-REALTOR® MLS subject to the settlement’s rules. Agents should work with their brokerage or brokerage's attorney to confirm their compliance needs and effective dates.

MLSs and non-REALTOR® MLSs opted into the settlement can no longer display commission offers

On both REALTOR® and non-REALTOR® MLSs that have opted into the settlement, listing agents and sellers will be prohibited from displaying offers of compensation to buyer's agents.

In practice, this means agents won't be able to see or communicate offers of commission on MLSs covered under the settlement. However, as NAR explained in March, buyer's agent compensation offers can be an option consumers pursue outside the MLS. For more on compensation offer policies per the NAR settlement, see their FAQ.

For REBNY members, offers of compensation to the buyer's agent must originate from the seller

Independent of the NAR settlement, REBNY introduced five revisions to its Universal Co-Brokerage Agreement (UCBA) effective as of January 1, 2024. One of these revisions, that of decoupling commissions, directly impacts REBNY-member NYC agents. The revision requires offers of compensation to the buyer's agent to originate from the seller, not the listing agent, even if it's on the seller's behalf:

To promote transparency and consumer confidence in the residential marketplace, the UCBA will now require offers of compensation to the buyside broker to originate from the Seller/Owner. Listing Brokers will no longer be permitted to make the offer of compensation to the buyside broker – even if it is on the Seller's/Owner's behalf.

Furthermore, buyer's agents must be compensated by the seller (not the listing agent):

Assuming there is an offer of compensation from the seller and the buyer's broker has accepted the offer, the buyer's broker will be directly compensated by the seller or owner of the exclusive property, which should occur at the closing as is customary in the New York City area.

For more information, see REBNY's FAQ on decoupling commissions.

Many agents will be required to sign a written agreement with buyers before touring homes

A condition of the NAR settlement requires "MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home." This will also apply to any NYC brokerage or non-REALTOR® MLS opting into the settlement. Written agreements are an opportunity to add transparency, promote open conversation, and set proper expectations with your buyer clients. 

In light of this, StreetEasy created a short-term, non-exclusive Touring Agreement to help agents adhere to the new industry standard - without having a potential buyer sign an exclusive agreement before a tour. Meant as an introductory, consumer-friendly agreement and drafted with New York State compliance in mind, it sets expectations for the buyer concerning representation, and helps lay the foundation to discuss compensation and exclusivity in a subsequent agreement when you and the buyer are ready. For more information, see StreetEasy's Touring Agreement: What Agents Need to Know.

Some NYC brokerages have introduced their own brokerage-specific agreements for use ahead of a tour, separate from StreetEasy's Touring Agreement. Buyer's agents are free to use either agreement.

There is rising consumer awareness about commissions

Despite the media buzz around the settlement since March, in terms of policy, much of the settlement agreement isn't anything new. For example, commissions have always been negotiable, and agents were already prohibited from filtering listings by compensation offer. That said, many consumers have been paying attention to the news as well, and are increasingly aware of the factors that affect them - like their ability to negotiate commissions.

Agents nationwide, including in NYC, can reasonably expect this shift among buyers and sellers. Accordingly, agents should approach the first conversation with a buyer knowing how to show their value and turn a prospect into a loyal client.

NAR must create and update educational materials to reflect the changes

The settlement requires NAR to develop educational materials that are consistent with the policy changes, and eliminate any previous materials that are contrary to them. To stay up-to-date, see their NAR Settlement: Get the Facts hub containing the latest materials, resources, and news pertaining to the settlement agreement.

For more information and resources on how to adapt and thrive in today's changing industry landscape, visit our Latest Industry Standards hub for agents.