The much-discussed update to listing agreements reflects upcoming NAR rules but does not prohibit sellers from compensating buyers’ agents.
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With new rules regarding agent compensation on the horizon, eXp Realty has made a splashy move in recent days, updating its listing agreement with language stating that the company “does not share commissions with buyer’s brokers” — a move that The language sparked a series of debates online.
Holly Maberry
The brokerage announced the new listing agreement internally on Friday and provided the document to Inman on Wednesday. Holly Mabery, eXp’s senior vice president of brokerage, said in a conversation with Inman on Wednesday that the document has been updated because “we want to make sure our agents have the best protection possible.” She added, “We don’t do it against brokers. compensate.”
“We do not predetermine compensation,” she continued, adding that instead, eXp listing agents will provide their clients with “a range of options.”
The document itself reflects this approach, stating on the first page that “the broker (eXp) does not share commissions with the buyer’s broker.”
However, this statement does not mean that the buyer’s agent cannot collect compensation from the seller. The document itself also states that buyers can ask for concessions from sellers, which can be used to pay broker fees, among other things. Mabery told Inman that home sellers who use eXp agents are free to offer compensation as they see fit.
She added that eXp listing agents will receive training to prepare sellers throughout the process for the possibility of requiring compensation from the buyer’s agent.
The key change, then, is that the offer of compensation should come from the seller, not the seller’s agent, and eXp appears to anticipate that buyers and their agents will demand some form of compensation rather than preemptively offer such compensation.
The changes reflect new rules announced this spring by the National Association of Realtors that will officially take effect in August. Among other things, the rules prohibit listing agents from providing compensation to buyer’s agents in multiple listing services affiliated with real estate brokers.
Although eXp’s updated listing agreement appears to reflect the new NAR rules, it caused a stir online this week. On Tuesday, for example, a post on the topic in the popular Lab Coat Agents Facebook group garnered more than 300 comments. The topic generated enough attention that eXp Realty CEO Leo Pareja took his break from vacation Wednesday morning to discuss the situation on the Broke Agent Media podcast.
However, Pareja said in the podcast comments that the updated form is not a major new policy from eXp, but rather reflects “our best interpretation of the rule change.”
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“All of our goals with the listing agreement were to explain the rules that would be enforced by the MLS,” he said, later adding that inter-broker compensation “will be removed from the MLS in August.”
“Our current position is that we will ensure that broker-to-broker commission sharing is no longer allowed on the MLS,” Pareja later said on the podcast.
In an interview with Inman, Mabery said she was aware of online discussions about the eXp listing agreement, but said some of the concerns may stem from the spread of comments taken out of context and general nervousness about change.
While eXp describes their form updates as a response to the upcoming NAR rules, the mention of offers also hints at ongoing industry-wide questions about how buyer’s agents will actually be paid in the near future. Concessions are one possible answer, and powerful organizations like Bright MLS and the California Regional MLS (CRMLS) are taking action to make such concessions easier to offer.
However, a number of private firms have also emerged to offer listing agents and their clients the opportunity to compensate their buyer representative peers. Whether these solutions will withstand the scrutiny of the U.S. Department of Justice remains to be seen.
The ultimate answer may also be a combination of solutions; last week, for example, CRMLS Vice President and General Counsel Ed Zorn said concessions may be “focused on the entry-level market.”
The final outcome remains to be seen, and during his podcast appearance, Pareja acknowledged the current uncertainty surrounding the future of agent compensation.
“This is an evolving subject,” he said, adding later, “It’s a brave new world for all of us.”
In a conversation with Inman, Mabery further noted that “everyone” in the industry is currently updating their listing protocols, and eXp looked at those protocols and found that “some are good and some are confusing.” The company created created its own listing agreement — which Marbury noted is not protected by copyright and can be used by anyone — in an effort to deliver something better.
“If we can be leaders in providing clarity and context,” she said, “we absolutely want to do that.”
Please read eXp’s full listing agreement here:
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