The trade group’s consumer guide contrasts with previous information but also continues to promote pre-emptive compensation to buyers’ agents.
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After the National Association of Realtors reached a settlement in March in multiple antitrust commission lawsuits, National Association of Realtors President Kevin Sears was outspoken about the changes needed for the deal.
“Something is bad,” Sears told a roomful of real estate agents at NAR’s midyear meeting in May. “I get it.”
He went on to say that he didn’t think it was a good idea to eliminate buyer’s broker compensation from the Multiple Listing Service, which was one of the mandates of the settlement agreement. “This is bad and has to change,” he said.
Now, as the NAR’s Aug. 17 deadline for MLSs to implement trading changes approaches, the 1.5 million-member trade group last week released guidance for buyers and sellers touting the changes as a “benefit” for consumers.
NAR said in a guide titled Home Buyers: Here’s What the NAR Settlement Means for You: “NAR’s recent settlement brings a number of changes that will benefit homebuyers and we want to clearly outline them for you. these changes.
A guide titled Home Sellers: What the NAR Settlement Means for You contains nearly identical language: “NAR’s recent settlement resulted in several changes related to broker commissions that we hope will benefit sellers. The changes are clearly laid out for you.
NAR released the guidelines on the same day Sears attended the Inman Connect show in Las Vegas, where responses were mixed from attendees who had varying views on the benefits NAR brings to its paying members.
A jury in October handed down a multibillion-dollar verdict against NAR and major real estate franchisees, a trade group that has struggled to get a message out to consumers and its members and has repeatedly cast the media as the villain in defending its practices. .
The NAR did not express hostility to the settlement changes in its new buyer and seller guidance. The buyer’s guide outlines several aspects of what the deal means for homebuyers, including:
Before touring the home, you will sign a written agreement with your agent.
Before signing this Agreement, you should ensure that it reflects the terms negotiated by you and Agent and that you understand exactly what services and value will be provided and in what amounts.
The buyer agreement must include four sections regarding indemnification:
- Disclose specifically and conspicuously the amount or rate of compensation the real estate agent will receive or how the amount will be determined.
- CCompensation is objective (e.g., $0, X flat fee, X percentage, .
- A provision that prohibits the agent from receiving compensation for brokerage services from any source in excess of the amount or rate agreed upon in the agreement with the buyer; and,
- Clearly state that broker fees and commissions are completely negotiable and not required by law.
However, the guidance does make sure to let both buyers and sellers know that sellers may still pay a buyer’s agent.
“The seller may agree to compensate your agent,” the buyer’s guide reads. “This practice is allowed, but the offer cannot be shared on the Multiple Listing Service (MLS) — which is the division between the buyer’s broker and the listing broker. A local marketplace for people to share information about properties for sale.
“You can still accept concessions from the seller, such as an offer to pay closing costs.”
Conflicting interpretations of changes to the NAR settlement agreement were apparent last week at Inman Connect, particularly regarding partnership compensation (also known as commission sharing). At the NAR’s midyear meeting, the trade group’s legal team promoted the practice, detailing ways listing agents can advertise compensation offers to buyer’s agents outside of the MLS and encouraging buyer’s agents to contact before showing a property Listing broker, ask for quotes on compensation.
But Inman Connect panelists discouraged this practice, which also seemed to go against what the U.S. Department of Justice said they wanted to see happen: Listing brokers would not seek compensation from buyer’s brokers anywhere so that sellers and listing brokers Able to do so without affecting the amount the buyer pays the agent.
Panelists favored letting listing agents only care about their own fees, buyer’s agents negotiating indemnity with buyers before showings, and buyers requesting their agent’s indemnity in the offer to purchase, if needed, which the Justice Department made clear is allowed of. Following an investigation by the Department of Justice, the California Association of Realtors recently issued new transaction forms that no longer support broker-to-broker compensation offers.
In contrast, NAR’s guide for sellers highlights the practice of providing preemptive compensation to buyers’ agents, telling sellers it’s a way to market their homes and make their listings more attractive to buyers .
The guide states:
- You still have the option of offering compensation to your buyer’s agent. You might consider doing this as a way to market your home or make your listing more attractive to buyers.
- Your agent must clearly disclose to you and obtain your approval for any payment or offer payment made by the listing broker to another broker representing a buyer.
- This disclosure must be made to you in writing prior to any payment or agreement to pay another broker on behalf of the buyer, and the amount or rate of such payment must be specified.
- If you choose to approve a compensation offer, the way it happens changes.
- As a seller, you can still make an offer, but your agent can’t include it in the Multiple Listing Service (MLS) – the local marketplace used by buyers’ agents and listing agents to share information about properties for sale.
- Your agent can promote your listing through platforms other than the MLS, such as social media, flyers, and websites.
- As a seller, you can still make offers to buyers on the MLS (for example, discounts on buyer’s closing costs).
Neither guide mentions other ways in which a buyer’s agent can be paid other than through an offer made by the seller, nor the impact that these alternatives may have.
As the real estate industry undergoes significant changes after August 17, it remains to be seen which rule interpretations and practices will prevail, whether they will pass the scrutiny of antitrust regulators such as the U.S. Department of Justice, and how consumers will respond to such comparative information. observe.
NAR did not respond to multiple requests for comment for this article.
Send an email to Andrea V. Brambila.
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