Starting Aug. 17, broker commissions will no longer appear in MLSs connected to the National Association of REALTORS® (NAR), and buyer’s brokers will need signed agreements with clients before touring any homes.
While the Northwest Multiple Listing Services (NWMLS) does not operate under NAR, the association’s rule changes largely duplicate changes which NWMLS has already implemented, NWMLS President and CEO Justin Haas said. The NWMLS will not adopt what it describes as the settlement’s call to eliminate compensation transparency for buyers. According to Haas, this will restrain sellers’ choice by prohibiting sellers from making offers of compensation through the MLS.
Listings in NWMLS’s system may continue to include any seller offer of compensation to the buyer broker. Any offer of compensation, meanwhile, will remain displayed in the Matrix MLS system, the OneHome consumer portal, the NWMLS Mobile App and HomeSpotter, and provided to vendors and members to display to consumers on IDX websites.
That said, NWMLS is revising some of its forms to clarify and simplify compensation-related provisions and to ensure that Realtor members can comply with the broker practice changes outlined in the settlement agreement.
The changes spurred by NAR’s commissions lawsuit settlement may seem straightforward, but there are some nuances that are important to know for buyer’s brokers, seller’s brokers or clients trying to buy or sell a home.
For seller’s broker working under an MLS affiliated with NAR:
Under NAR’s code of ethics, Realtors must work with their consumers to make sure they understand their options. It’s up to the broker how and whether to discuss with a seller the pros and cons of offering a commission to a buyer’s broker. For example, offering a commission to the buyer’s broker may help with the marketing of a property and drive-up demand.
Brokers on each side of a transaction can discuss commissions in person, over the phone, via text, through social media or any other form of communication that is not on the MLS or through a third-party seeking to replicate the MLS.
For buyer’s broker working under an MLS affiliated with NAR:
Real estate professionals using the MLS must have a written and signed agreement with buyer clients before those professionals show a potential buyer a home. This includes when a broker enters a home to provide a live virtual tour of a home for a buyer who is not present at the property.
A NAR spokesperson said prerecorded videos do not count as a tour. However, if a buyer views a property without the broker present, but the broker facilitated that visit, then it does count as a tour.
The agreement must specify the amount the buyer is willing to pay the professional. The compensation must be a dollar amount or percentage of the total transaction. And the buyer’s broker cannot be paid more compensation than the buyer is willing to pay.
If you’re a homebuyer or seller:
One of the biggest misconceptions about the NAR settlement is that it will change how much clients will pay for broker representation. Realtor commissions have always been negotiable, and they will remain negotiable starting Aug. 17.
Homebuyers and sellers have always had the ability to reach their own agreements with brokers on commissions, using a flat fee or percentage. It’s up to the individual consumer to decide what they think is a fair price for the services of a broker and assess the value in working with a real estate professional.
There are roughly 3 million licensed real estate brokers in the U.S., and NAR has about 1.5 million members, meaning homebuyers and sellers have options for representation. And clients, as always, have the option to do their own legwork and buy or sell without a broker.
Numerous studies show clients who work with brokers are generally happier with their homes and negotiate better terms on their transactions, but it’s entirely up to those clients whether to go that route.
More detailed information about NAR’s settlement and the new rules and regulations are available in this fact sheet.
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