On today’s podcast, we’ll update you regarding the effects of the commission sharing lawsuit settlements.
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What changes are already being made by brokers, agents, and state and local associations?
What should you do now to get into or stay in momentum for the remainder of this year? Let’s take a closer look at what’s been happening while you’ve been out in the wilds of real estate!
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PART ONE
1. What are the policy changes resulting from the commission lawsuit settlements?
a) Compensation offers in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives are now either eliminated or prohibited.
b) MLS is required to eliminate broker compensation fields in the MLS.
c) MLSs are required NOT to create, facilitate, or support any non-MLS mechanisms for participants, subscribers, or sellers to make offers of compensation to buyer brokers.
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(This includes providing listing information to an internet aggregator’s website, for example)
d) MLS participants must not, and MLSs must not enable the ability to filter out or restrict listings based on the level of compensation offered. No searching for the best commissions!
e) Compensation disclosures are required for sellers as well as for prospective sellers and buyers.
f) HERE’s the IMPORTANT ONE: MLS participants working with a buyer must have a WRITTEN AGREEMENT with the buyer before touring a property.
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2. What does ‘Working with a buyer’ actually mean? This depends on the situation. For example:
According to NAR’s FAQs on this, simply marketing your services to a buyer or speaking to a buyer on the seller’s behalf (let’s say you have a listing and a buyer comes to your open house) does NOT mean that you are ‘working with a buyer’ based on the settlement agreement.
When are you considered to be ‘working with a buyer’?
When you provide actual services to a buyer, such as searching for homes for them, setting up showings, negotiating, providing CMAs, or presenting offers.
3. What about Dual Agency? NAR has stated that “Agency is a matter of state law, including how the dual agency is defined, what disclosures are required, and if it’s deemed lawful for consumers in that state.”
Dual Agency is not created when a listing broker simply answers a buyer’s questions or shows the home to an unrepresented buyer.
This is a sticky topic, so we defer to your state law on this one! It’s also worth noting that you may be in a state that allows Dual Agency, but your BROKER or team may disallow dual agency. Adjust accordingly and keep your facts straight on this topic!
4. What does ‘Touring a home’ mean?
Not to get too technical, but let’s just remember that NAR defines’ a home’ as a residential property with up to 4 units. So, this applies to those of you showing duplexes and small multi-families to investors.
“Touring” is when the buyer and the MLS agent ENTER the house. It’s pretty simple. The FAQs also state that this includes virtual tours.
5. What about this requirement of a ‘Written Agreement’?
Myth: The requirement mandates an AGENCY agreement. According to NAR, that is not actually the case! It just has to be an AGREEMENT. “MLS participants and buyers will still be able to enter into ANY type of professional relationship permitted by the state law.”
Fact: NAR Policy does NOT dictate any of the following:
–What type of relationship does the professional have with the potential buyer? This could be agency, non-agency, subagency, transactional, or customer.
–The TERM of the agreement. (It could be a one-time touring agreement, a one-day, one-week, month, or specific to a house agreement. It could even be just for a certain neighborhood or zip code.
–Services provided. Things like how many showings, writing and presenting offers, transaction coordination, negotiation, etc.
–COMPENSATION: This can range from $0 to a flat fee to a percentage or even an hourly rate.
