Today, I want to address a significant development in the real estate industry that you likely heard about, but has left some Realtors wondering, what is next? This is regarding the National Association of Realtors (NAR) lawsuit. This update is especially crucial for our agents, but it’s also for the general public to stay informed about the ongoing changes in our industry.

As you may already be aware, the NAR was found liable in a lawsuit that will lead to rule changes in the way MLS commissions are handled. This lawsuit has been a hot topic of discussion within our industry, and understandably, it has raised questions and concerns among real estate professionals and clients alike. The lawsuit and jury findings indicate that MLS’s will no longer be able to offer buyer agents commissions on listings, and that the buyer commission cannot be pre-negotiated through the seller. That does not mean buyer agents are not paid – it just means the buyer agent commission has to be negotiated (much like commercial agents). However, as of today, we have no changes. There is no court order or MLS rule changes regarding how the commission part of a listing is handled on the MLS. So, for now:

1. Wait and see: Changes in industry regulations, especially through legal processes, can be complex and time-consuming. Be on the look out for guidance from your MLS (Multiple Listing Service), the court, or me before making any adjustments to commission practices. If you haven’t already, buyer agents, before showing any property need to get into the habit of obtaining Buyer Broker Agreements. This establishes your entitlement to a commission before working for the client (showing property for example). We will be talking more about this. This is also not new, but when obtaining a listing, advise your clients that the offered buyer agent commission is negotiable. One relatively new adjustment is the offered commission can be zero at least per MLS policy. If you have questions, you can reach out to me.
2. Potential for Appeal: It’s worth noting that legal matters often involve appeals and counter-arguments. In this case, an appeal is expected, which could influence the final outcome of the lawsuit. We must be prepared for the possibility that the initial ruling may not be the final word on this matter. Unless / until there is an order from the court enjoining any kind of rule or conduct, then we proceed as usual.
3. Settlement Possibility: Lawsuits of this nature sometimes result in settlements where both parties agree to specific rule changes or compromises. While we await further developments, it’s essential to stay open to the potential for negotiated resolutions that may affect our industry.
4. Obtain a Buyer Broker Representation Agreement: It is worth repeating: buyer agents, obtain a buyer broker agreement before showing property! If you are representing any client, you cannot and will not be compensated until you obtain a written agreement establishing your right to be be paid. This really should not be a change for agents, but unfortunately, the MLS has made Realtors in residential sales lax in this regard – agents have become lazy because they knew if they showed a property, they were likely (not certain) to get a commission because they would write the offer (which established the commission) and knew what the commission would be up front through the MLS. Now our rules are changing! It was always the best practice to get a buyer broker representation agreement anyways because an unsigned prospective client could still have hired another agent, leaving you at best with a “procuring cause” argument which often is weak anyways. Get the Buyer Broker Representation Agreement signed early on!

I will update you when we have required changes due to any rule changes or court orders.

If you have any questions, please let me know!

Sincerely,

Chuck @ Sold2000.com Independent Realtors