As you are aware, there has been a flurry of commission related lawsuits over the last couple of years. The resulting settlement proposal now in place will mean big changes in the way we negotiate commissions and how we disseminate that information.
The following is a summary of the specific changes that will go into effect on August 17. As much of the onus for practical implementation and enforcement of the new requirements falls on Multiple Listing Services, we recommend that you pay particular attention to any communication from your Board or MLS about how to function in this new business environment.
Specific changes include:
- Eliminate and prohibit any requirement of offers of compensation in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives. Essentially, the buyer agent compensation fields will disappear from MLS input forms and data. The prohibition also applies to any ‘workaround’ for non-MLS property databases, including Internet aggregators like Zillow. To discover if compensation is being offered by the listing broker or seller to buyer brokers, a call will have to be made.
- Reinforce that MLS participants must not filter or restrict MLS listings presented to clients by level of compensation.
- Require compensation disclosures to sellers, prospective sellers, and buyers.
- Require MLS participants working with a buyer to enter into a written agreement with the buyer prior to touring a home. This requirement is particularly challenging because a written agreement must be in place before showing the first home to a buyer. Again, seek clarification and implementation strategies from your Board or MLS, but it would seem that some kind of one-time-showing agreement would have to be executed for each home until a full buyer consultation and buyer broker agreement is signed.
It is possible, after an adjustment period, the changes will mean that sellers will compensate their listing agents and buyers will compensate their own agents. It will mean that we will have to earn the right to represent buyers by making a clear case for the value we bring to a transaction(the Buyer Consultation), and the reasonableness of our compensation proposal.
Bear in mind the agreement does not prohibit a seller from offering compensation to a buyer’s agent. It just prohibits the publication or advertisement of that information. However, we are already seeing savvy sellers balking at the high commissions that have been offered to buyers’ agents in the past. Fortunately, Help-U-Sell brokers have been operating for almost 50 years on a reasonable set fee basis, so the changes will probably be less painful for us than some of our competitors.
To learn more, come to Power Hour tomorrow, June 12 at 9am Pacific Time, Noon Eastern. Open the Zoom App OR go to www.zoom.us, click ‘Join a Meeting’ and enter Meeting ID: 963 5169 9809 Passcode: HUS123
