The Burnett case targeting buyer agent commissions hasn’t even wrapped up its first week of trial in Kansas City yet, but some people haven’t waited for the outcome to proactively make changes to so-called “cooperative compensation”—changes that are starting to seem inevitable.
The Real Estate Board of New York (REBNY), which oversees agents in the New York City area as a separate governing body from the National Association of REALTORS® (NAR), announced last week that it would begin decoupling commissions on Jan. 1 as part of a regular annual update to its policies, meaning seller agents will no longer compensate buyer agents.
“These amendments promote transparency and consumer confidence in the residential real estate transaction,” said Ninve James, REBNY’s SVP of residential brokerage services & products, in a statement provided to RISMedia. “They also provide for a more efficient RLS to help New York City brokers and agents do more business.”
REBNY’s version of the MLS, which it calls the Residential Listing Service, or RLS, “believes that ‘decoupling’ the buyside compensation represents the future of how residential real estate is transacted, and expect other listing services to follow this lead,” REBNY also wrote on its website.
For agents and brokers working in New York City, the new model will involve either the seller paying the buyer agent directly, or the buyer paying their own agent. The RLS will continue to allow offers of buyer compensation, with the express direction that the offer “originates” with the seller.
A person familiar with REBNY’s decision-making said there have already been multiple educational sessions focused on the changes attended by hundreds of agents and brokers. REBNY has also started a push on social media to make sure its members, and members of the public, are aware of the new rules.
This change is a more significant step than NAR-associated MLSs have so far chosen to take. As plaintiffs in the Burnett trial continue to hammer away at the standard method of buyer compensation, several MLSs have chosen to allow an offer of $0 in the buyer compensation field (NAR later blessed that change).
But both within the scope of the ongoing trial as well as beyond, there is a sense that regulators will not be satisfied with this kind of tweak. The Department of Justice intervened in the settlement agreement of a separate MLS back in September, saying explicitly that allowing offers of $0 “does little” to prevent anti-competitive behaviors.
Another person familiar with REBNY’s policies noted that there is another listing service that has already adopted these changes to buyer compensation—namely, Northwest Multiple Listing Service in Seattle. This person said that REBNY believes the changes make sense for any listing service, even apart from the current legal challenges, and they also align with other REBNY policies focused on transparency.
The person pointed specifically to Citysnap, REBNY’s consumer portal created with Homesnap, which has displayed buyer compensation offers to consumers since June 2022.
While many critics of the current structure have argued that buyers should compensate their own agents, REBNY’s model could potentially address some of these legal and practical criticisms of cooperative compensation.
In a “sample listing agreement compensation clause” provided with the changes, the first sentence makes clear that it is the seller who will be paying both agents, with separate lines to fill in for compensation. There is also a field for how much the seller agent would be paid if the buyer chooses to go unrepresented.
Additionally, a separate sample amendment was also provided for the seller to negotiate commission with a buyer agent—although a stipulation clarifies that the amount “may not be rescinded, withdrawn or reduced to any buyer and/or Buyer Brokerage Firm who notifies Listing Firm or Seller of their intention within the next 72 hours to submit an offer.”
On the surface, this would help facilitate the kind of negotiation on commissions that plaintiffs in the Burnett trial argue is not possible under the traditional structure. At the same time, the 72-hour rule would allow buyer agents to know what they are getting paid for their work, which has been a point of emphasis for NAR in the trial.
It is unclear whether a model like REBNY’s will catch on. The outcome of the Burnett trial will not directly affect MLSs—those associated with NAR, or any others—as they are not named defendants in the case. But any decision there could still have far-reaching indirect effects on how listing services are operated.