Above, John Clidy, Wendi Harrelson, Mark Willis and Jason Abrams
The National Association of REALTORS® (NAR) has, as part of a settlement in class-action lawsuits centering on buyer-broker commission structures, agreed to rule changes that take effect this coming August. On Monday, June 10, 2024, leadership at brokerage franchise Keller Williams held a one-hour virtual town hall, as panelists answered questions from Keller Williams agents and clarified how daily business will be changing in the real estate space.
The crux of these changes, at least when it comes to REALTORS®’ day-to-day business, is that agents must use buyer representation agreements prior to showing homes. (Zillow has released a boilerplate “touring agreement” for buyer agents to use with client prospects.)
The overall mood of the town hall was a calming one, with panelists arguing that these changes are anything but apocalyptic. (Mark Willis—CEO of Keller Williams—paraphrased President Franklin D. Roosevelt, proclaiming there’s “nothing to fear except for fear.”)
The NAR settlement has not been finalized, but rule changes are scheduled to go into effect on August 17, months before a judge will hold a final hearing to approve the agreement in late November.
Participating on the panel was Willis; Wendi Harrelson, president of KWRI-owned regions; John Clidy, vice president of growth, KWRI; and Jason Abrams, head of industry and learning.
After defining the parameters of the appeal, and making it clear for listeners that things are not going back to the way they were, the panelists explained how new NAR rules will work in practice. Though targeted at Keller Williams agents, the remarks include useful information for any agent.
“(Agents) must include a conspicuous statement that broker fees and commissions are not set by law and are fully negotiable,” said Abrams—as panelists returned to the idea that contract/representation language must become more conspicuous to buyer clients several times throughout the town hall.
After elaborating on how buyer representation agreements will be crafted at the local level (indeed, there has been controversy over whether the Zillow agreement complies with Virginia state law), the panelists answered questions about how much information agents can and should disclose.
“Listings (on MLSs) cannot have any information about whether a buyer agent commission is being offered,” said Clidy, responding to whether agents can mention in the remarks section of the MLS listing that the seller is not offering a buyer agent commission offer.
Addressing whether agents can bypass these changes by listing offers of cooperative compensation on their brokerages’ website, Willis explained that is not compliant with new NAR rules and that such website listings still cannot have cooperative compensation offers.
Likewise, Abrams specified that buyer/seller representation agreements entered into before August 17 might have to be modified if they violate the new rules—for instance, if a seller agreement includes references to or intent to make an offer of compensation on the MLS. This, as Abrams noted, is also to protect the agent, as if they fail to alter the agreement, they will be in the double bind of violating rules or abiding by the terms of the agreement.
“If you haven’t read your form lately, go read it,” Abrams said. “If you have questions, pick up the phone and call your MLS…(asking them to explain) how they’re going to be enforcing new rules seems like a reasonable request.”
“Listing agents must, here’s that word again, conspicuously disclose in writing and obtain a seller’s authority for any payments or offer of payment a seller’s agent will make to the buyer’s agent,” said Harrelson. “This cannot be changed after the agreement is signed.”
However, as the panelists noted, if a seller wants to use cooperative compensation, agents can still advertise on other channels such as TV, billboards, etc.
“Cooperative compensation has not been outlawed—what’s changed is I can’t market it on the MLS,” said Abrams.
“The seller can still offer compensation to the buyer,” added Harrelson.
“Commissions have always been negotiable, and I think the best agents have always explained this to buyers and sellers,” said Willis. “All we have to do is conspicuously disclose it in writing. So this is really not anything to overreact to.”
June 18, 2024 is the deadline for MLSs to opt into NAR’s new policies.
Watch a recording of the Keller Williams Town Hall here.
