The buyer commission field is here to stay for areas in the Northwest under the purview of the NWMLS (Northwest Multiple Listing Service).
A non-affiliate of the National Association of REALTORS® (NAR), NWMLS does business independently, owned instead by its member real estate firms, and is therefore able to opt out of the proposed settlement terms NAR has laid out.
While some industry executives have shared excitement around this pushback, others are wary it could leave the real estate practice open for further legal risk.
Details behind the decision
NWMLS President and CEO Justin Haag recently connected with RISMedia and shared details about the organization’s choice to forego eliminating the buyer agency compensation figure from its MLS listings.
Haag points to historical trends with the Department of Justice (DOJ), suggesting that the department has been a proponent of greater transparency for consumers regarding broker fees and making any offer of compensation public and readily available. That transparency, he said, helps to address steering concerns.
In fact, the company says it has already made several moves in that direction since 2019, first by eliminating the requirement that a seller offer compensation to the buyer’s broker. Then, “decoupling” broker compensation so any agreed-upon payment for the buyer broker is set and rendered by the seller, not the listing broker.
Additionally, the commission amount is clearly stated on the first page of the purchase and sale agreement and is open to negotiation by the buyer and buyer-broker. Also, earlier this year, the state of Washington—which makes up most of NWMLS’ coverage area—revised its “Agency Law” in order to require brokers to enter into written representation agreements for both buyers and sellers, instead of just sellers.
“All services agreements must be entered into at the outset of the parties’ relationship and comprehensively address broker compensation and the details of representation. NWMLS’ rules and forms, together with the revised Agency Law, provide for consumer-friendly brokerage relationships,” NWMLS wrote in a statement. “Sellers negotiate how much to compensate the listing firm and decide whether to offer to contribute toward the buyer’s broker compensation and the amount of any such offer. Buyers agree how much to pay their own brokers at the outset of their relationship and can then negotiate for the seller to help cover that cost as part of the purchase.”
Following NAR’s settlement rules would have the opposite effect for consumers, claims the NWMLS. The company states that NAR’s agreement duplicates many of the rules already in place within their organization, but attaches an added restriction that keeps sellers from making offers of compensation through the MLS and moving the information off-MLS where it would be difficult to find and not available to all buyers and brokers.
“Moving any offers of compensation off the MLS and into the shadows out of the view of buyers, as required by NAR’s proposed settlement agreement in Sitzer/Burnett, will create additional opportunities for steering that do not exist today and will likely exacerbate the risk of steering,” said Haag.
Industry feedback
As with much of the public feedback surrounding the lawsuit and proposed settlement, sentiment is mixed.
Haag says member opinion has been positive following the MLS’ board agreement to oppose NAR’s guidance—a decision made by 17 firm owners and managing brokers.
Keller Williams Easton, located within NWMLS’ service area in Washington, expressed excitement following the MLS’ opposition of the settlement guideline in question.
In a LinkedIn post, designated broker Genine Wood said she was available for agent questions after the exciting news that “the way commissions have always been stated in our listings will be stated just like before.”
Responding to a social media post about the news, founder of 180 Relocation Lindy Chapman said she didn’t realize NWMLS had initiated several representation and disclosure changes in 2019.
“(I) wish more in the industry had been willing to recognize the consumers’ frustration and the need to make changes to create greater transparency and evolve with today’s buyers and sellers rather than now dealing with the ambiguity created by the lawsuits and DOJ settlements,” she said.
In a Reddit thread dedicated to the topic, user “CanYouDigDeep” shared an opposing view, reflecting on the potential for further legal action as a result of pushback.
“These smaller MLSs just leave themselves open to the same lawsuit NAR settled by leaving the same rules in place and behaving the same way. So they might not change, but some opportunistic lawyer will come after them, get a settlement that makes them do so while pocketing the settlement as profit. They don’t have to follow NAR, but it’s probably best if they do.”
NWMLS says that rather than restricting consumer choice, it will continue to make sellers aware of their choices to offer no compensation, offer a specific amount, or ask that the buyer request compensation for the buyer broker in the buyer’s offer.
To do otherwise, the company says, invites deceptive practices like secret deals off-MLS, along with discrimination and unfair housing that especially targets already disadvantaged buyers.
