Talking Through Real Estate Commissions and Lawsuits

There’s a good chance that what I write today will be outdated tomorrow. What follows is a general understanding of where we are near the end of June 2024 in the real estate commissions world.

What have you heard about the Realtor/NAR/DOJ/commission lawsuits?

What questions do you have? How will Charlottesville real estate practices change?I’m having these conversations every day, and learning every single day.

At this stage of the always-evolving lawsuits, a few structural things that are changing:

  • Forms are changing – buyer broker agreements, listing agreements,
  • Commissions offered via the MLS – the compensation of the vaunted “cooperation & compensation” aspect of the MLS – are gone.
  • Timeline for implementation. Some things have changed, some change next month, some things change in November, and likely September and October, too.
  • How buyer agents get compensated is changing.
  • How sellers offer – or don’t offer – compensation for buyers agents is changing

What does this mean for real estate consumers?

  • How you bought or sold your last home, if that was 18 months ago or 18 years ago, is different than you remember.
  • The agent you hire *must* be able to explain these changes to you, in a way that you understand and feel comfortable with.
  • The timeline when you hire your buyer agent may be longer — you recognize the need for someone to help you, guide you, explain the process, the area, the market, the things that are coming, that are not coming, you know that you don’t know all of the questions you need to ask (should you get a survey?), and you understand that you’re hiring someone to represent you and your best interests.
  • The timeline when you hire your buyer agent may be shorter – you have clearly identified what you need and want, you understand your particular micro-market, you have the connections to assemble the right team to represent you, you have asked ChatGPT, your peers, your family all the questions you know you need to ask, and you feel comfortable moving forward. (I think I just started an argument also for why your hiring timeline should be longer)

And all of this is ok. Really.

Change is normal. Change is good.

What will the future look like? Anyone who answers this with definitive clarity is lying to you or selling you something. I don’t know what the future will look like, and I know that I will continue to learn, ask questions, practice, and surround myself with fellow professionals all practicing our craft.

 

Borrowing a post from James Dwiggins in LinkedIn, because it’s really good. It’s directed at the real estate industry, and I think it’s useful for real estate consumers to start to understand what we are understanding.


“1.) Listing agents – just state that your seller is willing to entertain any and all requests for offers of compensation or concessions and to put it in the purchase agreement. If a buyers agent calls you and asks if the seller is willing to offer compensation or concessions – just repeat the following: “our seller is willing to entertain any and all requests for offers of compensation or concessions and to put it in the purchase agreement”. The end!

2.) Buyers agents – just put your request in the purchase agreement. It can be that the seller pays your compensation, or you can request a concession towards buyers closing costs – or both! The buyer then can pay your commission. Hell… you can ask the seller to include the helicopter they own if you want. It’s a negotiation – this is literally what we do everyday.
All the rest of this workaround stuff is going to end up in more lawsuits. The DOJ does not want this and while I disagree with almost everything the DOJ is doing, we need to be skating to where the puck is going – not where it is.

Questions? Want to grab coffee or a beer and talk this through? I’d welcome the conversation and the practice!

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    And from the justifably-much-maligned, but still useful NAR

    Ahead of the August 17 implementation of NAR’s practice changes, we wanted to provide a few reminders of actions that are required to obtain a release of liability and protect your organization from claims related to broker commissions:

    • We recommend all MLSs implement practice changes by August 17. REALTOR® MLSs (those owned exclusively by one or more REALTOR® Member Boards) must implement the changes by this date to remain in compliance with NAR policy.
    • Offers of compensation are prohibited on MLSs. Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.
    • Agents working with a buyer must enter into a written agreement before touring a home. Ahead of August 17, NAR encourages all members to address form changes and prepare to educate real estate professionals and consumers about revised forms.

    NAR policy does not dictate terms of buyer agreements, but NAR has created resources to assist with implementation of the settlement terms—such as tips on clarity and emphasizing consumer choice—including our “Written Buyer Agreements 101” resource, available here.

    The practice changes are detailed here, and clarifying information is available in our FAQ on facts.realtor.

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