As the real estate industry prepares for changes to written agreements and compensation negotiations, the National Association of Realtors has begun to clarify what is to come…well, sorta clarify. NAR Chief Legal Officer Katie Johnson e-mailed members this week, pointing to updates to NAR’s facts.realtor site and an updated FAQ page, with a host of material addressing buyer representation agreements. The biggest question of when said agreements go into effect, however, remains unanswered.
“NAR staff will work with the MLS advisory board to implement the new rules relating to the agreed upon practice changes. When the new rules roll out—and on an ongoing basis—NAR will continue to provide guidance and training in line with industry best practice to help members adapt to the changes to come,” the page reads. No specific date, however, is provided.
“We will be releasing additional guidance about the timing of the practice changes required under the settlement in the coming days,” Johnson added in the members e-mail. Today, NAR announced practice changes required under the NAR Settlement Agreement will take effect in August, not July as originally stated.
NAR did clarify what exactly “working with a buyer” means, noting that the language is intended to distinguish MLS participants who provide brokerage services to a buyer from MLS participants who simply market their services or just talk to a buyer.
“If the MLS participant is working only as an agent or subagent of the seller, then the participant is not “working with the buyer.” In that scenario, an agreement is not required because the participant is performing work for the seller and not the buyer,” the FAQs reads. “Authorized dual agents, on the other hand, work with the buyer (and the seller).”
The page also notes that MLS participants and buyers will still be able to enter into any type of professional relationship permitted by state law. NAR policy does not dictate:
- What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).
- The term of the agreement (e.g., one day, one month, one house, one zip code).
- The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).
- The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate).
When it comes to compensation, NAR notes that under the settlement, any compensation agreed to must be objectively ascertainable and not open-ended. For example, the range cannot be “buyer broker compensation shall be whatever amount the seller is offering to the buyer.”
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