‘Ahead of the curve’: Maryland realtors not as affected by NAR settlement

A $418 million settlement by the National Association of Realtors has brought forth changes to traditional practices of how broker commissions are paid. Maryland realtors, however, aren’t having to adjust as much as their counterparts.

The settlement was reached in May after class-action lawsuits by home sellers alleged antitrust violations stemming from requirements placed on listing brokers. The NAR denied any wrongdoing in connection to those claims.

In the wake of the settlement, two key changes from the NAR went into effect in August. First, homebuyers must sign a written agreement with an agent before that agent provides any services to the buyer. Second, offers of compensation from a seller to a buyer’s agent may no longer be shared on multiple listing services, which are marketplaces for realtors.

The Mid-Shore Board of Realtors’ stance on the changes is that there is now an increased sense of transparency for homebuyers and sellers.

“The lawsuit was really about transparency and how (buyer’s agents are) getting paid,” Shelby Roney, board president, said. “And it kind of makes you reiterate why you should be paid.”

Roney, a realtor for Benson & Mangold Real Estate, said Maryland won’t be feeling that first change as much as other states. She pointed out that Maryland has had buyer’s agency since 1999, noting a law enacted in 2016 that required written buyer agency agreements.

Maryland realtors representing potential buyers are used to signing those written agreements, detailing to the buyer what services the agent will provide and at what cost. The national rule will reinforce that routine and force buyers and agents to sign agreements that are even clearer in outlining how much commission will cost for the agent.

“We’ve always been very proactive and ahead of the game, ahead of the curve,” Roney said of Maryland.

Meanwhile, other states that did not have clear buyer’s agency law had to quickly adjust to the new requirements.

“They were already freaking out before March,” Roney said of other states. “When I was in California, there were agents from all over the country, and most of them did not have anything resembling buyer’s agency. And it was very concerning for them, that they were nowhere prepared. How to explain it, how to even enforce it, how to word it, their state laws were going to have to change.”

The increased focus on explicit buyer’s agency agreements only furthers the advantages of a buyer paying their own agent rather than relying on a sub-agent during the buying process, Roney said.

Sub-agents are agents unaffiliated from the listing real estate broker but paid by the seller or seller’s agent to assist prospective buyers. They do not work for the same company as the seller’s agent.

Sub-agency is still alive in the state, according to Roney. However, sub-agents are only able to provide so much help to buyers since their loyalties are only to the seller. For prospective buyers, having a dedicated buyer’s agent is beneficial.

“It’s the biggest investment that you’re going to make in your lifetime,” she said of buying a home. Roney did note that many first-time homebuyers have benefitted from the seller paying the commission for an agent.

The option for a seller to offer compensation to a buyer’s agent is still available, Roney said, though not through multiple listing service databases. Now, it’ll be clear to buyers before any agreement is signed.

The benefits of having a buyer’s agent are significant for buyers, especially when housing prices rise, the Mid-Shore Board of Realtors says. It’ll also help realtors understand their value and be upfront about what “tier” of services they will offer depending on the compensation rate.

“You have to know your value and you have to explain your value, and you also have to decide what your tiers (of service) are,” Roney said. “ … Where do you want me to work for you?”