Real Estate Shake-Up: Ed Zorn Explains New Commission Rules and Buyer Agreements

Photo byTed Irvine | Inman

In a pivotal moment for the real estate industry, Edward Zorn, a prominent broker and attorney, is set to shed light on upcoming changes that could reshape the market. Zorn, who serves as the vice president and general counsel for the California Regional MLS, will address these shifts at Inman Connect Las Vegas later this month.

At the heart of the change is a nationwide settlement between the National Association of Realtors (NAR) and plaintiffs involved in antitrust lawsuits. The settlement introduces significant adjustments, effective August 17, including the prohibition of compensation offers to buyer brokers through multiple listing services (MLS) and a mandate for brokers to secure contracts with buyers before showing homes.

Zorn, known for his deep insights into real estate law, shared his thoughts in a two-part interview. In Part 1, he discussed how these new regulations will alter the responsibilities of listing agents and the implications for seller concessions and buyer agreements. He believes that while seller concessions might become more prevalent in entry-level markets, higher-priced homes may not see as many offers of compensation. Zorn emphasized that concessions are strategic tools designed to accelerate sales and assist specific buyer segments.

As the industry braces for these changes, Zorn expressed concerns about how the elimination of commission-sharing fields might impact first-time homebuyers and those reliant on FHA loans. He advocates for maintaining some level of concessions to support these buyers and cautions against a one-size-fits-all approach to compensation and concessions.

In Part 2 of the interview, Zorn delves into the nuances of seller concessions, potential effects on steering practices, and the evolving role of buyer agents. He highlights that buyer agents will need to adapt by obtaining representation agreements and clearly articulating their value to clients. With the shift in how buyer fees will be negotiated, agents must sharpen their skills in valuation and negotiation.

Zorn underscores that the key to avoiding antitrust issues lies in eliminating practices that facilitate commission-sharing. He calls for a focus on transparent and straightforward commission discussions between listing agents and sellers, without intermediaries.

As the real estate landscape transforms, Zorn’s insights offer a crucial roadmap for navigating these changes, ensuring that both agents and buyers are well-prepared for the new era in real estate transactions.