NextHome CEO Sounds Alarm on Commission Workarounds: Lawsuits Loom for Brokers

Photo byTaylor Anderson for Inman Intel

As the real estate industry braces for a major shift, NextHome CEO James Dwiggins has issued a stern warning to brokerages and agents: Beware of using new websites that promote offers of compensation for buyer brokers post-August 17, or you might find yourselves entangled in legal battles.

In the wake of the National Association of Realtors (NAR) settlement, which mandates the removal of compensation offers from multiple listing services (MLS), Dwiggins is drawing a clear line in the sand. According to the settlement, starting August 17, listing brokers will no longer be able to advertise compensation offers through MLS platforms, but the question remains—where can these offers be communicated?

Dwiggins argues that a wave of emerging websites designed to navigate around this restriction are courting legal peril. “If you or your agents are using these portals to share commissions after August 17th, be prepared to face lawsuits,” he cautioned. His concerns hinge on the stipulations of the settlement agreement, which demand compliance to avoid further legal repercussions.

This cautionary note is underscored by a growing number of upstart companies that have sprung up to fill the void left by the MLS changes. These platforms, which range from newsletters to proprietary websites, aim to provide alternative channels for advertising compensation. Keller Williams, for instance, has informed its agents that such offers can be marketed outside the MLS, including through various digital and traditional media.

However, Dwiggins strongly disputes this interpretation. He points to settlement clause H.58.v, which he believes will attract scrutiny from attorneys looking to enforce compliance. “Plaintiffs’ lawyers are already tracking these websites and noting agents who use them. They’ll be compiling a list of defendants to sue, which will include brokerages,” he said.

Michael Ketchmark, the lead plaintiff attorney, echoes Dwiggins' concerns. “Brokers and agents must not attempt to skirt the law,” Ketchmark stated. “We’re committed to holding those who violate the settlement accountable.”

Adding another layer of oversight, the Department of Justice (DOJ) has expressed its stance on the matter. In a recent court hearing, DOJ attorney Jessica Leal asserted that offers of compensation should not be made anywhere, including on any alternative platforms.

Among those testing the boundaries of the new regulations are companies like Listing Split and Nesthook. While Listing Split’s creator, Steven Hattan, argues that sellers need options like finders fees, Nesthook’s president, Ryan Kelley, remains cautiously optimistic about their platform’s compliance.

As the industry adapts to these sweeping changes, Dwiggins’ advice is clear: Proceed with caution. The legal landscape is evolving, and the consequences for non-compliance could be significant. The message for real estate professionals is unequivocal—adapt carefully or risk facing legal challenges in the near future.