NAR Settlement Sparks Confusion as New Commission Rules Loom

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As the clock ticks down to the August 17 deadline for new commission regulations, confusion reigns among real estate professionals nationwide. At Inman Connect Las Vegas, a series of panel discussions exposed a growing chasm between the National Association of Realtors' (NAR) proposed changes and the reality on the ground.

Conflicting Interpretations and Widespread Uncertainty

The anticipated shift in commission structures has left many in the real estate industry scrambling for clarity. The core of the confusion lies in differing interpretations of NAR's policies versus the U.S. Department of Justice's (DOJ) expectations. While NAR has promoted practices that still include cooperative compensation—encouraging listing brokers to advertise compensation offers and advising buyer agents to contact listing agents—the DOJ is pushing for a complete overhaul. Their stance advocates for eliminating compensation offers from listing brokers altogether, severing any influence on buyer agent pay (NAR, 2024; DOJ, 2024).

During the panel discussions, concerns about these discrepancies were voiced by realtors, brokers, and MLS executives. One Indiana realtor expressed frustration over conflicting advice, questioning whether their practices were misguided. They highlighted that the practice of contacting listing agents before showings to inquire about compensation details might be premature and counterproductive (ICLV, 2024).

A Push for Transparency and Consumer-Centric Practices

Panelists, including Cassie Walker Johnson of Windermere Real Estate, Kendall Bonner of eXp Realty, and Ed Zorn of CRMLS, uniformly disapproved of practices like calling listing agents prior to showings. Johnson warned that such practices might lead to agent steering, while Bonner criticized the inefficiency of this approach. Zorn emphasized a shift towards a "consumer-centric model" where buyer agents negotiate their compensation directly with buyers, reflecting a fundamental shift away from the traditional commission-sharing system (ICLV, 2024).

James Dwiggins, CEO of NextHome, reiterated the simplicity of the new model: "Seller’s willing to entertain any and all requests, put it in your offer. Buyer’s agent, put whatever you want in the offer, and it becomes a negotiation." This approach aims to streamline negotiations and align with DOJ guidelines, making the process more transparent and straightforward (ICLV, 2024).

Creative Compliance Strategies and Industry Adaptations

As the industry grapples with the new rules, some MLSs are adopting creative compliance measures. Sam DeBord's panel highlighted anecdotal evidence of agents trying unconventional methods to indicate commission offers, such as embedding commission details in listing photos or using coded language. DeBord advised against such practices, emphasizing the need for clear and straightforward adherence to new regulations (ICLV, 2024).

Annie Ives, CEO of The MLS, reported that her organization is using compliance software to monitor listings for rule violations, while refraining from imposing fines initially. "Our model is not to collect money on fines," Ives explained. "Our model is to keep the data accurate and to be friendly to the agent" (The MLS, 2024).

Looking Ahead

The real estate industry faces a pivotal moment as it adapts to these impending changes. Stakeholders must navigate a complex landscape of new regulations while striving to maintain transparency and efficiency. The evolving scenario underscores the importance of clear communication and adaptability as the industry moves towards a new era of commission structures.