In my weekly newsletter, The Ketchup, and my weekly Inman column, The Download, I’ve had plenty to say about the National Association of Realtors commission lawsuit settlement and the way it has been implemented (or in some cases, not implemented).
As of Aug. 17, agents were required to have signed buyer agreements before acting on behalf of a buyer — including conducting home tours — and sharing of commission information via MLS is no longer allowed.
It’s this last crucial element of the settlement that seems to have thrown everyone for a loop. Once agents found out that they could no longer post the buyer commission on listings, the go-to response for many became finding workarounds. These arrived in the form of tech platforms, social media posts, phone calls to the listing agent, and more.
My Instagram feed right now is full of “buyer agent friendly” listings. My email inbox is full of PR pitches for “tech workarounds.” New potential clients are reaching out to me to get quotes for their new websites where they intend to post compensation information.
While the NAR settlement may seem restrictive, pursuing workarounds can lead to serious consequences for agents and damage the integrity of the real estate profession. What’s more, trying to “work around” the rules can undermine your ability to do the best possible job for your client, whether it’s a buyer or seller.
Overview of the main changes and requirements of the NAR settlement
ICYMI, here’s an FAQ that explains the settlement. Long story short, the main rule changes (courtesy of NAR) are:
Compensation offers moved off MLS: NAR has agreed to put in place a new rule prohibiting offers of compensation on an MLS. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).
Written agreements for MLS Participants acting for buyers: While NAR has been advocating for the use of written agreements for years, in this settlement we have agreed to require MLS Participants working with buyers to enter into written agreements with their buyers before touring a home.
The point of these two changes is to create transparency and fairness in real estate transactions.
Many agents have said that it does the opposite by taking compensation offline and making it part of the negotiation process. If that’s how you feel, that’s your prerogative, but it does nothing to change the requirements.
Many agents say that these lawsuits were just a cash grab by both consumers and attorneys. If that’s how you feel, that’s your prerogative, but it does nothing to change the requirements.
Many agents say that these rule changes will make it more difficult for them to stay in business. If that’s how you feel, that’s your prerogative, but it does nothing to change the requirements.
The risks of pursuing workarounds
The industry is still under scrutiny by consumer watchdogs and the Department of Justice and the implementation of the new rules has been anything but smooth. Agents, team leaders and brokers who spend time trying to sidestep the settlement terms instead of finding ways to work with it may find themselves in the crosshairs of upcoming sanctions or lawsuits as well.
In addition, looking for a way around the settlement terms may lead to:
Violations of the Realtor Code of Ethics, which could result in penalties or the loss of your license
Loss of trust when trying to circumvent the rules damages your reputation with client, colleagues and the community
Loss of credibility which can impact future leadership and business opportunities.
The importance of compliance and integrity
I was chatting with one of my favorite clients just prior to Aug. 17. She said that their team had concluded that it was not in their sellers’ best interest to disclose offers of compensation. “Make an offer and our seller will respond to that offer,” is their basic response to buyer’s agents who reach out to find out what their potential payday will be.
I was struck by the fact that, true to her branding and marketing, that team leader cares more for her clients’ wellbeing than anything else. That’s the point of the settlement changes, and it’s the place we need to come from as an industry. If you’re more worried about how to get around the rules than how they’re impacting your client’s bottom line, your focus is probably in the wrong place.
Again, I understand your feelings. I understand your fears. However, those feelings and fears don’t change the facts you’re working with.
Over the past nearly two years since ChatGPT came into common use, I’ve seen marketing professionals and content creators lose everything. I’ve seen full-time writers go from sustainable self-employment to literally sending out zero invoices for months on end.
The landscape of journalism has experienced similar disruption going back years. Declining revenues, shrinking newsrooms, and the relentless rise of digital media have led to traditional print publications seeing their circulation numbers plummet as more readers turn to online sources for news, often at little or no cost. This shift has led to a dramatic reduction in advertising revenue, forcing many outlets to downsize or shut down entirely.
The online proliferation of misinformation and the challenge of maintaining journalistic integrity in a fast-paced digital world have further complicated the landscape. Journalists are now tasked with doing more with less, often under intense pressure to produce content quickly, while the economic model that sustained quality reporting continues to erode, threatening the very foundation of a free and informed society.
What I’m saying is that, in the face of what feels like an existential threat to your livelihood, I understand that it is tempting to cling to the old model or listen to the promises of workaround shills who promise you that they can make it all go back to “normal.” But you and I know that never works. Those who cling to the old ways always, always get bypassed by those who are willing to figure out how to adapt and move forward.
Upholding professional standards under the new paradigm means:
Committing to ethical practices and complying with the settlement terms in good faith
Fostering trust and transparency in real estate transactions, which is good for clients and the industry as a whole
Leading by example and demonstrating the importance of integrity to your mission and company values
Attracting clients who value transparency and ethical practices
Educating clients about the changes and how they benefit from a new, more transparent system
Building trust and credibility that strengthens your brand and your client relationships.
This isn’t meant to be a sermon. You’ll do what you want to do. But we’ve lived through the existential panics of the internet, the public MLS, the mortgage crisis, the rise (and fall) of the iBuyer. Every time, the best thing to do was to move forward, adapt, and stay client-focused. No surprise: that’s still the best thing to do.
10 ways to get with the new program
Here are 10 key actions real estate agents should take to comply with and move forward under the terms of the NAR settlement:
Understand the settlement terms: Thoroughly review and understand the specific terms and changes resulting from the NAR settlement to ensure full compliance.
Update marketing and advertising practices: Ensure that all marketing materials, including websites, property descriptions, advertisements, and buyer and seller consultation materials, accurately reflect the new commission information and any other relevant changes.
Educate clients about commission transparency: Clearly explain the new commission transparency requirements to clients, helping them understand how commissions are structured and disclosed.
Revise contracts and agreements: Update all contracts, listing agreements, and buyer’s agreements to align with the new requirements, including any disclosures mandated by the settlement.
Participate in training: Engage in any training or continuing education programs offered by NAR or other industry organizations to stay current on compliance requirements.
Communicate with your brokerage: Ask questions and define best practices in cooperation with your managing broker. Work together to implement necessary changes across the organization.
Avoid workarounds: Resist the temptation to seek loopholes or workarounds that could violate the spirit or letter of the settlement terms, as this could result in legal or ethical repercussions.
Enhance client communication: Improve your communication strategies to ensure clients are fully informed about their rights, the transaction process, and any changes affecting their experience.
Maintain accurate records: Keep detailed records of all transactions, including how commissions are disclosed and negotiated, to protect yourself in the event of audits or disputes.
Promote ethical practices: Uphold and promote the highest ethical standards in your real estate practices, reinforcing trust and transparency in all client interactions.
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