How Do We DO Real Estate Now?

You've seen headlines and are scratching your head. What do the changes mean from THAT lawsuit? I'm here to explain the changes to make this crystal clear. There is no cheating - adding compensation information in a specific place on the MLS. There is no getting around reviewing and completing a Buyer Broker Form. So just don't do it! Read on for a copy of my blog.

New Rules - The National Association of REALTORS? Lawsuit

By now, you may have read or heard about the National Association of REALTORS?(NAR)? lawsuit in Kansas City, Missouri wherein NAR lost and millions have been paid to settle as a result.? ?In general, this lawsuit claimed anti-trust, price fixing, and commissions as they relate to home sales and became effective August 17, 2024.??

The class action suit was brought by a seller who claimed to have been harmed because he didn't realize he had to pay a buyer's agent commission.? The suit claims unfair practices and anti-trust violations by NAR to put it simply.?

?

It's worth noting that everyone who earns a real estate license is a real estate agent.? But only those that belong to the National Association of REALTORS?, subscribing to the Code of Ethics, are a REALTORS? and must follow the new rules, and in some states laws,? (18 states) that have been passed.? The following applies to the more than 1.5 million REALTORS? nationwide.??

Any agent that belongs to an MLS and advertises homes for sale on an MLS must abide by tne new rules, which includes REALTORS??and real estate agents.?

?

The result of the lawsuit effects every MLS in the US.??Buyer Broker compensation is no longer listed publicly on MLS's but can be on an agent's website.

?

In Arizona, these rules and forms became effective August 1, 2024. There is a "two click" rule for the Arizona Regional MLS? (ARMLS) that must be followed when a listing agents shares a buyer broker compensation amount on their own platforms.? All compensation amounts have been removed from MLS's.? Buyer's MUST meet with Buyers BEFORE showing them any homes to review and sign a Buyer Broker Agreement.? And a Broker for the agent must sign the form within ten days.?

?

Arizona has not passed a law, as of this writing, but these rules must be followed according to the lawsuit.? ?Eighteen states have enacted laws regarding compensation and buyer broker forms.? ?There are eight MLS's in Arizona, with ARMLS being the 5th largest in the US with over 40,000 members.?

?

In Arizona, there are two Buyer Broker forms.? One form is to simply show a home to a buyer, while the other is an Exclusive Employment Agreement which has additional language including:

• Dates of? Buyer Broker/Buyer relationship;
• Agency relationship notated, but an Agency Disclosure is still required;
• Buyer Broker to work exclusively with a named specific buyer'
• If Buyer signs multiple BB Exclusive Agreement forms, buyer may be liable for multiple commissions.
• Agent must accompany Buyer? and sign a BB form to see new home sales lots on first visit as a builder may refuse to compensate Buyer Broker.
• Buyer is advised to review the Arizona Buyer Advisory.
• Buyer and agent set retainer fee , Broker compensation, or flat fee amounts, which will apply if a compensation amount is not provided by seller.
• If? Seller compensation offered is more than Buyer Broker compensation on BB form, the buyer will be credited the overage.
• If seller compensation is less than Buyer Broker compensation on the BB form, the buyer will pay the difference.?

Legal language continues as to disputes, etc.??

Visit this site to see a long list of FAQ's

The policy of showing homes with a Buyer Broker signed form is self-policed in Arizona.? Fines? are imposed by the Arizona Regional MLS for violating the Buyer Broker form policy and start at $500.? Subsequent penalties apply thereafter ($1500, $5,000, up to $15,000? and including suspension from ARMLS privileges!)? ?So don't ask a realtor to see? a home without meeting an agent first and signing the form.??

The Buyer Broker is reponsible for contacting a seller to determine if the seller is offering Buyer Broker compensation prior to showing a home.? If a seller does not wish to pay a Buyer Broker compensation, then the buyer has the option to include the compensation request in a purchase offer, pay Buyer Broker compensation, or move on to another home.?

?

A Buyer Agent may include Buyer Broker Compensation in a Purchase Contract by including? either a Seller Compensation form or a Broker to Broker Compensation Form.??

For transparency, this accomplishes that fully for the lawsuit.? ?Whether a seller is offering to pay buyer broker compensations may not change, even with this lawsuit.? Reason being, if a seller wants to sell his home and a buyer does not want to pay compensation, their home may not receive as many showings.? Buyer's agents are required to show every home, but a buyer makes the ultimate decision to see a home.?

?

Therefore, ff the buyer does not want to pay a Broker Compensation = no showing.

?

Arguments have been made that agent compensation is higher in the United states versus other countries.? But so are legal fees and ensuing lawsuits.

?

Buyer and Seller agent duties are typically more extensive in the United States according to this publication which quotes Michael Orr, founder of the Cromford Report, as a source of information from London.??

?

Rumors are swirling that the DOJ is not finished with their anti-trust views of Buyer Broker compensation.? We shall see.? In any case, agents who are educated and seasoned will transition seamessly while other agents may decide against the profession.??In the end, "you get what you pay for."?

?

Home buyers are advised to ask about these rules and seek out a professional who can thoroughly explain how this lawsuit impacts their purchase of a home.