Maryland REALTORS® Online

Capitalize on the Outcome

By Chuck Kasky
CEO of Maryland REALTORS^® and host of the Association’s podcast, “Get Real Estate,” which is available through any podcast app.

Teddy Roosevelt said: “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”

We are in a moment that tests our fortitude. With news of the proposed settlement between the National Association of REALTORS^® (NAR) and the Plaintiffs in the antitrust cases, it’s clear that there will be significant changes to the fabric of our profession. At Maryland REALTORS^® we will always strive to do the right thing, but we will never do nothing.

First, a quick update.

As part of the proposed settlement, which still needs to be approved in court and will likely be scrutinized by the Department of Justice, NAR agreed to put in place a new rule prohibiting offers of compensation on the 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). This change will go into effect in mid-July 2024, at the earliest.

The agreement would release NAR, over one million NAR members, all state/territorial and local REALTOR^® associations, all association-owned MLSs, (Bright MLS sand its local association shareholders are covered in the settlement) and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions.

Also, written buyer representation agreements will be mandatory, which has been the law in Maryland since 2016. In addition, NAR would pay $418 million over approximately four years.

So, how do we move forward?

While the proposed settlement provides some clarity about the future of real estate transactions, there are many unknowns. Maryland REALTORS^® is moving quickly to disseminate timely and accurate information to our members and will provide guidance and resources well ahead of any implementation of the changes that are coming.

First, we know we will need to update the Buyer Representation Agreement and Listing Agreement. References to cooperative compensation will need to be rewritten.

Also, NAR said the proposal would allow sellers and their listing agents to continue offering compensation for buyer broker services, but that those offers won’t appear in the MLS. We are working on an Addendum to the contract to facilitate that negotiation. To do so we need to better understand how this interacts with lenders’ cap on seller contributions to the buyer’s closing costs; we will be exploring that issue in depth.

Further, it’s not clear what happens when sellers offer compensation that’s lower than the amount a buyer and their agent have agreed to in their buyer representation agreement. That’s something we need to address.

We are also seeking clarity from NAR on matters like how to address the prohibition on VA buyers paying compensation to their brokers, and whether lenders will be open to including commissions in the mortgage. There are lots of moving parts to all this, but we are working diligently on your behalf.

As always, we will continue to deal with reality as it unfolds and adapt as necessary. Please reach out to us with your thoughts, ideas, comments, or concerns. Remember to monitor our Resource page on our website, which will provide the latest information on the proposed settlement on our website.