Window to the Law: Understanding New Rules on Offers of Compensation - Transcript
In this video, I will address questions about how NAR’s March 15th proposed settlement agreement affects offers of compensation.
Offers of compensation will continue to be an option for consumers to pursue off-MLS through consultation and negotiation with real estate professionals. However, effective August 17, 2024, the MLS can no longer be used to communicate offers of compensation, and where there is an offer of compensation made off-MLS, there will be no policy requiring that such offers be blanket, unilateral and unconditional.
Instead, once an MLS participant obtains a seller’s approval to make an offer, the offer of compensation can be shared through other common marketing vehicles, such as flyers, signs, emails, and other communication mechanisms off of the MLS.
For example, a broker can show offers of compensation for their listings on their website display. However, they must not display offers of compensation for other broker’s listings on their website display if it relies upon any MLS data or data feeds.
Sellers also continue to have the choice to offer buyer concessions and these concessions can be communicated on the MLS subject to their MLS’s local rules and provided that the concessions are not conditioned on the use of, or payment to, a buyer broker.
Buyers can also ask their buyer broker to make it a term of an offer to purchase that the seller pay certain compensation to the buyer broker. That said, keep in mind that Standard of Practice 16-16 prohibits a REALTOR® from attempting to modify the terms of a listing agreement since that’s a contractual matter between the listing broker and the seller. Article 1 of the Code of Ethics requires that REALTORS® must always serve in their client’s best interest. So, a buyer broker must not delay or withhold delivery of a buyer’s offer and should never act on their own to negotiate a buyer broker’s compensation. But the seller and the listing broker can independently choose to amend their agreement or take other action they deem appropriate.
Lastly, the practice changes under the settlement will require buyers and buyer brokers to enter into a written agreement before the buyer tours a home and establish in writing any agreement for compensation for buyer broker’s services.
For the most up-to-date and accurate information about the settlement, please go to facts.realtor.
