Jay Thompson is a former brokerage owner who spent over six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column is published every Wednesday.
The National Association of Realtors (NAR) Board of Directors approved several multiple listing service (MLS) policy proposals on Monday.
Three of these seem to be garnering the most attention from the press and real estate agents.
Displaying buyer broker commissions
According to reporting by Inman, one policy “requires MLSs to display buyer broker commissions on their listing sites and to include buyer broker commissions in the data feeds they provide to agents and brokers, but does not require that the brokers and agents using the feeds display buyer broker commissions.”
This news was immediately met with cries of, “Not fair! My pay is my business!” It is your business; it’s also the business of the people paying you. For those proclaiming the impending flood of buyers seeking lower commissions or rebates, relax.
The Northwest MLS (primarily Seattle) began publicly displaying buyer agent commissions over two years ago. I haven’t heard a single agent in the Seattle area have anything negative to say about this change. In fact, several have told me it has not changed a thing. Dozens of MLS 32s are already following this from the wave started with the recent DOJ antitrust settlement sideshow. It’ll all be OK.
Most agents already openly discuss their commission rates with their clients, as they should. If you’re not having this conversation, you should, and the new NAR MLS policy may well force you to. That’s not a bad thing.
Filtering listings by commission or agent
Another change “prevents brokers and agents from filtering out listings from website displays based on buyer broker commissions or the name of the brokerage or agent,” Inman reported.
Good! Maybe this will end the ridiculous practice of excluding listings from a client’s search based on a lower than expected buyer agent co-broke. Although it’s hopefully a significant minority of agents doing this, the fact is many have openly admitted they do it.
As for excluding listings because of the listing brokerage or agent, I haven’t seen anyone own up to doing this, but I have no doubt it happens. What an abhorrent practice. This does a disservice to your client, may breach your fiduciary duty, could be an antitrust issue and certainly is a smack in the face to the cooperative nature of real estate sales in the United States.
What’s sad is there even needs to be a written rule to prevent this. Put your clients’ needs first, over yours, always.
Buyer agent services can’t be represented as free
As Inman reported, the other hot topic in MLS policy discussions “prevents agents and brokers from advertising their services as free unless they will not actually receive any compensation from anyone for them.”
This is something that has confused me since the day I got my license.
The buyer does pay. Yes, the seller “pays” — from the buyer’s proceeds. We could — as has been done by countless others countless times — debate whose money really pays the buyer’s commission all day long. That’s a long discussion for another column.
None of these MLS policy changes affect this fundamental exchange:
Buyer: What’s your commission?
Agent: Don’t worry about it. The seller pays me.
Buyer: Why would the seller pay my agent?
Agent: It’s complicated.
Buyer: Well, whatever. I’m the one bringing a big giant check to closing, and it seems like I’m paying for it all.
The new policy reads:
MLS Participants and Subscribers must not represent that their brokerage services to a client or customer are free or available at no cost to their clients, unless the Participant or Subscriber will receive no financial compensation from any source for those services.
There you have it. You are receiving financial compensation from a source for your services. That “source” is the seller, the buyer, the lender, the Mafia, the grandparents, whatever. You’re getting paid; your services aren’t free.
This policy passed the Board of Directors with no discussion, with 724 in favor and 49 opposed.
“While Realtors always have been required to advertise their services accurately and truthfully, this change creates a bright line rule on the use of the word “free” that is easy to follow and enforce.” NAR said in a release.
“Enforce” is an interesting choice of words. That implies there will be consequences if you don’t follow the “no more free” policy.
Lots of folks are going to have to change some scripts, marketing copy, and ads. The internet is littered with, “as a buyer, my services to you are free!” It’s in ads, online discussions, websites, lead capture forms, Facebook ads, and TikTok dances.
You might be thinking, “But this is MLS policy, I can still crawl all over Facebook telling people my work is free.” Maybe, maybe not. Be careful. With 600 some-odd MLS out there, policies differ, and there could very well be language in your MLS’s policies that extend their “jurisdiction” to places listings are advertised.
On Monday, NAR’s board of directors approved a change to Standard of Practice 12-1 from the Professional Standards Committee.
Previously, SOP 12-1 stated:
“REALTORS may use the term ‘free’ and similar terms in their advertising and in other representations provided that all terms governing availability of the offered product or service are clearly disclosed at the same time.”
That SOP now reads:
“Realtors must not represent that their brokerage services to a client or customer are free or available at no cost to their clients, unless the Realtor will receive no financial compensation from any source for those services.”
Personally, I like this policy. Claiming your work costs the buyer nothing is misleading, at best. It’s also a weak way to market and brand yourself. What’s ironic is how many agents will get into a discussion on rebates or “discount” brokers and lead with, “you get what you pay for.” And then you want to say, “I’m free!” Really?
You’re not free; you’re not cheap. You kick ass and get the job done for your client. You work hard. You earn and deserve every penny you can get. Don’t try to set yourself apart with “free!”
If proclaiming your services as free is the best way for you to get business, you might be in the wrong business.
These policies are effective Jan. 1, 2022. MLSs have until March 1 to implement them. If a COE change is made, I assume there will be time provided to clean up if you’ve been pitching the free route.
This is a good resource that covers all of the new MLS policies.
Jay Thompson is a real estate veteran and retiree who lives in the Texas Coastal Bend, as well as the one spinning the wheels at Now Pondering. Follow him on Facebook, Instagram and Twitter. “Retired but not dead,” Jay speaks around the world on many things real estate.