After agents responded to Realogy’s stance on mandatory commission sharing, Realogy Brokerage Group President and CEO M. Ryan Gorman sets the record straight. “It’s important to me to get this right,” he writes.

When my declaration in the Burnett/Sitzer antitrust case became unsealed, I knew it would not be without controversy. I want to clear up any perceived confusion or misunderstanding. It’s important to me to get this right.

  • Buyer representation is extremely valuable. Period. 
  • Realogy and Coldwell Banker fully support and believe in cooperative compensation. 
  • Washington regulators and courts are actively scrutinizing the mandatory nature of the participation rule.
  • The current participation rule allows for compensation as low as $1 (or even a penny, according to some), so our position challenges why this requirement is even necessary. And there is no truth to the speculation that this would bring any additional harm to veterans (with VA loans) or first-time buyers.
  • In MLSs where the mandatory nature of the rule does not exist today, market forces continue to prevail. 

We strongly support seller’s offers of compensation to buyer’s agents as it is in the best interests of both buyers and sellers to have expert, trusted advisers working with both parties to achieve the mutually desired outcome: a successful transaction.

I have noticed some criticism suggesting that we are advocating for the elimination of cooperative compensation. That is simply not the case and could not be further from the truth. Frankly, it fails the basic logic test. 

Supporting unilateral offers of compensation and believing that the mandatory nature of the buyer broker commission rule is unnecessary are not at all inconsistent. By rescinding the mandatory nature of the rule, the MLS would still remain the facilitator of cooperative compensation, and the buyer broker compensation field would remain intact.

And, as I have said before, I believe not only should a seller offer compensation to a buyer broker but that offer should also be completely transparent to all concerned, including the public.

In policy terms, rescinding the mandatory nature of the participation rule could be as simple as changing ‘shall’ to ‘may.’ That’s it. 

NAR Policy Statement 7.23:

“In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall may therefore specify on each listing led with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.”

MLSs do not set, control or fix commissions, often citing that cooperative compensation can be as little as $1.

This is the root of our position. Commissions are negotiable. The requirement to offer cooperative compensation is unnecessary considering current implementation allows a listing broker to offer as little as $1, which is demeaning to and tremendously undervalues the work of every buyer’s agent I know.

So why then are we, as an industry, focused on keeping this requirement in place?

The mandatory participation rule is actively under scrutiny by Washington regulators and courts.

Regulators and courts looking at this issue are analyzing the mandatory nature of the rule and considering whether it is anticompetitive.

The scrutiny and misunderstanding of why the rule is required (particularly, if it can be as little as $1) is overshadowing the more important issue, which is the valuable role buyer’s agents play in the transaction. This has led us to our view that the current rule appears to pose unnecessary complications with little to no actual benefit.

Attacking my character is one thing, but allowing the rule to remain — with its unnecessary complications — interferes with our ability to put the attention where it belongs, on the value of buyer’s agents and defeating attempts to devalue their role. 

I am not easily flustered. But, candidly, I am upset at the responses that insinuate this is some devious plan to eliminate buyer’s agents. Everyone, particularly those in the industry, know buyer’s agents work their tails off to support their clients.

If you look at Seattle as a case study for a market that eliminated a “mandatory” rule, you will see that listing agents have not forgotten the tremendous value buyer’s agents bring to the transaction that benefits buyers and ultimately sellers alike. Cooperative compensation still exists, and market forces are prevailing.

In closing, if you took the time to read to this point, thank you. If you have been a voice of change on this issue, thank you.

The simple truth is we have an opportunity to come together as an industry. I hope you’ll join us.

M. Ryan Gorman is the president and CEO of Realogy Brokerage Group and CEO of Coldwell Banker.

buyer's agent | NAR | Realogy
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