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Following close on the heels of Anywhere Real Estate, RE/MAX on Friday released the business practice changes it would make in its proposed $55 million settlement of two bombshell commission lawsuits.
Like Anywhere, RE/MAX said that its brokerages can now decide for themselves whether they join the National Association of Realtors, making it the third major real estate firm to distance itself from NAR this week.
“We’ll support the choice either way,” RE/MAX President and CEO Nick Bailey said in a statement Friday announcing the proposed settlement, which would need to be approved by the courts.
The news that neither major franchisor would require its agents to maintain a NAR membership was perhaps among the most shocking revelations from the RE/MAX and Anywhere proposed settlements, given that both firms have more than 100,000 agents.
NAR has faced months of turmoil following allegations of sexual harassment and other misconduct by leadership that came to light earlier this year. The pair of settlement agreements released Friday show that the commission lawsuits, known as Sitzer/Burnett and Moehrl, could also pose yet another threat to what is currently the nation’s largest professional organization, boasting approximately 1.58 million members.
In response, spokesman Mantill Williams said its members can decide what’s best for them, and laid out the benefits he said NAR provides to its membership.
“Brokerages are independent, legal entities that make their own business decisions,” Williams said. “It is incumbent on every REALTOR® association – local, state and national – to continue to communicate and provide true value to our members. If these brokers continue to find value in belonging to the association, then they will choose to belong.”
What remains unclear is whether agents could bypass a membership to NAR and still gain access to local multiple listings services.
Sitzer/Burnett is headed to trial this month in U.S. District Court in the Western District of Missouri.
NAR itself, along with Anywhere, Keller Williams, RE/MAX, HomeServices of America and its subsidiaries BHH Affiliates and HSF Affiliates are among the defendants in the class action suit.
RE/MAX laid out seven other proposed changes it said it would make if the courts approved the settlement, which would likely happen next year. The franchisor said many of the agreed-upon changes in the proposed settlement were already in place and instead suggested it would continue doing what it already had been.
The franchisor said it would encourage its brokerages to be transparent when working with buyers and sellers, particularly around cooperation and compensation.
“RE/MAX won’t require to you make offers of compensation or accept offers of compensation from cooperating brokers,” Bailey said in his Friday statement. “We’ll also continue to encourage you to be very clear that commissions are negotiable and not set by law or RE/MAX, LLC corporate policy.”
The franchisor said that information should be conveyed in listing agreements, buyer representation agreements and pre-closing disclosure documents.
Like Anywhere, RE/MAX will no longer require that its affiliates follow NAR’s Code of Ethics or the MLS Handbook.
Several of the other proposed changes that are part of the settlement are already in place.
RE/MAX said it admitted no wrongdoing as part of its proposed settlement in Sitzer/Burnett and Moehrl. Both lawsuits, which challenge the commission-sharing structure that’s common in real estate transactions, are on their way to trial in the coming months, with Sitzer/Burnett set to begin in two weeks.
Instead, RE/MAX said its brokers and agents “should continue to be honest and upfront about how much your services cost.”
RE/MAX said it would continue to display offers of cooperative compensation made by listing brokers and agents on remax.com. It said it would continue to not provide software that filters or restricts MLS listings based on the level of compensation being offered.
“We’ll encourage you not to filter search results in this manner – unless directed to do so by a client,” Bailey said. “RE/MAX, LLC will remind you of your professional obligation to show and market properties regardless of what the offer of compensation might be.”
RE/MAX said it would continue not implying a minimum commission requirement in any franchise agreement.
“In other words, RE/MAX brokerages and agents will continue to have the freedom to set and/or negotiate commissions as they see fit,” Bailey said.