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There is much confusion surrounding the NAR commission lawsuit settlement and the resulting changes in business practices. Compliance expert Summer Goralik is here to address some of the pressing questions to help the industry move forward together.
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This week’s question
As a buyer’s agent, how do we confirm that the seller is willing to compensate the buyer broker? How can we ensure this without seller concessions?
Compliance expert answer
The question about confirming buyer-broker compensation reflects a common concern among Realtors in the current real estate landscape.
With the changes brought about by the NAR settlement, discussions about commission structures have become prominent. The traditional practice of unilateral compensation offers through the MLS has been disrupted, leading to a new commission process in real estate.
Many agents are now adapting to these changes through training, updated forms, and revised policies. However, practical questions about daily operations, such as ensuring proper compensation for buyer brokers and agents, remain crucial.
In the post-NAR settlement era, the concept of risk has expanded. Compliance with new practices and securing compensation agreements correctly is essential, given the increased scrutiny from the DOJ and MLS enforcement.
Confirming buyer-broker compensation now begins with the buyer representation agreement, which outlines services, commission disclosures, and the negotiability of rates. This agreement is crucial for initiating commission discussions between buyer agents and their clients, promoting transparency and preventing potential steering.
It’s important to formalize any discussions about seller-paid buyer agent compensation in writing to ensure transparency and protect all parties involved. Buyer agents must rely on documented agreements to secure compensation in the evolving real estate landscape.
The real estate industry is undergoing a period of transition, and while it may feel uncertain, Realtors are adapting to new ways of negotiating commissions and incorporating seller-paid buyer agent compensation into purchase offers. Over time, these processes will become more familiar and accepted.
In my view, including compensation terms in the purchase agreement is not only compliant with industry regulations but also promotes transparency and protects both agents and clients. As Realtors become more experienced with these changes and transactions successfully adopt this new commission structure, the industry will gradually settle into a new normal.
However, it is essential for real estate agents to consider state laws and guidelines, seek guidance from their brokers, and ensure that they implement these changes correctly and ethically in their practice. Brokers play a crucial role in providing training on the new rules, updating forms and disclosures, and establishing office policies that align with state regulations.
Agents must be well-informed about the changes, able to communicate effectively with clients, negotiate terms with other agents, and prepare necessary documents for transactions involving brokerage compensation. With proper guidance, training, and brokerage policies in place, both listing and buyer agents can thrive in this evolving landscape.
It is important for licensed real estate agents to consult with their brokers for guidance on the new practices, and brokers should seek legal advice for clarification and support. The opinions and recommendations in this discussion are based on experience and knowledge of real estate laws and should not be considered legal advice.
Summer Goralik, a real estate compliance consultant and former CA DRE Investigator, provides insights and expertise in navigating these changes. Connect with her on LinkedIn.
[Original article source: http://www.expertdrecompliance.com/]