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Confusion surrounds the NAR commission lawsuit settlement and the resulting changes in business practices. Compliance expert Summer Goralik is here to help clarify the questions and uncertainties within the industry.
This week’s question
There is confusion between NAR and state-level associations like C.A.R., causing uncertainty about the settlement requirements and DOJ expectations. Can NAR and C.A.R. leadership directly engage with the DOJ to resolve these issues rather than leaving the entire industry in the dark? Is it permissible to market a seller offering concessions? The messaging is inconsistent.
Compliance expert answer
The upcoming changes in practice have created uncertainty, despite conceptual understanding. The challenge lies in meeting the requirements of NAR, the DOJ, and consumer expectations. The practical implementation of these changes remains unresolved, with practitioners facing a complex landscape.
The guidance from NAR, state associations, and the DOJ on cooperative compensation and concessions has been disjointed, adding to the industry’s confusion. The response will focus on clarifying cooperative compensation and concessions.
Cooperative compensation
NAR states that real estate brokers can still engage in cooperative compensation, but the MLS will no longer facilitate such offers. Cooperative compensation arrangements are allowed outside the MLS, although some associations have removed broker-to-broker compensation provisions entirely.
The conflicting guidance on cooperative compensation points to the DOJ’s efforts to separate commissions and ongoing class action lawsuits. Practitioners must navigate these uncertainties thoughtfully.
What should you do?
Exercise caution and conduct thorough research. Monitor developments in your local jurisdiction and seek legal advice to ensure compliance with the settlement and state laws.
Concessions
Seller concessions can be advertised on the MLS as long as they are not tied to cooperating brokers or buyer representatives. MLS policies will determine how concessions are managed, with some platforms including concession fields while others may not.
Stay informed and seek guidance to navigate these changes effectively in your real estate transactions.
The concession field in the MLS will now only have a simple “yes/no” question regarding the seller’s willingness to consider concessions.
To ensure compliance, investigate how your local MLS handles concessions and familiarize yourself with the rules. Your responsible broker’s advice and policies should also be considered, as they may recommend not entering concession information into the MLS. Always prioritize your seller’s interests and follow their instructions.
Stay proactive and informed during this period of change. Address any discrepancies between required practices and actual practices to avoid liability. Keep up-to-date with industry changes, learn from colleagues’ experiences, and seek legal advice when needed.
Editor’s note: The opinions shared are based on experience with the California Department of Real Estate and should not be considered legal advice. Consult with your brokerage or legal counsel for further clarification.
Summer Goralik is a real estate compliance consultant and former CA DRE Investigator in Huntington Beach, California. Connect with her on LinkedIn.