The real estate industry is changing. Regardless of whether you are a REALTOR or not, whether you participate in REcolorado or another MLS, the legal landscape necessitates changes in business practices for your own protection against further lawsuits.
Key takeaways:
- Sharing offers of compensation is no longer permitted in the MLS.
- Commissions are not set by law and are fully negotiable.
- Compensation for a buyer’s agent is between the buyer and the buyer’s broker.
- Sellers may choose to offer concessions for buyer expenses, such as closing costs. Offers of concessions must be at the seller’s directive.
- Start modifying your practices now to avoid violations of MLS policy or being named in a lawsuit. Don’t look for workarounds or ways to circumvent new rules.
Compensation Retirement August 15
In adherence to the terms of the NAR settlement, REcolorado removed all compensation fields and data from the MLS on August 15. Brokers are not allowed to share compensation information through the MLS.
Offers of compensation are no longer be permitted in any area of the MLS, which includes fields, written remarks, photos, supplements, etc. Because this information is no longer collected, it will not be available in data feeds that are used by technology providers or portals.
Will this change if REcolorado is sold to a new owner?
No. REcolorado chose to opt-in to the NAR Settlement, which obligates us to comply with the settlement terms including removal of compensation data. We made this decision because we believe the changes will serve the best interest of the MLS and our subscribers, whether we are association- or privately-owned.
Can we still accept/offer compensation?
Yes. Offers of compensation can be pursued through negotiation and consultation with consumers and real estate professionals. Compensation will continue to be negotiable and should always be negotiated between agents and the consumers they serve.
Can sellers offer concessions?
Sellers may offer buyer concessions on an MLS (e.g. buyer closing costs) so long as such concessions are not limited to or conditioned on the retention of or payment to a cooperating broker, buyer broker, or other buyer representative.
If not in the MLS, where can I display this information?
All references to compensation are prohibited within the MLS. REcolorado will not create, facilitate, or support any non-MLS mechanism for listing brokers or sellers to make offers of compensation to buyer brokers or other buyer representatives.
While you can display compensation information on your own listings on your own website, your individual website cannot display compensation information for other brokerages and their listings. Please talk with your IDX vendor if you have questions about options available for your website.
For guidance about where you may display offers of compensation outside of the MLS, reference the NAR Settlement FAQs and talk with your managing broker or legal counsel.
Can I contact a listing agent to ask if compensation is being offered?
Yes. You may reach out directly to a listing agent for more details about their listing. You will not be able to rely on any products or platforms for compensation information.
Can VA borrowers pay for buyer agents?
The VA has temporarily lifted its ban on buyers directly paying for professional real estate representation until the agency deems it necessary to engage in a formal rulemaking process. The VA’s home loan guaranty is the only loan program with this explicit prohibition. Lifting the ban has signaled that veterans can still seek professional representation and access VA loans.
If a seller contributes money to pay for buyer’s agent fees, is that considered an interested party contribution (IPC)?
No, seller contributions of money to pay for buyer’s agent fees are not considered IPC and will not be considered in IPC limits for conventional mortgages. Fannie Mae defines Interested party contributions (IPCs) as “costs that are normally the responsibility of the property purchaser that are paid directly or indirectly by someone else who has a financial interest in, or can influence the terms and the sale or transfer of, the subject property.” Compensation paid to the buyer for the buyer agent fees falls outside the IPC amount. Speak with your mortgage lender for specific questions and situations.
