Tag: NAR settlement

MLS Rules Changes and How They Affect EMTAR Members

Written by newmanifest on August 15, 2024. Posted in EMTAR.

Note: This is the fourth and final blog leading to August 17, 2024, when a number of new rules and protocols will take effect as a result of the NAR lawsuits settlement. The other topics in our series are The Ins and Outs of Buyer Agreements (7/25), Updated Rules on Offers Of Compensation (8/1), and Highlights of the Updated TN Realtors Forms (8/8). Thank you for keeping an eye out for these important posts!

MANAGING/PRINCIPAL BROKER FOCUS

In each blog we have spotlighted items of particular interest to Managing/Principal Brokers, because we know that those who lead firms and offices are on the front lines of answering agents’ questions.

As a reminder, EMTAR will host a Brokers Forum on Wednesday, September 18, a FREE luncheon for Managing Brokers only. We want to follow up one month after the NAR Settlement implementation to see where market practices are trending and to address any questions. We ask that you RSVP, as seats are limited. More details:

Who: Managing Brokers
What: Brokers Forum – Market Practices after the NAR SettlementWhere: EMTAR Training Room (2588 N. Mt. Juliet Rd.)
When: Wednesday, Sept. 18 — 1:00 – 2:30 PMProvided: FREE Catered Lunch
RSVP: Please send an email noting “Brokers Forum – Yes” to info@emtar.com.

MLS RULES CHANGES AND THEIR IMPACT

Now let’s turn to the impact of the NAR settlement on MLS rules.

*Some of the following is adapted from NAR’s Settlement FAQs (here). It’s important to emphasize that as new practices unfold, the details may be fluid. We will communicate any updates/changes related to the settlement as we become aware of them.

First off, NAR includes a section in its FAQs underscoring the value of an MLS. We’re not sharing all of those points here because we know our EMTAR members are aware of the excellence with which Realtracs, our regional MLS, conducts its business and offers its services to participants. EMTAR has a close, ongoing relationship with Realtracs and its leadership, and we proactively look for ways to keep our members up-to-date on any relevant MLS-related developments.

For example, at our Membership Luncheon last week, August 8, Julie Davis, Realtracs’ Chief Relationship Officer, was part of a panel discussing the NAR Settlement and its effects on our REALTOR^® members.

Among other questions she addressed, one that members have asked is how the new MLS rules will be enforced. Julie shared that enforcement would be handled primarily by self-policing. Realtracs staff will rely on its subscriber base to flag any noncompliant activities. However, Realtracs will, as always, monitor data and look for any patterns of violations via data analysis, and in those cases they would take appropriate corrective steps to protect the integrity of the MLS and the value of its services to participants.

The overall policy change that will likely have the most widespread effect is that compensation will come off of the MLS altogether as of August 17, 2024. That change is woven throughout NAR’s FAQs, some of which we are sharing below for your information. They include:

What are the main MLS policy changes that NAR has set forth?

Eliminate and prohibit any requirement of offers of compensation on an MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
Retain, and define, “cooperation” for MLS Participation.
Eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation on an MLS to buyer brokers or other buyer representatives.
Require an MLS to eliminate all broker compensation fields and compensation information on an MLS.
Require an MLS to not create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for Participants, Subscribers, or sellers to make offers of compensation to buyer brokers or other buyer representatives.
Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives. Such use must result with an MLS terminating the Participant’s access to any MLS data and data feeds.
Reinforce that MLS Participants and Subscribers must not, and MLSs must not enable the ability to filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
Require compensation disclosures to sellers, and prospective sellers and buyers.
Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home.

How has the definition of an MLS participant changed?

The definition has been amended to remove any references to offers of compensation and to establish that a Participant has the duty to cooperate, which is to share information on listed property and to make property available to other brokers for showing to prospective purchasers and tenants when it is in the best interest of their clients.

Are all other MLS policies that were not amended still in effect?

Yes, all MLS policies will continue to be in effect and subject to enforcement by their local MLSs.

Can an MLS Participant use or share their MLS data or data feeds to establish or maintain a platform for offers of compensation from multiple brokers and buyer brokers or other buyer representatives?

No, use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers to buyer brokers or other buyer representatives is prohibited.

Can an MLS have a Yes/No Compensation Field?

No. Once more, the new MLS policies prohibit any information about compensation on an MLS.

Can an MLS allow MLS listings to link to a listing broker’s contact information (e.g., phone number, broker’s preferred communication method)?

Yes, an MLS may provide links or other information that allows brokers to contact each other. However, this may not be used to circumvent the prohibitions of (a) making offers of compensation on an MLS to cooperating brokers or other buyer representatives (either directly or through buyers) or (b) disclosing on an MLS broker compensation or total brokerage compensation (i.e., the combined compensation to both listing brokers and cooperating brokers). For example, an MLS may not allow MLS listings to have an embedded link to a website which, with a single click on the MLS listing, would immediately display an offer of compensation. (Updated 7/31/2024)

How does the REALTOR^® Code of Ethics apply to offers of compensation off MLSs?

Offers of compensation may continue to be made off MLSs, in consultation between the real estate professional and the seller. With respect to offers of compensation, REALTORS^® must continue to be guided by their ethical duties under the REALTOR^® Code of Ethics, including that:
REALTORS^® must always:
- Article 1 – Protect and promote their client’s interests
- Article 3 – Ascertain compensation
- Article 9 – Assure all real estate transaction agreements are in writing in clear and understandable language
- Article 10 – provide equal professional services and comply with fair housing laws
- Article 12 – Be honest and truthful in communications
As a reminder, pursuant to both Article 17 of the REALTOR^® Code of Ethics and MLS policy, members are required to mediate and arbitrate contractual and compensation disputes.
These ethical rules continue to apply after, and are not changed by, the MLS practice changes required by the proposed class action settlement. (Added 8/6/24)

Do the written buyer agreement requirements apply to MLS Subscribers?

Yes, Subscribers must comply with all MLS rules and regulations, and Participants must ensure their compliance or they would be subject to the MLSs local enforcement and disciplinary action. (Added 8/6/24)

MLS Participants may not receive compensation for services from any source that exceeds the amount or rate agreed to in the buyer agreement. Does this mean that brokerages can only have one agreement with the buyer?

No. The practice change empowers buyers and brokers to negotiate and agree to services and compensation that work for them. MLS Participants should work with consumers to ensure they fully understand the options available. Compensation continues to be negotiable and should always be negotiated between MLS Participants and the buyers with whom they work.
At times, a new or amended buyer agreement may be appropriate, and the buyer and broker may agree to amended terms. However, amended agreements must also meet the requirements of the practice changes. The practice changes must be implemented fully and in good faith in the service of promoting consumer empowerment, choice, and healthy competition.
NAR policy does not dictate:
- What type of relationship the professional has with the potential buyer (e.g., agency, non-agency, subagency, transactional, customer).
- The term of the agreement (e.g., one day, one month, one house, one zip code).
- The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers).
- The compensation charged (e.g., $0, X flat fee, X percent, X hourly rate). (Updated 7/31/2024)

Is there an NAR MLS policy about seller concessions?

No, MLSs will continue to have local discretion on seller concessions. This includes determining what local rules to have about seller concessions, except under the settlement an MLS must ensure that the seller concessions are not limited to or conditioned upon the retention of or payment to a cooperating broker, buyer broker, or other buyer representative.

NEED MORE QUESTIONS ANSWERED?

Again, you will find more FAQs on MLS rules and all other aspects of the settlement here.

You might also want to go back and review the previous three blogs in our series, as they cover many other vital topics related to the changes that will take effect August 17.

Finally, we encourage you to email info@emtar.com with any NAR Settlement questions you have regarding TN Realtors^® Forms, Realtracs, and changes in Real Estate Practices.

THANK YOU, EMTAR MEMBERS!

In closing, we want to remind you of how much we appreciate you and the difference you make in our communities. Buyers and sellers know they can count on your expertise, strong ethical commitment, and attention to their needs. All of us at EMTAR are honored, privileged, and proud to serve as your partner in success!

About EMTAR: Chartered in 1969, our Association’s 1,300+ REALTORS^® are a proud part of the 36,000+ members of Tennessee REALTORS^® and of the 1.5 million+ members of NAR, all working to serve the public and protect the rights of America’s property owners. EMTAR members are known not only for their unmatched real estate excellence and high ethical standards, but also for being generous, hospitable, others-focused, loyal, hardworking, and eager to help wherever and whenever help is needed.

Highlights of the Updated TN Realtors Forms

Written by newmanifest on August 8, 2024. Posted in EMTAR.

Note: This is the third of four blog posts leading to August 17, 2024, when a number of new rules and protocols will take effect as a result of the NAR lawsuits settlement. The other topics in the series are The Ins and Outs of Buyer Agreements (7/25), Updated Rules on Offers Of Compensation (8/1), and MLS Rule Changes and How They Affect EMTAR Members (8/15). Please stay tuned!

MANAGING/PRINCIPAL BROKER FOCUS
In each of these blog we are spotlighting items of particular interest to our Managing/Principal Brokers, because we know that those who lead firms and offices are on the front lines of answering agents’ questions.

1: First, brokers, please help us make sure your agents are aware of the second of two opportunities to learn about the forms changes. Led by veteran instructor Susan Barnette, this free Zoom course will delve into the specifics. Here are the details:

TN Realtors Form Changes – ZOOM
Wednesday, August 14, 2024
9:00 – 10:00 AM (1 hour CE)
Register here.

2: EMTAR will host a Brokers Forum on Wednesday, September 18, a FREE luncheon for Managing Brokers only. We want to follow up one month after the NAR Settlement implementation to see where market practices are trending AND to address any questions. We ask that you RSVP, as seats are limited. Here are the details:

3: Finally, you might wish to view and/or point the agents in your firm to the 20-minute video here from the state Association going over the forms changes.

TN REALTORS FORMS CHANGES
Now let’s turn to the impact of the NAR settlement on TN Realtors forms, which are available on the state’s Forms on the Fly page (member login required).

**Some of the following information ties into NAR’s Settlement FAQs (here). It’s important to emphasize that as new practices take effect, the details may be fluid. We will communicate any updates/changes related to the settlement as we become aware of them.

As noted above, TN Realtors discussed the forms changes in a video posted here. The NAR Settlement has resulted in only “minimal updates” to the Tennessee forms library, as Legal Counsel Addison Russell and 2024 Residential Forms Committee Chair Cindy Stanton emphasized during the video.

The bottom line of the changes, they noted, is:

Compensation will come off of the MLS altogether as of August 17, 2024.
Written agreements will be required between buyers and agents prior to touring (showing) a property.
By law, commissions are not set and are fully negotiable—which is something Tennessee has long included in its forms, but some tweaks have been made to ensure that this is even clearer.
Finally, an amendment will be required for any Buyer Representation Agreement in place prior to August 17 (for which a Purchase & Sale Agreement has NOT yet been executed) to incorporate the settlement changes.

Some questions remain and information might need to be updated as the practice changes go into effect, so Tennessee is watching other states carefully and staying tuned to NAR for any developments that will affect these forms in the future.

Here are the only five forms affected by the settlement and a summary of each:

RF101 – Exclusive Right to Sell Listing Agreement

Small tweaks have been made to Section 6.
Item 5, Seller Concessions, specifies those options.
Item 7, Compensation, states in all caps: “Broker compensation is not set by law and compensation rates are fully negotiable.”
Slight changes were made to Compensation to Broker for Sale, Cooperating Compensation, and Compensation to Broker for Lease.
Item 8, Responsibilities and Rights of the Parties, removed the MLS requirement and replaced it with, “Broker is authorized to communicate any offer of cooperating compensation to prospective Selling Agents or Facilitators.”

These updates “shouldn’t change how you’re practicing much, but we are trying to make it more concise,” Addison Russell said.

RF141 – Exclusive Buyer Representation Agreement

Section 3 has been rewritten into a new section called Compensation (Section 4).
The new section addresses compensation for broker services and compensation from the seller.
It includes a “Difference” item: “In the event that the amount of any cooperating compensation paid by Seller or Seller’s broker is less than the amount listed above, Buyer agrees to pay Broker the difference at closing.”
A cap on compensation is included: “If Broker is an MLS participant, Broker shall not receive compensation . . . that exceeds the amount listed above.”
VA Buyer: This information is on a new line but remains as it has been.

“The intent as always is to make as little disruption as possible” for REALTOR^®members, Cindy Stanton said.

RF143 – Written Agreement with Buyer Before Touring a Home
“This may be the form that we get the most questions about,” Addison Russell said.

The new form is one of the bigger changes pursuant to the NAR Settlement.
It requires a written agreement with a buyer before touring or showing a property.
Tennessee already has our Buyer Representation Agreement (RF141), and members are encouraged to continue to have a buyer sign that before touring/showing properties.
If you are a REALOR^® member and choose not to practice agency relationship, or are entering into a non-exclusive agency relationship, this form (RF143) is the one you will use to establish facilitator status with a buyer prior to touring a home.

RF401 – Purchase and Sale Agreement

Very minor updates have been made to this form, the most commonly used document by all parties.
Item 13. Brokerage, again states that compensation is laid out in separate agreements, and is fully negotiable.
There isn’t a Compensation section on this form. Members should continue to use the compensation section of the listing agreement. Brokers are parties to RF101 but NOT to the Purchase and Sale Agreement, so there was no need for a separate Compensation section here.
A new stipulation has been added (item 24), as needed. Selling Broker (Broker assisting Buyer) Compensation: “Seller shall pay $___ or ___% of the Purchase Price of the Property to Selling Broker (Broker assisting Buyer) at Closing as a Concession to Buyer.”

RF642 – Amendment to any Buyer Representation Agreement Entered into Prior to August 17, 2024

Again, if you have a Buyer Representation Agreement in place but a Purchase and Sale Agreement has NOT been executed as of August 17, you will need to fill out this form with your buyer and have them sign it.

Addison Russell concluded at the end of the video, “We felt really good about where we were already, and I think that’s apparent by the minimal changes that were needed” to the TN forms.

NEED MORE QUESTIONS ANSWERED?
We encourage you to email info@emtar.com with any NAR Settlement questions you may have regarding TN Realtors^® Forms, Realtracs, and changes in Real Estate Practices prior to our August 8 Membership Luncheon. The luncheon will be video-recorded with a Q&A from a moderated panel of TN Realtors^® Legal Counsel, Forms Committee, and Realtracs representation.

ONCE AGAIN, THANK YOU EMTAR MEMBERS!
As we quickly move toward August 17, let us emphasize that we appreciate the difference you make in our communities. Buyers and sellers know they can count on your expertise, your strong ethical commitment, and your attention to their needs. Please watch for more information leading to and beyond the effective date.

Updated Rules on Offers of Compensation

Written by newmanifest on August 1, 2024. Posted in EMTAR.

Note: This is the second of four blog posts leading to August 17, 2024, when new rules and protocols will take effect as a result of the NAR lawsuits settlement. The other topics in the series are The Ins and Outs of Buyer Agreements (7/25), Highlights of the New Tennessee REALTORS^® Forms (8/8), and MLS Rule Changes and How They Affect EMTAR Members (8/15). Please stay tuned!

MANAGING/PRINCIPAL BROKER FOCUS
In each of these blog we are spotlighting items of particular interest to our Managing/Principal Brokers, because we know that those who lead firms and offices are on the front lines of answering agents’ questions.

NAR has made available a broker’s guide to upcoming practice changes. This set of slides provides you with an overview of the settlement, information on corresponding practice changes and implementation, and guidance on how to help consumers understand what these changes mean for them and their homebuying or selling transactions. Be sure to give them a look.

OFFERS OF COMPENSATION PRACTICE CHANGES
Now let’s zoom in on some of the terms of the NAR settlement that will affect offers of compensation.

**Some of the following information comes from NAR’s Settlement FAQs (here). It’s important to emphasize that as new protocols go into effect and the market responds, the details may be fluid. We’ll make every effort to communicate any updates/changes as we become aware of them.

First, this insightful article by Melissa Dittmann Tracey in Realtor magazine summarizes the upcoming changes: “Starting Aug. 17, the MLS will no longer be a platform for communicating offers of compensation. However, they still remain an option for consumers.”

The author points to NAR’s helpful series of “Window to the Law” videos to explain the coming changes. The first video is all about compensation—”which is and always has been negotiable.”

The article includes the perspective of Charlie Lee, NAR’s senior counsel and director of legal affairs, saying “real estate pros have a variety of ways to negotiate and communicate offers of compensation.” Those options include:

“Marketing: If the listing broker or seller is offering compensation for the buyer’s broker, the listing agent can share that offer through their marketing, such as in flyers, signs, or emails.”

“Website displays: A broker can show offers of compensation for their listings on their website display . . . Brokers must not display offers of compensation for other broker’s listings on their website display. You can show other brokers’ compensation on your listings if you don’t get it from MLS data or an MLS feed.”

“Seller concessions: Sellers may elect to offer concessions to the buyer, which may be used for items like paying for the buyer’s closing costs or the commission for the buyer’s agent. If the local MLS allows, such concessions can be communicated on the MLS within designated fields. However, any concessions listed cannot be conditioned on the use of or payment to a buyer broker.”

“Negotiations: Buyers may request that their agent include broker compensation as part of the terms of a purchase offer.”

And finally, “Buyer agreements: NAR’s proposed settlement agreement will require buyers and their agents to enter into written agreements before touring homes. These agreements will detail the compensation for using the buyer broker’s services.”

Now let’s highlight some of the relevant topics including in NAR’s Settlement FAQs.

1) Why prohibiting publishing compensation offers on an MLS was part of the settlement:

“While NAR has long maintained—and we continue to believe—that cooperative compensation and NAR’s current policies are good things that benefit buyers and sellers, we also acknowledge that continuing to litigate would have hurt members and their small businesses . . .”

This part of the settlement agreement “is consistent with NAR’s long-maintained position that prohibiting all offers of cooperative compensation entirely would harm consumers and be inconsistent with real estate laws in the many states that authorize them. We believe this agreement provides a path forward for our industry and NAR.”

2) Consumer choice and the value of a REALTOR^®:

“As always, the consumer chooses whether to use a real estate professional. Research has confirmed that consumers find great value in the services provided by a buyer broker, and we continue to believe it is imperative for buyer brokers to clearly articulate what services and value they are providing to consumers.”

3) Buyer brokers and how they are paid:

“NAR has long believed that it is in the interest of the sellers, buyers, and their brokers to make offers of compensation—but using an MLS to communicate offers of compensation will no longer be an option. The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to:

Fixed-fee commission paid directly by consumers
Concession from the seller
Portion of the listing broker’s compensation
Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent.

“Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.

“The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to:

Fixed-fee commission paid directly by consumers
- Concession from the seller
- Portion of the listing broker’s compensation
- Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent

“Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent.”

4) What listing brokers should advise clients about offers of compensation:

“Listing brokers should inform their clients that offers of compensation will no longer be an option on an MLS. This change will not prevent offers of cooperative compensation off an MLS. And it will not prevent sellers from offering buyer concessions on an MLS (ex. concessions for buyer closing costs).” Again, “Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they serve.”

5) Off-MLS options and concessions:

“Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions that can be used for buyer closing costs).”

6) REALTORS^®’ continuing high ethical standards and dedication to excellence:

“The settlement does not change the ethical duties that NAR members owe their clients. REALTORS^® are always required to protect and promote the interests of their clients and treat all parties in a transaction, honestly (Article 1, COE).

“NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.”

7) NAR’s commitment to clear options for consumers:

“NAR remains dedicated to promoting transparency in the marketplace and working to ensure that consumers have access to comprehensive, equitable, transparent, and reliable property information, as well as the ability to have affordable professional representation in their real estate transactions.”

8) Bottom line:

“This settlement allows compensation to remain a choice for consumers when buying or selling a home. NAR continues to believe that offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers.”

Again, these are some of the topics addressed in NAR’s FAQs, but we encourage you to review the other related questions and answers on this page.

NEED MORE QUESTIONS ANSWERED?
We encourage you to email info@emtar.com with any NAR Settlement questions you may have regarding TN Realtors^® Forms, Realtracs, and changes in Real Estate Practices prior to our August 8 Membership Luncheon. The luncheon will be video-recorded with a Q&A from a moderated panel of TN Realtors^® Legal Counsel, Forms Committee, and Realtracs representation.

ONCE AGAIN, THANK YOU EMTAR MEMBERS!
As we close this second of four blogs in advance of 8/17, we want to reiterate that we appreciate the difference you make in our real estate industry and for our communities. Buyers and sellers know they can count on your expertise, your strong ethical commitment, and your attention to their needs.

Please keep an eye out for more information coming your way leading to and beyond the effective date for the changes coming out of the NAR Settlement.