A much-discussed listing agreement update reflects upcoming NAR rules, but doesn’t bar sellers from offering compensation to buyers’ agents.
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As new rules regarding agent pay loom on the horizon, eXp Realty has in recent days taken the notable step of updating its listing agreement with language stating the company “does not share commissions with a buyer’s broker” — language that has prompted a flurry of debate online.
Holly Mabery
The brokerage published its new listing agreement internally on Friday and provided the document to Inman on Wednesday. In a conversation with Inman Wednesday, Holly Mabery — senior vice president of brokerage operations at eXp — said that the document was updated because “we wanted to make sure our agents are best protected.” She added that “we’re not going to do broker-to-broker compensation.”
“We’re not going to pre-determined compensation,” she continued, adding that instead, eXp listing agents will provide their clients with “a menu of options.”
The document itself reflects this approach, stating on the first page that the “broker (eXp) does not share commissions with a buyer’s broker.”
However, that language does not mean buyers’ brokers can’t collect compensation from sellers. The document itself goes on to state that buyers may request concessions from sellers, and those concessions could be used to pay for brokers among other things. Mabery told Inman that homesellers using eXp agents are free to offer compensation as they see fit.
She added that eXp listing agents will be trained to prepare their sellers throughout the process for the possibility of requests for buyer-broker compensation.
The critical changes, then, are that compensation offers should be coming from sellers, not sellers’ agents, and that eXp seems to anticipate buyers and their brokers requesting some form of compensation rather than such offers being made preemptively.
These changes reflect new rules the National Association of Realtors announced this spring, which are set to officially go into effect in August. Among other things, the rules bar listing agents from making offers of compensation to buyer’s agents in Realtor-affiliated multiple listing services.
Despite eXp’s updated listing agreement seeming to reflect the new NAR rules, it prompted something of a firestorm online this week. On Tuesday, for example, a post in the popular Lab Coat Agents Facebook group about the topic racked up more than 300 comments. The topic garnered enough attention that eXp Realty CEO Leo Pareja stepped away from his vacation Wednesday morning to discuss the situation on the Broke Agent Media podcast.
However, during his comments on the podcast, Pareja characterized the updated form not as a significant new policy for eXp but rather as a reflection of “our best interpretation of the rule changes.”
Leo Pareja
“All of our goals with listing agreements are to interpret the rules that are going to be enforced by the MLS,” he said, adding later that broker-to-broker compensation “in August will be deleted from the MLS.”
“Our position as of right now is we’re going to make sure we’re going to reflect that broker-to-broker commission sharing on the MLS is no longer allowed,” Pareja said later during the podcast.
Speaking to Inman, Mabery said she was aware of the online chatter about eXp’s listing agreement, but said some of the concern may be stemming from the spread of out-of-context quotes, as well as from general nervousness about change.
Though eXp has portrayed their form updates as responses to the coming NAR rules, the mention of concessions also hints at ongoing industry-wide questions over how buyers’ agents will actually be paid in the near future. Concessions represent one possible answer, and powerful organizations such as Bright MLS and California Regional MLS (CRMLS) are moving to make such concessions easier to offer.
However, a number of private companies have also emerged to give listing agents and their clients places to make offers of compensation to their buyer’s rep counterparts. Whether such solutions survive scrutiny from the U.S. Department of Justice remains to be seen.
The ultimate answer could also be a combination of solutions; last week, for instance, Ed Zorn — vice president and general counsel of CRMLS — suggested concessions may “clump around the entry-level market.”
The way this ultimately pans out remains to be seen, and during his podcast appearance, Pareja nodded to the current uncertainty regarding the future of agent compensation.
“This is an ever-evolving subject,” he said, before adding a moment later that “this is all a brave new world for all of us.”
During her conversation with Inman, Mabery further noted that “everybody” in the industry is currently in the process of updating their listing agreements, and that eXp studied those agreements and found that “some were good, some were confusing.” The company created its own listing agreement — which Mabery noted is not copyrighted and can be used by anyone — in an effort to provide something better.
“If we can be leaders in providing clarity and context,” she said, “we absolutely want to do that.”
Read eXp’s full listing agreement here: