MLSs, local associations help members navigate changes tied to NAR settlement

While the news of the National Association of Realtors’ settlement agreement in the commission lawsuits may have created panic at some brokerages, local Realtor associations and Multiple Listing Services (MLSs) said they were not only anticipating the news but were prepared for it.

“We’ve been scenario planning for quite some time, and it was not a scenario we have not already planned for,” said Art Carter, CEO of the California Regional MLS (CRMLS). “On a couple of our webinars, we said that we expected it to happen by the end of the summer, so the timing wasn’t really a surprise either.”

Across the country in Florida at the Naples Area Board of Realtors (NABOR), the association’s leaders were also not surprised by NAR’s news, but unlike CRMLS, they were a bit surprised by the timing.

“The timing was probably my biggest surprise,” NABOR President PJ Smith said. “I kind of figured the end of this year or maybe after an appeal, but I am glad we at least now know what we are working on. There are still a ton of unknowns that we have to figure out, not only just locally, but statewide and nationally.”

Navigating knowns and unknowns

The current “knowns” for these MLSs and associations are the terms of NAR’s settlement agreement, which includes a variety of changes to the industry.

Based on NAR’s current rules, if a listing agent wants to list a property on a Realtor association-affiliated or -owned MLS, the agent must make a blanket offer of compensation, even if that offer is a as little as $0, to the buyer’s agent. Many non-Realtor association-owned MLSs have adopted similar rules.

But under the terms of NAR’s settlement agreement, the trade group would be banned from making or enforcing rules like this, and the field for displaying cooperative compensation offers on the MLS must go away. If approved by the court, these changes would go into effect in mid-July.

At CRMLS, Carter said he and his team are already working to implement changes they will have to make to their MLS in order to comply with the new rules.

“We are in the process of putting together some white papers about how we think that the field should be rolled out,” Carter said. “We will also have a concessions field that will be a multi-layered field that will allow for a checkbox if the seller is willing to consider concessions as part of the offer.

“We can’t specifically say that they are only for compensation, or that the concessions are a certain percentage or dollar amount, but we are preparing for that and working on the logistics of when to roll those out.”

Over at REcolorado, which is not wholly owned by Realtor associations, leaders had already elected to remove its compensation requirement last year, a move also made by the Northwest MLS and the Real Estate Board of New York.

“As we monitored the lawsuits, this approach led us to strengthen our business-friendly, market-driven policies by removing the compensation requirement,” said Gene Milliman, the president and CEO of REcolorado. “As a result, REcolorado users will not see major changes as they use the MLS.”

Seeking release

While REcolorado’s status as a non-Realtor association-owned MLS allowed it to change its rules surrounding cooperative compensation practices prior to NAR’s settlement agreement, it also means that if the MLS finds itself being named as a defendant in a copycat commission lawsuit, it will not be protected by NAR’s settlement agreement.

NAR, however, provided a release option for non-Realtor MLSs in its settlement agreement. If an MLS like REcolorado chooses to opt in to the settlement, they will have to contribute $100 per subscriber to the settlement fund and agree to the MLS practice changes that are part of the settlement.

REcolorado did not wish to share its thoughts on the opt-in mechanism NAR negotiated. But Carter, the head of CRMLS — which is owned by 42 local Realtor associations and thus not impacted by the opt-in mechanism — was impressed that NAR sought a way to take care of non-Realtor MLSs.

“I think if there were going to be uncovered elements of the industry, NAR providing a pathway for them to be part of the settlement was probably above and beyond what could have been expected of them,” Carter said.

Fewer agents means fewer members

Although associations and MLSs are feeling confident about their ability to navigate the terms of NAR’s settlement agreement and the many unknowns that remain, some agents in the field don’t feel the same way. Due to the terms of the settlement and the potential decrease in the number of buyers using representation, industry experts are predicting a decrease in the overall number of real estate agents.

“If this plays out like I think it is, I believe it is going to have a monumental impact on the size of Realtor associations and the amount they can collect in member fees,” said Bennie Waller, a Realtor and economics professor at the University of Alabama.

While a decrease in membership that leads to a drop in the amount of membership dues collected is concerning for Realtor associations, leaders at NABOR remain optimistic.

“Our membership is increasing and I cannot explain it,” said Marty Manion, the CEO of NABOR. “We are up in numbers from last year and we are still averaging anywhere from 80 to 100 new members a month.

“But (whether) membership is going up or membership is going down, we are fortunate that we are strong enough as an organization to provide resources for our members to do business. We have reserves to make that happen; we have education to make that happen. I believe we are positioned well enough that regardless of membership numbers, we can continue giving our members the information they need.”

To use or not use MLS?

Similar to the membership challenges Realtor associations may face as a result of NAR’s settlement agreement, some in the industry have posited that if agents can no longer list offers of cooperative compensation on the MLS, they may choose to bypass the platform altogether and advertise their listings elsewhere.

While the MLSs acknowledge that this is a possibility, they remain steadfast in their belief in the power of the MLS, even if commissions are no longer allowed to be shown in a specific field on the platform.

“It is our firm belief that the multiple is and always has been a great benefit to the consumer,” Carter said. “It is the biggest gift that the brokerage community has given to the consumer, and to have that compromised is not in the consumer’s best interest.

“The MLS provides the widest level of exposure, and it gives brokers and agents levels of information that they are not going to get if they do things separately from each other. They are better off together and sharing certain elements of information.”

The only constant is change

As MLS executives contemplate the future, they say they are currently focused on helping their subscribers navigate the terms of the settlement and what it means for their businesses.

“We are currently hosting broker forums and participating in partner events aimed at informing real estate professionals about what the settlement means for them, their clients, and their businesses as they use REcolorado MLS,” Milliman said.

“Although we can’t answer every question, we’ve received positive feedback about our efforts to share what we know now. The brokers, agents and appraisers we serve are looking to us for guidance. Our aim is to make certain they know what we know, as quickly as possible, so they can focus on helping their clients achieve their homebuying and selling goals.” 

At NABOR, Manion said it is important that industry leaders and agents remember that this is not the first massive change the industry has had to navigate.

“I’ve worked for the Realtor organization in various places for 30 years,” Manion said. “I would suggest that there has always been change. The topic changes and what we are debating changes, but I would say that the industry is innovative, and the industry figures out how to make it work, how to comply legally and how to serve the consumers.”

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