In what could be an attempt to get ahead of changes that may be coming to the real estate industry, the Real Estate Board of New York announced some major policy changes this week, as first reported on by The Real Deal.
Starting Jan. 1, REBNY rules will prevent the listing brokers from paying buyer agents and instead will require sellers to pay commissions directly. The rule will require listing agreements to clearly outline the seller’s offer of compensation to the buyer’s agent.
The REBNY and the Residential Listing Service (RSL) in NYC are governed by the Universal Co-Brokerage Agreement (UCBA) and are independent from the National Association of Realtors.
NAR is currently in court, along side HomeServices of America and Keller Williams, for Sitzer/Burnett, the smaller of two bombshell class action buyer broker commission lawsuits. RE/MAX and Anywhere had previously been named defendants in the suit, but both have filed settlement agreements. The second, larger lawsuit is called Moehrl after its lead plaintiff and it is expected to head to trial in the first half of 2024.
The lawsuits take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a Realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR, however, contends that the current commission structure, which has been in place for over 100 years, actually benefits consumers.
In September, Steve Murray, the co-founder of RealTrends Consulting, told HousingWire he sees three possible outcomes.
“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said.
“The second thing that could happen, is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.
Ninve James, who runs REBNY’s residential brokerage services and products, told The Real Deal that the board is implementing the changes to “promote transparency and consumer confidence” and “provide for a more efficient RLS.”
Other amendments to REBNY rules include a change to the UCBA’s so-called “opt-out” listings. These listing are properties that owners do no want listed publicly. With the amendment, brokers are now able to submit an opt-out form notifying REBNY of the listing and inform other brokers about it through individual calls and emails. Under earlier rules, brokers were blocked from distributing any information about these listings.
Brokers will also now be able to submit unsolicited offers to homeowners with RSL listings with “coming soon” status. If the owner wants to move forward with the offer, the listing status will need to be changed to “active” in order to proceed.
Additionally, the UCBA will now recognize electronic payments for commission and rent deposits, including wire transfers and applications including Venmo and Zelle.