REALTOR® associations across the country have diligently rolled out new practice standards as part of the National Association of REALTORS® proposed settlement agreement, which requires written buyer agreements that meet certain criteria and include revised compensation disclosures aimed at enhancing transparency and consumer choice.
The practice changes require MLS participants to establish written agreements with buyers they work with and prior to touring a home. NAR Senior Counsel and Director of Legal Affairs Charlie Lee says members should confirm with their form provider that the forms have been updated to comply with the practice changes.
State associations responded to these requirements, many going through multiple iterations of form updates until they got it right.
“It was a big task,” says Taylor Kitzmiller, associate counsel for Maryland REALTORS®, who detailed the state association’s proactive adjustments. “We really fleshed out our compensation section, explaining to the buyer what they are committing to pay their broker—whatever the broker and client end up agreeing to.”
Forms may take many different shapes as associations and brokers develop models that work best for them and their consumers while complying with varying state and local laws. For example, Maryland REALTORS® also created two new forms:
- An addendum to the sale contract enabling a buyer to request that the seller compensate the buyer broker directly
- An agreement between brokers if there is an offer of cooperative compensation, which can no longer be listed on the MLS
Hank Lerner, chief legal officer for the Pennsylvania Association of REALTORS®, says that because of the longstanding practice of buyer agency contracts in his state, form updates were more about refinement than an overhaul. PAR’s Standard Form Committee worked with a task force to revise more than 20 forms to reflect the practice changes. “Both our listing and buyer agency forms have had very flexible fee provisions for many years, so the changes we made were narrowly focused on the settlement terms while maintaining the existing fee flexibility.”
Proactive Education and Training
To ensure a smooth transition after the Aug. 17 deadline, associations engaged in extensive educational efforts, including webinars, workshops and direct consultations with members. Maryland REALTORS® implemented a comprehensive strategy that even included a dedicated website focused on NAR’s settlement—similar to facts.realtor.
“This site explains the settlement’s implications, showcases all of our sample forms and features a video series covering the form changes,” Kitzmiller says. Additionally, the website hosts recordings of the association’s webinars.
“We’re incredibly proud of all the work we did, and we’re hopeful that it will instill confidence in our members as they adapt to these changes,” Kitzmiller says.
PAR has conducted several statewide webinars and written several articles to help members navigate the new forms. The association initially held a webinar for brokers to explain the practice decisions they’ll need to make for their brokerages. More recently, PAR held webinars for the general membership, explaining the settlement and forms and how to implement them into their businesses, says PAR CEO Mike McGee.
PAR has also partnered with 19 local associations to launch a statewide consumer outreach campaign to provide consistent messaging to educate consumers about the industry changes and the benefits of using a REALTOR®. The association was awarded an NAR Consumer Advocacy Outreach grant to help with this effort, McGee says.
Heading a local association in Maryland, Howard County Association of REALTORS® CEO Sarah Rayne says its role is assisting the state association in educating members. “We hosted our state association for a forms update webinar a few weeks ago, and we’ve been pushing information out to our members regularly,” she says. “It takes a village to reach as many members as possible.”
Looking Forward
As the industry gets used to these changes, the focus remains on ensuring that real estate professionals can do their job even better in serving the interests of their clients and consumers. The practice changes are expected to foster a more transparent marketplace, benefiting both consumers and agents by clarifying the financial aspects of real estate transactions.
Associations plan to continue to refine their forms and training processes. Lerner says he expects that brokerage practices will evolve as brokers adjust their models in ways that make sense for them and the home buyers and sellers they represent. “Our goal is that our forms will continue to evolve with them and continue to accommodate a number of different options,” he says.
Members who have general questions about the practice changes and their impact on forms can visit facts.realtor for more information.
