With confusion around the new commission rules, compliance expert Summer Goralik unpacks whether listing agents should verify signed buyer-broker agreements before showing a property.
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There’s a lot of confusion around the particulars of the National Association of Realtors (NAR) commission lawsuit settlement and the resulting business practice changes. Compliance expert Summer Goralik is here to help clear up some of the looming questions so that we can move forward together as an industry.
This week’s question
As a listing agent, are we required to ask the buyer’s agent showing our listings if they have a signed buyer-broker agreement before showing the property?
Compliance expert answer
This question highlights the complexities and nuances introduced by the recent National Association of Realtors’ (NAR) proposed settlement. Significant changes in the real estate industry include the removal of offers of compensation from the Multiple Listing Service (MLS) and the requirement that buyer agents now have a written representation agreement in place with their clients before showing properties.
Whereas the broad strokes of these changes may be becoming clearer, their practical implications are still unfolding, leaving some gray areas in the interpretation and enforcement of these new rules. For this reason, this settlement is raising new questions and concerns, especially regarding the day-to-day logistics for agents and brokers.
Traditionally, when addressing compliance questions, licensed professionals have relied on resources such as real estate law, state department of real estate websites, advisories, and government enforcement actions for guidance. Although some core issues from the recent litigation, like the negotiability of real estate commissions, agency and the disclosure of compensation, are rooted in established law, the new requirements introduced by the NAR settlement are more practice-oriented. As a result, the familiar resources that agents and brokers typically turn to for assistance and direction may be less applicable at this time.
To address the many questions currently emerging in the industry, it is essential to consult the settlement agreement itself, as well as the antitrust commission suits, examine the NAR’s FAQs available on their website, and seek training and support from state and local associations and MLSs.
According to NAR’s FAQs, the responsibility for ensuring that a buyer representation agreement is in place lies primarily with the buyer’s broker and the MLS. The FAQs do not explicitly require listing brokers to confirm whether buyer brokers have a signed buyer agreement before a showing.
In California, for instance, the California Regional MLS (CRMLS) has responded to the settlement with Rule 9.1, which governs “selling procedures.” While this rule clearly outlines the buyer broker’s obligations with respect to representation agreements, it does not impose any additional requirements on a listing broker to verify the presence of such agreements. In fact, the rule explicitly states, “Nothing in this policy shall impose any restriction or requirement upon the Listing Broker.”
Though it is advisable to review the specific rules of your local MLS — since these can vary — it appears that, at least in California, listing brokers are not obligated to confirm the existence of a signed buyer agreement. That said, some brokers may choose to implement internal policies requiring their listing agents to inquire about buyer agents’ compliance with these requirements as part of their due diligence process. This could include adding a step to their listing checklist to ensure that all parties are acting in accordance with the new rules.
It’s worth noting, still, that if not mandated by MLS policy or regulated by law, any inquiry or request for proof of a buyer agreement by a listing agent might not always be well-received or even acknowledged by a buyer’s agent. Nevertheless, if a listing agent suspects that a buyer’s agent is not complying with the new requirements, they may choose to report the issue to the relevant MLS or their local or state association.
In summary, while there is no formal requirement for listing agents to verify the existence of a signed buyer agreement, some licensed practitioners may adopt this practice as a precautionary measure. As the industry adapts to these changes, peer enforcement is likely to become more common, as accountability among NAR members and MLS participants will be increasingly expected.
Editor’s note: Licensed real estate agents should always check with their responsible brokers for guidance, direction and policy regarding the new practice changes, and licensed real estate brokers would be wise to consult with a licensed attorney for legal clarification and support.
The opinions, suggestions or recommendations contained in this discussion are based on Summer Goralik’s experience working for, and knowledge of the laws enforced by, the California Department of Real Estate and must not be considered legal advice or relied upon as legal advice. You should consult with your brokerage, and/or appropriate legal counsel in your jurisdiction, for further clarification.
Summer Goralik is a real estate compliance consultant and former CA DRE Investigator in Huntington Beach, California. Connect with her on LinkedIn.
