Inventory for all property types declined in almost all areas, except for Rockland’s condo and co-op markets, the latter with an 84.6% gain. The Bronx led the region for new listings, with a 31.9% increase.
PrimeSource, which is a leading manufacturer of proprietary brands and a distributor of premier third-party brands, will utilize the location to service New York, New Jersey, Connecticut and Pennsylvania.
On March 15, 2024, the National Association of Realtors entered into a proposed settlement agreement with various plaintiff homeowners to resolve nationwide litigation concerning broker commissions. Effective August 17, 2024, certain practices and changes must be adopted by all Realtors to comply with these settlement agreement provisions. Here is a breakdown of those requirements and an overview of the new forms that have been created by the New York State Association of Realtors (NYSAR).
Changes to MLS Policy
Effective Aug. 17, 2024, all MLSs, including OneKey MLS, must implement new policies.
Therefore, OneKey has established that effective Aug. 8, 2024, they will no longer display any offers of cooperating compensation to any cooperating brokers. Additionally, OneKey will no longer permit any reference to cooperating compensation in agent or public remarks. Further, the MLS may not facilitate the sharing of cooperating compensation, so tools, such as ShowingTime, may not be used to disseminate cooperating compensation information.
It is important to keep in mind that cooperating compensation is still permissible, and a brokerage and its agents can still market a client’s cooperating compensation on any other platform (example: website, social media, billboard, flyer, telephone, text, etc.), so long as they only share their offered cooperating compensation and not other brokerage’s cooperating compensation.
Effective July 23, 2024, OneKey will also be providing a new field for seller concessions. OneKey will provide a dropdown box where the seller can acknowledge if they will or will not entertain a seller’s concession. If the “Yes” box is selected, then the seller has the option of putting in a specific dollar amount that the seller will offer as a concession; however, this amount is not required. It should also be noted that a seller concession cannot be restricted or earmarked for compensation to cooperating brokers and a seller’s concession is not a substitute or a workaround for marketing cooperating compensation.
Buyer Agent Agreements
In addition to the MLS changes, effective Aug. 17, 2024, all Realtors that represent buyers must obtain a signed written buyer agreement prior to touring a home. This applies only to Realtors who are representing buyers, so agents that represent only the seller (example: an open house) will not require a buyer agreement to show the property. This agreement must state that all commissions are not established by law and are freely negotiable. It must also provide for a conspicuous specific buyer commission that is objectively ascertainable and not open-ended. Such phrases as, “buyer will pay whatever the seller is offering” would not be permissible. Finally, it must state that the Realtor is prohibited from receiving any cooperating compensation in excess of the amount authorized by the buyer.
NYSAR has prepared an exclusive buyer agency agreement, as well as a non-exclusive buyer agency agreement, which can be used on an ad hoc basis based upon the buyer’s desire to see certain properties only. Both agreements establish that the buyer will agree to pay the buyer agent’s commission and that there is a cap to that compensation. They also provide that the buyer agent may seek cooperating compensation from the seller or listing agent to offset what the buyer would be obligated to pay; however, the buyer will ultimately be responsible for the full commission or any outstanding remainder if any cooperating compensation does not satisfy the buyer compensation in the contract. It further addresses the fact that if dual agency (either direct or designated) takes place, the buyer would be obligated to pay the entire amount of buyer compensation and the buyer would not be able to avail itself of any cooperating compensation, as dual agency effectively negates any offers of cooperating compensation (cooperating compensation is only offered between two brokers and is not available if only one broker is a party to both sides of the transaction). However, if a broker utilizes the NYSAR Exclusive Listing Agreement, addressed below, the buyer’s agent could receive compensation pursuant to the dual agency provision in that form.
Finally, the forms provide a dispute resolution provision that requires the parties to submit the NAR-authorized mediation and/or arbitration on the local association level if a dispute arises, as well as prohibiting the parties from engaging in litigation or participating in a class action lawsuit.
Exclusive Listing Agreements
As a result of the settlement agreement, listing agreements must also be modified. In addition to a provision that conspicuously states that commissions are not set by law and are freely negotiable, any reference to cooperating compensation being submitted and marketed through the MLS must be removed.
NYSAR’s new form provides separate sections for commissions. The first provision establishes the listing agent commission. It then provides for a provision for a modification to that commission in the event that there arises a dual agency or unrepresented buyer situation. These commissions are negotiated in advance.
The second provision is to decide whether or not the seller will offer cooperating compensation. They are under no obligation to offer out compensation; however, if they choose to offer out cooperating compensation, they must determine from the outset whether that compensation will come directly from the seller or through the listing broker. That provision also establishes who will be offered cooperating compensation (example, buyer agent, broker agent, subagent, etc.) as well as the pre-negotiated amount. It is important to note that even if a seller does not offer cooperating compensation, a buyer (or a buyer’s agent at the direction of the buyer) can request cooperating compensation and the seller can negotiate such request.
Like the buyer’s agreement, all disputes are to be handled through a NAR tribunal at the local association level, as well as provide a prohibition on litigation or joining a class action.
Historically, the contract for the payment of cooperating compensation was established by membership in the MLS and a posting of that cooperating compensation on the MLS. That offer of cooperating compensation was unconditional, and a broker could rely on their membership agreement to bind the parties. Disputes were handled through NAR-authorized mediation/arbitration, as per the MLS membership.
Since cooperating compensation can no longer be published on the MLS, a contract is needed between the seller or listing broker and the cooperating broker to memorialize the cooperating compensation being offered and contractually bind the parties. NYSAR has created two forms. One is an agreement between the seller and the cooperating broker; the other is an agreement between the listing broker and the cooperating broker. Both are similar insofar as they establish that either the seller or the listing broker (depending on which form you use) contractually agrees to pay the cooperating broker a commission. They also set forth who is being offered cooperating compensation (buyer agent, broker agent, subagent) and what that compensation is. They both establish that any dispute will be handled by a NAR-approved body on the local level. Their only difference is that the seller’s cooperating compensation document provides further details on cooperating compensation, including an explanation of duties, cooperating compensation, and the negotiability of cooperating compensation, as the party contracting to pay the commission is a member of the public and may not fully familiar with these provisions.
After both parties have signed the forms, they are legally bound by its terms and conditions. If a party fails to pay, the harmed party (the cooperating broker) can take this document and file a complaint under Article 17 of the Code of Ethics to seek enforcement.
Conclusion
We all need to be aware of these upcoming changes and pivot to understand and embrace them well in advance of the proposed deadline. The forms referenced in this article can be found at https://www.nysar.com/legal/forms/. Also, on that website, below the links to those forms, you can find a link to a guide on how to use those forms. Additional information will be coming from HGAR, NYSAR and NAR in the form of webinars, meetings, postings, videos, and other resources. As always, a great source of information is NAR’s site facts.realtor. Check out these sites when you can.
Make sure you remain aware of updates as this situation continues to unfold. HGAR will proactively reach out to its membership with reminders and opportunities to learn more.
Inventory for all property types declined in almost all areas, except for Rockland’s condo and co-op markets, the latter with an 84.6% gain. The Bronx led the region for new listings, with a 31.9% increase.
PrimeSource, which is a leading manufacturer of proprietary brands and a distributor of premier third-party brands, will utilize the location to service New York, New Jersey, Connecticut and Pennsylvania.
City and State honored 100 “New Yorkers who are on the front lines, creating jobs and spurring economic growth on the local, state and national levels.”
Receive original business news about real estate and the REALTORS® who serve the lower Hudson Valley, delivered straight to your inbox. No credit card required.
