The National Association of Realtors has now made a $418 million legal settlement, and has agreed to specific changes in its practices that will impact not only the lives of residential real estate agents, but the lives of commercial agents, too.
Here are two of the most significant changes that NAR has now agreed to:
1) Multiple listing services will no longer be able to disclose the amount of commission that will be paid to a buyer’s agent, if the agent becomes the procuring broker for the property.
2) For any agent who is a member of a multiple listing service, whenever they’re working with a buyer, that agent must now have a signed representation agreement in place with that buyer, acknowledging that they represent the buyer, and making specific references as to how the buyer’s agent will be compensated.
So what this now says to me, is that major commercial real estate brokerage companies all across America, as well as the online services that allow agents to post the availability of their listings for sale or lease…these entities I believe are all now consulting with their attorneys, to determine how they will now proceed with this new agreement being in place.
But I would expect that the safe and easy move, will be for them to now require these same changes to go into effect on the commercial side of the business, too.
With this in mind, I don’t expect that any major commercial real estate brokerage company, or any company that allows commercial properties to be marketed on their own online property marketing service, would ever want to deal with a lawsuit down the road where the judge will be asking them why they didn’t follow the guidelines that NAR has now agreed to for the industry. Making this change would just be so simple and easy, and very inexpensive.
This reminds me of decades ago when the residential side of the business began requiring homeowners to fill out property disclosure statements for the prospective buyers to review, which informed the buyers of any known defects or potential problems that the homeowner was aware of, that were now being disclosed.
Then immediately following this, the organization that I am a Past President of, AIR CRE, took the lead and immediately began developing these same kinds of disclosure forms for commercial real estate transactions, so that owners could then fill out these kinds of forms for commercial properties also, and this then became the standard practice within our industry.
It was just the right thing to do, and at the exact right moment in time to do it.
(In addition, if you’re looking for great forms and addenda for commercial real estate transactions, take a look at the forms and the entire system that AIR CRE makes available for commercial brokers, right here.)
So in moving forward, expect that these changes will be coming to our side of the industry, too, and if you’d like to see a 6-minute video presentation from NAR’s legal counsel, along with NAR’s President, about what was agreed to within this settlement, you can watch it here.
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