Last week, the National Association of REALTORs reached an agreement with the Department of Justice in response to concerns raised by the Department regarding transparency and competition in the MLS industry. While the settlement has not been finalized, these initial conversations mark a change that will affect the way MLSs do business going forward. Our founder, Dawn Pfaff, weighed in to help real estate professionals, homeowners, and home buyers understand what the new rules would mean for them.

Q: What exactly happened? What are these new rules, from your perspective?

A: There are 2 main parts of the DOJ agreement. First, buyer’s broker commissions should be more transparent to the buyer. The buyer’s broker commission should be visible to the buyer going forward. Second, brokers who are not members of the MLS should have access to lockboxes when they represent buyers. The MLS should not limit who can buy an EKey or who can have access to the property.

Q: What were your initial thoughts when you heard about the DOJ filing and the subsequent agreement?

A: When I first heard about the new agreement, I was surprised that the NAR settled the same day I heard about the lawsuit. I think more transparency is a good thing and will lead consumers to have a better understanding of their costs. Both the buyer and the seller participate in the payment of commissions as the money comes out of the deal, but the buyer generally does not consider the commission as part of their offer, whereas the seller does. 

As for lockboxes, the listing agent is responsible for allowing a buyer and their representatives to enter the property, whether they meet the person there or arrange for a lockbox at the property. When MLSs limit who can purchase EKeys to lockboxes and listing agents refuse to make arrangements to show the property to agents without EKeys, buyers can’t access all available listings and sellers can’t access all buyers. This rule will ensure that all who want to view a property can gain access (as long as the seller approves).

Q: What effects do you think this will have for home buyers? How about home sellers?

A: This will mean more transparency for savvy people who realize that everything is negotiable. Beyond that, I really don’t think this will have much impact on buyers or sellers. They will still accept the amount they are willing to accept for the home.

Q: How do you think this will affect agents and/or brokers?

A: Agents and brokers will have to be more transparent, but in general, brokers will still conduct business in the same way they always have. 

Q: How do you believe this will affect the real estate industry as a whole? 

A: I think this will strengthen the value that the real estate agent brings to the transaction. Transparency in commissions gives a broker the opportunity to talk about their value; a listing agent is supposed to market the property, bring the seller the highest price, and make sure the deal gets closed. The broker’s job, on behalf of the buyer, is not only to help a buyer identify the perfect property, but also to represent the buyer’s interests, get them the best deal, protect them, and counsel them throughout the entire process. As for the lockbox issue, this will allow more buyer’s brokers into a property, and therefore bring more opportunities for a higher offer to the seller.  

Q: Any advice for home buyers and sellers with this new policy?

A: My advice to buyers and sellers is ask questions about the commission splits and truly understand how your agent gets paid.

Q: Your entire business was created to improve both agent/broker and consumer experience with the real estate industry - what have you done to address the issues brought up by the DOJ filing?

A: These new rules are an opportunity for agents to use this new transparency as part of their listing presentation. This gives the agents a platform to talk about the value they bring to the transaction and actually can strengthen their position in the industry.