Guest columnist Michael Seward: Settlement could dramatically shake-up real estate industry




Published: 03-31-2024 12:32 PM

The National Association of Realtors (NAR) recently agreed to rules changes as part of a massive settlement. The new rules will put more negotiating power in the hands of consumers. Despite what professionals stated in a recent article in this publication, it has the potential of dramatically shaking up the real estate sales industry. It’s up to consumers to decide how, not us real estate agents. The Massachusetts Board of Registration of Real Estate Brokers and Salespersons needs to implement new rules to ensure consumers are aware of their options.

The terms of the settlement open the door for all sorts of innovations in the real estate sales industry that consumers may find appealing. One of the terms of the settlement is that the fee paid by sellers to a buyer’s agents will not be published on the multiple listing service, while another term requires that Realtors execute a buyer’s agency agreement with their buyer clients that outlines their duties and responsibilities and states what they will be paid.

That fee could be for less or more than what a seller of a particularly home is willing to pay them, if anything. It could be a flat fee or a percentage of the sales price. Meanwhile, home sellers may decide either to provide a blanket fee or determine a buyer’s agent fee on a case by case basis. In the case of the latter, a buyer’s agent would need to include their fee as a provision in the offer they prepare for their client.

There could also be major changes to commission structures home sellers pay. A different commission could be paid based on the circumstances of the sale, like, for example, dual rate commissions. A dual rate commission is when a seller pays a different fee based on whether or not a buyer’s agent is involved in the transaction.

The Massachusetts Board of Registration of Real Estate Brokers and Salespersons is the governmental body charged with regulating real estate licensees. The board already mandates that all real estate agents present an agency disclosure form to all consumers upon their first personal meeting to discuss a specific property. This form explains the different types of representation in Massachusetts, i.e., seller’s agents, buyer’s agents, facilitators, and dual agents. State law also requires that real estate agents provide consumers with a fact sheet about home inspections when their buyer clients sign a contract to purchase a home. The purpose of these forms is to educate and protect consumers. So it is reasonable to assume that the board will need to come up with a new form to inform consumers about their options in light of the settlement terms empowering consumers.

One of those interviewed for the article was the current president of the Realtor Association of Pioneer Valley (RAPV), Peter Ruffini. What wasn’t mentioned in the article is that Ruffini is also the chair of the commonwealth’s board of registration. The Realtor association serves the interests of Realtors, while the state’s board serves the public’s interests. If the president of RAPV also serving on the state’s board seems like a conflict of interest, that is because it is.

RAPV is a chapter of NAR. NAR is one of the largest lobbying groups in the nation. The Center for Responsive Politics regularly lists the trade group as one of the top spenders in lobbying, usually at number two on the list. NAR has influenced housing policy at every level of government for over 100 years. So there is an officer of the Realtor lobbying group serving on the state board responsible for regulating them. This isn’t the first time that has happened. Ruffini’s predecessor as chair of the state’s board, Kevin Sears, is currently the president of NAR. He rose through the ranks at NAR serving Realtor interests while serving on the official state board serving the public’s interests.

The potential for changes creates a certain degree of uncertainty for us real estate agents. It also empowers consumers with the potential of bringing down the costs associated with buying and selling a home. NAR’s settlement terms need to be incorporated into state real estate law in a manner that ensures consumers are properly informed of their options.

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Michael Seward is a licensed real estate broker and a member of the National Association of Realtors. He lives in Sunderland.