Washingtonians: How does the NAR Settlement Impact You?

Washingtonians: How the NAR Settlement Impacts You!

I am seeing a lot of misinformation in the media regarding the NAR Settlement. This is likely because this week’s news cycle is focusing on a national perspective, which doesn’t always align with how we operate here in Washington state. 

I want to assure home buyers and sellers that Washington is leading the way in compensation transparency, setting a standard that many other states are still working towards. To help you navigate through all the noise, here are some fast facts: 

What’s the same in WA state:

• Sellers and buyers sign service agreements with their broker.
• Compensation is negotiable. 
• Sellers determine how much (if any) compensation they want to offer a buyer’s broker through a listing agreement.
• NWMLS publishes the seller’s offer of compensation to the MLS (i.e this is public information). 
• Buyer broker compensation is disclosed in the purchase and sale agreement.

*The NWMLS has been proactively pursuing transparency measures regarding compensation since 2019, three years before the settlement came to the national spotlight. 

What has changed in WA state:

• Buyers sign contracts for services with their brokers which includes the amount of compensation the buyer broker will be paid (took effect in January 2024).
• Buyers and their brokers must agree on a specific percentage or dollar amount (not a range), they can no longer rely on the seller for compensation.
• Who now pays the compensation? This is now a negotiable term between buyers and sellers during a real estate transaction. Sellers may invite the buyer to request broker compensation in the buyer’s offer.

*These changes took effect on Saturday, August 17th, 2024. 

Still confused? Let’s break it down by each stakeholder affected by the changes: 

NWMLS: 

1. The Northwest Multiple Listing Service (NWMLS) is owned by member brokers (i.e. myself and other brokers paying dues), not by the National Realtor Association (NAR).  
2. The Northwest MLS took its position in May 2024 on the NAR settlement and opted not to join the settlement efforts. Why? 
   1. NWMLS has been proactively pursuing transparency measures regarding compensation since 2019, three years before the settlement came to the national spotlight. 
   2. The opt out decision was in the pursuit of leaving our clients in a better position, informed about compensation for buyers and sellers at the start of your agency agreement with clients. 
   3. The NWMLS will continue to publish buyer brokerage firm compensation in listings. This is the biggest difference in regard to what other MLSs in other states are doing in regard to the NAR settlement. NWMLS feels this is the most transparent option for buyers and buyer brokers.
3. The NWMLS has revised forms and listing processes to make sure sellers are aware of their options that were already in place in 2019, which is providing even further transparency.  

Sellers:

1. If you are a home seller, you make the executive decisions on the compensation you offer to a buyer’s broker. This can be none! 
2. Seller’s brokers should walk you through the pros and cons of providing buyer’s broker compensation.  
3. Sellers should be prepared to discuss compensation terms with their listing broker, buyers, and buyer’s broker. 
4. As a seller, you may request the buyer’s broker to include their requested compensation in the buyer’s offer. This would be another negotiable term in the contract just like any other term.

Buyers:

1. Changes to forms provide buyers with a clearer picture of what they’re paying for, making it easier to evaluate the value of their broker’s services.
2. Once reasonably possible, buyers will need to sign a written compensation agreement with their broker, this is called a Buyer’s Broker Services Agreement (BBSA). 
3. When buyers sign a BBSA, they will need to have an open dialogue regarding compensation, how their broker gets paid, and how it affects the home buying process.
4. Buyers can negotiate any compensation gaps due to their buyer broker agreement in their written offer to a seller. 
5. Buyer broker compensation, offered by the seller, is disclosed in the purchase and sale agreement. 

Real Estate Brokers: 

1. Brokers will need to adjust to new commission structures and clearly communicate their value to clients. 
2. Offers of compensation by the seller need to be discussed with buyers prior to making an offer on a home. 
3. Brokers will need to use the new NWMLS forms. 
4. Brokers will need to have proactive conversions about their compensation. 

In short, there are fewer changes happening in WA state than there are in other states. Stay informed and be sure you’re broker clearly articulates their process and compensation options at the outset of your relationship.   

If you have any questions or want to walk through this content over the phone, give me a call (509.391.5238).

Resources: 

• Legal Bulletin 226 – Forms and Rules Revisions Related to Offers of Compensation
• Real Estate Brokers in Washington 
• Guide to Buying a Home