Navigating Big Change

BusinessThought LeadershipBetter LifeReal EstateMindset

Mar. 20

Speculation, fear-mongering, trolling, exaggeration, uninformed opinions, click-bait, and general misinformation is what you’ll most likely bump into after NAR announced the proposed settlement in the Sitzer-Burnett lawsuit.

The “noise” spans everything from buyers' agents being a thing of the past to commissions going away completely to the collapse of major industry players like Zillow. And that’s before you even jump into the comments section of any social media posts.

It’s really easy to get swept up in all the noise and go into a panic.

As a real estate advisor, it’s important to understand the facts, be deeply informed, prepare for potential changes, and articulate them to your clients and those you serve.

We’ll get into the details of the case and how it could impact your business, but let’s quickly touch on how you can prepare and approach what will be an increasingly uncertain time for the real estate industry, your business, and the public (buyers and sellers).

Tune out the noise: there is already a lot of it coming at you from all directions and it will continue to grow as people jostle for attention, clicks, and eyeballs. Be hyper-selective about who and how you choose to receive, and share, this information. It will matter. Protect your mind from distraction - most posts, commentary, and headlines are like junk food for your brain.
Cultivate a growth mindset: Embrace these challenges and changes as an opportunity for learning and improvement. Choose to balance your information intake with creative, motivating, mind-expanding intake through books, podcasts, conversations, and meditation.
Embrace uncertainty: Instead of resisting uncertainty, see it as an opportunity that opens doors to new possibilities, experiences, and levels of service and expertise in your business.
Maintain flexibility: Stay open-minded and adaptable to new circumstances. Commit to maintaining a flexible mindset by letting go of old ways of thinking and being willing to adapt and grow.
Focus on what you can control: Instead of feeling overwhelmed by what you can't change, concentrate on what you can influence. Take proactive steps to positively impact your situation by educating yourself on the facts and seeking out the tools to be able to convey and deliver the best value to your clients and the people you want to serve.

Here’s a recap of the facts of the matter and what Thrive is doing to ensure we maintain the level of professionalism we promise our community of Advisors and our clients:

The Case

On Friday, March 15th, 2024 NAR proposed a settlement to end all allegations brought against it and its members (except companies that sell 2B+ in volume). Thrive falls under this umbrella of members.

This settlement is still subject to court approval (in the determination of whether this is approved by the courts, it should also be noted that the Dept of Justice may impede the settlement, at which point, further changes in compensation laws may occur).

At Thrive, we’ve been preparing for this through our “Legal Bootcamp”, role plays, and routine training, and believe that those who can adapt will indeed Thrive. This is an opportunity to further elevate your position as an Advisor, build your skills, and articulate and demonstrate your value to your buyer and seller clients and the public.

If you’ve been ignoring this, NOW is your time to lean in and engage. Remember, if you don’t plan and execute the path to your preferred picture of the future, the world will do it for you, and you won’t like where it leads.

The Main Takeaways

The biggest outcomes and impacts of this proposed settlement are:

Buyer agent compensation cannot be communicated through the NAR associated MLS’s after July 2024.
NAR MLS participants working with buyers must enter into written representation agreements before touring a home.

The Nitty Gritty

Agent Compensation

All brokerages can still charge a fee for services to both buyers and sellers. The proposed change is that after July 2024, buyer compensation cannot be communicated through the NAR-associated MLS.

While it is not clear how the communication of commission payments will be made after July 2024, there may be several avenues to communicate what commission, if any, will be paid:

Off-MLS websites that outline commissions on certain properties.
Direct communication with the listing agent, culminating in a written agreement.
Various other avenues that have yet to be discovered or innovated.

Subject to the final settlement outcomes, before July 2024, the relevant Colorado agencies (Colorado General Assembly, REColorado, DORA, and CREC) will have to determine what changes, if any, are needed to our forms, contracts, technology platforms (MLS inputs). It’s important to remember that real estate practices are governed by federal and STATE rules.

Think back to licensing school - there were two modules, federal and state. The proposed settlement itself even refers to the fact that how the settlement is carried out cannot contradict state laws. In other words, each state will need to determine how it interprets, engages and facilitates the proposed settlement, should it be approved by the courts.

Until such time, you should continue to use the same forms and contracts as required by CREC, and continue to have the same robust discussion about compensation with your buyers and sellers.

Seller Conversations:

It is important to outline the following with your sellers as it relates to these potential changes:

Offers of compensation to buyer agents have always been negotiable and optional, and not required. The recent lawsuit has simply made it so that as of July 2024 agent compensation cannot be posted on the NAR affiliated MLS’s (which REColorado is).
Options for payments to buyer agents going forward are:
- Fees paid directly by consumers (buyer);
- Seller concessions, provided that such concessions are not conditioned on the use of, or payment to, a buyer broker (i.e. the buyer needs to specifically state in their offer that the seller concession is to be used to pay for the buyer agent commission);
- Portion of the listing broker’s compensation;
- Fees are negotiated as part of the offer.
Any payment agreed upon and offered by the Seller to both the listing agent and buyer agent must be documented and detailed using the ERTS Listing 7.1.1 until such time the contract is updated by CREC.

Buyer Conversations:

When talking with your Buyers, you should have a similar robust discussion around compensation and the options for how you can be paid as a buyer’s agent:

Fees paid directly by the buyer;
Seller concessions, provided that such concessions are not conditioned on the use of or payment to a buyer broker (i.e. the buyer needs to specifically state in their offer that the seller concession is to be used to pay for the buyer agent commission);
Portion of the listing broker’s compensation;
Fees are negotiated as part of the offer.
check 7.3.1.1 in the ERTB if you want to be paid and make sure you have a conversation about implications to your buyer if the seller or listing broker is not offering buyer agent compensation.

Written Representation Agreements

The settlement requires NAR-associated MLS participants working with buyers to enter into written representation agreements with buyers before touring a home.

It is currently unspecified as to what written agreement will be required in Colorado, if any. However, Colorado already has some of the most robust and comprehensive consumer protection practices and contracts in place, and both the Brokerage Disclosure to Buyer and the Exclusive Right to Buy (ERTB) agreements sufficiently cover this requirement in our opinion.

That said, the requirement for when and how these forms will need to be executed is still unclear. Ultimately, it will be up to the Colorado General Assembly to pass a bill outlining exactly what our process needs to be. We expect that to be forthcoming in the coming weeks before July.

This is an opportunity for Thrivers to elevate their role as professional Advisors, and an avenue to educate buyers on their options, and the process.

Thrive will also be working closely with our online lead partners, to ensure we are compliant with any new MLS requirements while maintaining the level of service and responsiveness expected by our online consumer leads.

In closing, we will continue to monitor and update our internal processes, protocols, and training to reflect the most up-to-date, local, state, and national requirements.

Above all else, our operations team is committed to providing our community of Advisors with the absolute best tools, materials, training, support, and camaraderie to navigate our path forward. In some cases, that may be inconvenient, require sacrifice, and be costly. Yet, that will not wane our commitment to the Thrive Family, the Thrive Way, and our shared future together.