The August 17 deadline is looming, and many Realtors are gnashing their teeth over how they can share their seller’s offers of buyer broker compensation while still complying with the terms of the settlement.
Enter the commission sharing websites — websites specifically designed for agents and brokers to quickly and easily find out if the seller of a property is offering to cover the buyer’s broker fees.
Since the settlement agreement bans offers of compensation from the MLS, but allows for them be shared in other places, many have felt this could be the ideal solution and, understandably, several websites specifically designed to share compensation and concession information have popped up.
“When the terms of the NAR settlement came out and there was the piece about compensation and the MLS, I had been in a meeting with some of my top listing agents, who have sometimes up to 50 listings, discussing how they are going to handle this,” said Kacy Bell, the operating principal of Keller Williams Greater Des Moines. “All of a sudden they are going to be getting all these calls, texts and emails about if their seller is willing to offer compensation, on top of all their other communications. We knew there had to be an efficient way of handling this sort of communication.”
Bell approached real estate and mortgage firm Avenu Technologies with her challenge. From this, HomeKick was born.
Via the HomeKick platform users can search an address in the database and see how much the home seller is willing to offer in concessions or buyer representation fees. Users are only able to search one listing at a time by exact address and they have no way of searching listings or sorting listing by compensation or concession amount. The listings and information are submitted to the site by listing agents and brokers. Agents do not have to pay to add their listing information to the site, but there is an annual subscription fee of $60 if agents and brokers want to access and view compensation data.
If real estate professionals don’t feel like HomeKick is the right platform for them, there are plenty of other commission sharing websites on the market. From Louisiana-based Whatsthecommissions.com, to websites like Verified Commissions, which describes itself as “an open-source platform for agents to share offers of compensation,” and Nesthook, which claims it offers “compliant commission disclosure for real estate pros.”
While this may seem like the ideal way to share information that some buyers will need to determine if they can afford a property, many industry experts aren’t so sure.
“These things are very questionable and any agent or broker who is involved with them or supports them in any way are putting themselves at risk for future litigation,” said Steve Murray, the co-founder of RealTrends Consulting.
Under the terms of the settlement agreement NAR, which was defined to “include present and future, direct and indirect subsidiaries, predecessors, and successors,” has agreed “not to create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregators’ website for such purpose) for listing brokers or sellers to make offers of compensation to buyer brokers or other buyer representatives (either directly or through buyers).”
In theory, this means that a real estate and mortgage technology company like Avenu Technologies, the parent company of the HomeKick platform, is free to create a commission sharing website without violating the terms of the settlement agreement.
“HomeKick itself is not affiliated with NAR or endorsed by NAR or by and its affiliate of the MLS, and so we are spot on compliant with that provision of the settlement,” Marc Diana, the CEO of Avenu Technologies, said. “We also aren’t getting data from the MLS, which is prohibited in the settlement— it is user generated content.”
Nesthook published a similar interpretation of the rules on its Frequently Asked Questions page.
“Nesthook worked tirelessly with legal experts on the website’s design and content so that it adheres strictly to the guidelines outlined in the settlement, providing agents with a safe and secure platform to disclose and search commission rates,” the page states. “Nesthook has not been created by the National Association of Realtors, any Realtor Association or MLS. Nesthook is not a direct or indirect subsidiary, predecessor, or successor of NAR, or any Realtor Association or MLS. Nesthook is an independent organization that is not supported by NAR, any Realtor Association or MLS.”
But while the websites themselves may be in compliance with the terms of the NAR settlement agreement, the agents using them and contributing data may not be. And that’s the rub.
The settlement agreement covers all Realtor members and brokerages who reported $2 billion in sales volume or less in 2022, which, when combined with the language used in the business practices changes, makes it unclear if a Realtor member would be in violation of the agreement if he or she paid a subscription fee to one of these sites or contributed listing information. (The settlement agreements signed by larger brokerages contain similar language.)
“The intent of the settlement is that a broker can advertise compensation on their own website, on social media or share the information via email, but putting it on a platform where you are going to commingle that information with listings from other agents and brokers and you are supporting the formation of that site by giving them your data and you are paying them a subscription fee, that is where it gets questionable,” Murray said.
While industry experts may be unsure if an agent’s participation in one of these sites would be compliant or not, they are fairly certain that the Department of Justice will not be pleased with them.
“The Department of Justice is leaning heavily into this and as far as they are concerned, you cannot post those commissions, and the word that they use is ‘anywhere,’” said Chuck Cain, an attorney and the senior vice president of the national agency division at FNF Family of Companies.
With the industry collectively waiting for the DOJ to take action, industry leaders are cautioning their agents about using commission sharing websites. James Dwiggins, the CEO of NextHome, has been among the most vocal.
“There is nothing in the settlement that explicitly prohibits agents from using those commission sharing websites,” Dwiggins said. “However, there are incredibly litigious lawyers that will likely sue on anything, so it would be extraordinarily smart not to participate in those websites.”
In Dwiggins’ view, there is no need to disclose what the seller is willing to pay in concession or buyer representation fees.
“If you’re in any other market than a strong buyer’s market, what would be the reason to put all your cards on the table and say, ‘We are going to provide cooperative compensation?’” he said. “The way this needs to work in a true consumer centric model is that there shouldn’t be any advertising of commissions or even concessions in advance of an offer unless there is a really good reason to incentivize a buyer. You just have to say that your seller is willing to entertain any and all requests that are included in an offer.”
While it remains to be seen how the DOJ, Judge Stephen Bough, who is overseeing the final approval of NAR’s settlement agreement, or the commission lawsuit plaintiffs’ will feel about these commission sharing sites, for now if an agent or broker chooses to utilize one, it is buyer beware.
“For the third parties creating these sites, I don’t see there is an expressed prohibition against it within the terms of NAR’s settlement,” Cain said. “But the people who are providing the information to them, they might be violating the terms of the settlement. As this moves forward we’ll see if the DOJ leans into this and if that is the case these third party companies and sites will start to disappear pretty quickly.”
Here’s an approach that addresses all the issues raised in this article.
First, it is the seller who enters and offers the compensation. Second, it is free. Third, you can’t search by compensation, nor list more than one property at a time. Forth, not connected in any way to the MLS, associated with NAR, or any MLS.
http://www.agentcomp.us
Here’s another approach that addresses all the issues: Quit gouging US home sellers by forcing them to pay the buyer’s agent for a service that is very unlikely to be something the buyer values at 3%.
Take a look at this service that also addresses the fact that compensation is being removed from MLS, Comp-Share.com is not connected in any way to the MLS or by any IDX feed. https://comp-share.com View info online, by mobile chat bot and even by calling an IVR number