NWMLS will not "opt-in" to NAR deal.

As some of you may have heard, we had some big news come out of our Pacific NW Real Estate Market last week and we'd like to take the opportunity to break it all down for you here. On May 28th the Northwest Multiple Listing Service (NWMLS) made a significant decision that will have an impact on both buyers and sellers alike here locally. NWMLS has chosen not to "opt-in" to the proposed settlement agreement by the National Association of Realtors (NAR). This decision has generated quite a buzz within the industry, with many wondering what this means for the future of real estate in the Northwest region.

First and foremost, let's discuss how this decision by NWMLS affects our buyers. New regulations set to begin in August of 2024 mandate that all buyers must enter into a buyer's representation agreement with their agent, which states the total commission their agent will be paid at closing in exchange for their representation. This agreement must be signed prior to their agent taking them on their first home tour. All commissions have always been, and will remain, 100% negotiable by the parties involved. One of the main concerns for buyers with these new agreements is the potential impact on their ability to negotiate in their agent's commission as part of their offer to purchase a home. In other words, asking the seller to cover the cost of these commissions at closing and include them as part of the purchase price which has been standard practice since the early 90's.

As part of the settlement all NAR affiliated MLS's throughout the county have agreed to do away with advertising the Selling Office Commission (SOC) on their sites. NWMLS, however, saw this as a practice that will prove to be detrimental to both buyers and sellers alike in a statement released last week. "The settlement agreement eliminates compensation transparency for buyers and restrains sellers’ choice by prohibiting sellers from making offers of compensation through the MLS. Instead, the settlement agreement allows for offers of compensation “off MLS”, where that information is hard to find and not available to all buyers and brokers.  That change is a step in the wrong direction and is detrimental to consumers and brokers alike."  They went on to add, "NAR’s removal of compensation transparency from the MLS pushes consumers and brokers to make secret deals “off-MLS”, inviting deceptive practices, discrimination, and unfair housing.  Depriving buyers of information about the transaction risks harming buyers, especially those buyers who are already disadvantaged, including first time home buyers and members of protected classes.  Of course, prohibiting offers of compensation in the MLS also unnecessarily restrains the seller’s choice and absolute right to offer compensation to a brokerage firm representing the buyer."

What does this mean for us here locally? Going forward NWMLS will still continue to advertise the Selling Office Commission (SOC) on all of their listings. This means that buyers can still expect to see information regarding the commission involved in a particular property transaction, allowing for full transparency and the ability to have the option to see only those homes offering compensation if they can't come up with the additional funds to pay their agent for representation at closing themselves. 

So, how will sellers be affected by this decision? When a seller lists their property, they want to ensure maximum exposure to potential buyers. With NWMLS not participating in the NAR deal, it raised some questions about the property's visibility and the potential impact on its marketability if the seller's are not willing to offer any kind of SOC compensation. If a seller is not willing to pay any kind of SOC, they may need to explore alternative marketing strategies to ensure that their property is considered by as many potential buyers as possible, such as pricing aggressively and potentially offering to cover buyer's closing costs to offset the buyer having to pay the SOC themselves.

This recent decision by NWMLS suggests that they are taking a stand on behalf of their members, buyers and sellers in WA, and the industry as a whole. Beginning in 2019 NWMLS led the charge throughout the Country in updating their policies, procedures and contract forms in hopes of creating greater transparency between real estate agents and their clients when it comes to compensation and who pays. This was originally brought about by the NAR lawsuits, but has been firmly put in place in Western WA ever since. At this point the only change that will be made here locally is the implementation of a buyer's representation agreement between a buyer and their agent prior to touring their first home together.

As the industry continues to evolve, it's important to us for all of our clients to stay informed and adjust their strategies for buying and selling accordingly. So, whether you're a buyer, seller, or simply interested in real estate news, feel free to reach out to us anytime. We will continue to keep an eye on this situation, as well as our local market conditions, as they unfold. Thank you for continuing to trust me and Team NSRG with all of your real estate needs.