2024_Your_New_World (1)
In the latest changes in forms, they are now focusing on a consumer-centric approach to how buyers’ agents get paid. This approach is really based on the customer being at the center of the transaction and the customer being involved in each step of deciding what the compensation and fees are and how they’re going to be paid. In doing so, there are three main differences between the old commission-sharing model and the new consumer-centric approach.
With the new updates coming on August 13th, there’s much to learn, and PFAR is here to help guide you through these changes. Below is a summary of the main points from the recent CRMLS Zoom call titled “Your New World: August 13th and Beyond.” The summary is organized by slide and highlights the three main differences of the new consumer-centric approach and how commissions are paid out.
Let’s talk about the first difference. It’s really about what you do as the listing agent, going in and doing your listing presentation and the listing contract. The listing agreement has only one place for you to talk about the fees that are being collected, and all of those fees go to the listing brokerage firm. There is no place in the current RLA form for C.A.R or inside the consumer-centric approach, where the listing agent gets more money to share with the buyer side. That does not happen in the consumer-centric approach. The only discussion about fees, the payment of fees, and the agreement that the seller signs is to pay the fee for the listing agent services. So, there’s only one set of fees that are negotiated as part of the actual contract.
The buyers will enter into agreements with their buyer broker before any showings occur. This difference really tackles the main argument of the cases that brought us to this point, and that is to get rid of steering. If the buyer is negotiating the fee that the buyer broker is going to get before they ever see a home or even want into a house, there is no way that the buyer can be steered to some property that is more financially beneficial to the buyer’s broker especially since one of the provisions of the rule is that whatever fee is agreed to at the beginning of this relationship is the cap or the top amount that that buyer broker can make and that’s done before showing.
So that’s the second difference.
The third difference between the commission-sharing model and the consumer-centric approach is really the answer to the question, “How does the buyer’s agent get paid?” That third difference is that your fee will be included in the offer itself. So, in essence, when the buyer makes the offer to the seller (in the offer), it will be included in a provision for the seller to pay the buyer’s broker directly.
In California, CAR has developed a form, the SPBB form and the Residential Purchase Agreement, that fully accommodates this third difference that we see between the consumer-centric approach and the old commission-sharing model approach. So we just wanted to kind of give you the basics of that approach because this is the way that CAR has designed the forms to function, and it is consistent with the practice changes and some of the desires of the DOJ, the consumer Advocates, in how the commission should be being paid between the listing agent and the buyer’s agent.
I think it’s really important to understand that. While this is different, it’s not difficult. This is definitely a different way of handling commissions, but if you really think about it, it’s pretty straightforward; it’s actually fairly easy to explain to the consumers, so while it’s a bit different, it is not hard to accomplish or put into practice.
The compensation fields were removed from Flex on August 8th. There’s nothing that you, as a user, have to do with these fields. The MLS is taking care of all of it; you don’t have to go in and interact with your listings. In fact, for those of you in the FLEX system, you already cannot interact with any of those listings. So, those compensation fields, the ability to input compensation for our Flex users, have already been removed, and that will occur in The Matrix and Paragon systems on August 13th; as with the Flex system, those compensation Fields will remain on closed listings for historical purposes.
August 13th is the date that the new world will be in effect for all of our users, including over 100,000 people within the CRMLS system. Concessions at close will be updated to include a category list for all users, and that will be done across all platforms.
