Key Takeaways:
– The Real Estate Board of New York (REBNY) is changing its rules around buyer agent commissions.
– Starting Jan. 1, 2024, listing brokers will no longer be allowed to pay buyer agents, and sellers will be required to pay commissions directly.
– The change is being made to promote transparency and consumer confidence and to provide a more efficient Residential Listing Service (RLS).
– The 2024 Universal Co-Brokerage Agreement, which governs REBNY and the RLS, includes a clear statement that commissions are not universal and that listing brokers cannot suggest a commission for buyer’s agents.
– The agreement also includes a new section that requires sellers to pay commissions, which applies to rental properties as well.
– REBNY is independent from the National Association of Realtors, which is currently facing challenges to its commission sharing rules in court and from the U.S. Department of Justice.
– The changes to the agreement were part of a handful of other updates being made.
inman:
As Sitzer | Burnett unfolds, the New York City trade association announced the upcoming rule change amid a nationwide reevaluation of buyer commission structures.
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The Real Estate Board of New York is changing its rules around buyer agent commissions amid broader turmoil around the topic and multiple challenges to the way agents are paid nationwide.
Starting Jan. 1, REBNY rules will prevent listing brokers from paying buyer agents and will instead require sellers to pay commissions directly, The Real Deal reported Thursday morning.
The trade association told the outlet it was making the change to “promote transparency and consumer confidence” and “provide for a more efficient RLS.”
The changes are made via the 2024 Universal Co-Brokerage Agreement, which governs REBNY and New York City’s Residential Listing Service.
The RLS and REBNY are independent from the National Association of Realtors, which is currently attempting to make the case in court that its rules around commission sharing don’t violate antitrust laws. It faces challenges in two major class action lawsuits, as well as inquiries by the U.S. Department of Justice.
Still, REBNY’s 2024 Universal Co-Brokerage Agreement includes a clear statement that commissions aren’t universal, and that listing brokers can’t suggest a commission for buyer’s agents.
It also includes a new section around sellers paying commissions. The rule also applies to rental properties.
“For the avoidance of doubt, offers of compensation, if any, to the Co-Broker involving sale and/or resale transactions must originate from the Owner,” it says, adding “the RLS provides the platform to facilitate such offers of direct compensation from an Owner.”
That’s in addition to an updated statement about avoiding commission fixing.
“Neither REBNY nor the RLS shall fix, control, recommend, suggest or maintain commission rates and/or fees for services to be rendered by Participants in the RLS,” the rules say. “Furthermore, neither REBNY nor the RLS shall fix, control, recommend, suggest or maintain the division of commissions and/or fees between cooperating Participants or any other parties.”
REBNY didn’t respond to requests for comment about the changes, which were part of a handful of other updates being made to the agreement.
Nest Seekers’ Bianca D’Alessio told The Real Deal that she was afraid the change around compensation will give buyers’ agents the upper hand, particularly during buyers’ markets.
“As the market shifts and gets more difficult, a buyer’s agent that feels they’re more in control can leverage that,” D’Alessio said.
Others told the outlet they appreciated the transparency, and that some buyers are already negotiating commission sharing details before signing listing agreements.
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Property Chomp's Take:
The Real Estate Board of New York (REBNY) has announced a change to its rules regarding buyer agent commissions. Starting from January 1, 2024, listing brokers will no longer be allowed to pay buyer agents. Instead, sellers will be required to pay the commissions directly.
This rule change comes amidst a broader reevaluation of buyer commission structures across the country. The real estate industry is undergoing significant turmoil regarding how agents are paid, with multiple challenges and lawsuits being filed.
REBNY stated that the change is aimed at promoting transparency and consumer confidence while providing a more efficient Residential Listing Service (RLS). The new rules are part of the 2024 Universal Co-Brokerage Agreement, which governs REBNY and New York City's RLS.
It is important to note that the RLS and REBNY operate independently from the National Association of Realtors (NAR), which is currently facing legal challenges regarding its commission sharing rules. NAR is defending itself in two major class action lawsuits and facing inquiries from the U.S. Department of Justice.
The 2024 Universal Co-Brokerage Agreement emphasizes that commissions are not universal, and listing brokers cannot suggest a commission for buyer's agents. It also introduces a new section stating that sellers must pay commissions directly. This rule applies to rental properties as well.
The agreement explicitly states that neither REBNY nor the RLS can fix, control, recommend, suggest, or maintain commission rates or the division of commissions between cooperating participants.
While some industry professionals expressed concerns that the change may give buyers' agents an upper hand, others appreciated the transparency and the opportunity for buyers to negotiate commission sharing details before signing listing agreements.
Overall, the rule change by REBNY reflects the ongoing discussions and challenges within the real estate industry regarding buyer agent commissions. It remains to be seen how this change will impact the New York City market and whether other regions will follow suit.
