REBNY to require sellers to directly pay buyer’s agent

In what could be an attempt to get ahead of changes that may be coming to the real estate industry, the Real Estate Board of New York announced some major policy changes this week, as first reported on by The Real Deal.

Starting Jan. 1, REBNY rules will prevent the listing brokers from paying buyer agents and instead will require sellers to pay commissions directly. The rule will require listing agreements to clearly outline the seller’s offer of compensation to the buyer’s agent.

The REBNY and the Residential Listing Service (RSL) in NYC are governed by the Universal Co-Brokerage Agreement (UCBA) and are independent from the National Association of Realtors.

NAR is currently in court, along side HomeServices of America and Keller Williams, for Sitzer/Burnett, the smaller of two bombshell class action buyer broker commission lawsuits. RE/MAX and Anywhere had previously been named defendants in the suit, but both have filed settlement agreements. The second, larger lawsuit is called Moehrl after its lead plaintiff and it is expected to head to trial in the first half of 2024.

The lawsuits take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a Realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR, however, contends that the current commission structure, which has been in place for over 100 years, actually benefits consumers.

In September, Steve Murray, the co-founder of RealTrends Consulting, told HousingWire he sees three possible outcomes.  

“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said.

“The second thing that could happen, is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.

Ninve James, who runs REBNY’s residential brokerage services and products, told The Real Deal that the board is implementing the changes to “promote transparency and consumer confidence” and “provide for a more efficient RLS.”

Other amendments to REBNY rules include a change to the UCBA’s so-called “opt-out” listings. These listing are properties that owners do no want listed publicly. With the amendment, brokers are now able to submit an opt-out form notifying REBNY of the listing and inform other brokers about it through individual calls and emails. Under earlier rules, brokers were blocked from distributing any information about these listings.

Brokers will also now be able to submit unsolicited offers to homeowners with RSL listings with “coming soon” status. If the owner wants to move forward with the offer, the listing status will need to be changed to “active” in order to proceed.

Additionally, the UCBA will now recognize electronic payments for commission and rent deposits, including wire transfers and applications including Venmo and Zelle.

. It seems like the Real Estate Board of New York (REBNY) is making some big changes to their policies. According to The Real Deal, starting January 1st, 2024, listing brokers will no longer be able to pay buyer agents. Instead, sellers will be responsible for directly paying commissions to buyer agents. This new rule aims to ensure that listing agreements clearly state the compensation offered to buyer agents.

It’s worth mentioning that REBNY and the Residential Listing Service (RSL) in NYC operate under the Universal Co-Brokerage Agreement (UCBA) and are independent of the National Association of Realtors (NAR). Speaking of NAR, they are currently involved in a lawsuit alongside HomeServices of America and Keller Williams, known as the Sitzer/Burnett case. Another larger lawsuit, called Moehrl, is expected to go to trial in the first half of 2024. These lawsuits challenge NAR’s Participation Rule, which requires listing agents to offer compensation to buyers’ agents in order to list the property on a Realtor-affiliated multiple listing service (MLS). The plaintiffs argue that commission sharing drives up costs for consumers, while NAR maintains that the current commission structure benefits consumers.

In September, Steve Murray, the co-founder of RealTrends Consulting, shared three possible outcomes of these lawsuits. The worst-case scenario would involve brokers representing buyers negotiating their own fees, while sellers would no longer be obligated to offer compensation to list on the MLS. Another outcome could be more buyers approaching listing agents directly, potentially leaving them unrepresented. Lastly, Murray suggests that a new type of buyer broker could emerge, charging an hourly flat fee to represent buyers.

To promote transparency and consumer confidence, REBNY is implementing these changes to their rules. The board aims to create a more efficient Residential Listing Service (RLS) and provide clearer guidelines for brokers. Another amendment to the UCBA involves “opt-out” listings, allowing brokers to submit opt-out forms to REBNY for properties that owners do not want publicly listed. Brokers can then inform other brokers about these listings through individual calls and emails. Previously, brokers were unable to distribute any information about opt-out listings. Additionally, brokers will now be able to submit unsolicited offers to homeowners with RSL listings marked as “coming soon.” If the owner is interested, the listing status will need to be changed to “active” in order to proceed.

Lastly, the UCBA will now accept electronic payments for commission and rent deposits, including wire transfers and popular platforms like Venmo and Zelle.

Overall, these policy changes by REBNY aim to adapt to potential shifts in the real estate industry and ensure transparency and efficiency in the market. It will be interesting to see how these changes unfold and their impact on the industry as a whole.