NYC Brokers Uncertain In Face Of NAR’s August 17 Deadline

When the National Association of Realtors announced its proposed settlement and policy updates this spring, New York City residential real estate responded with a collective shrug.

The city has an oddball place in the implications of the settlement because the Real Estate Board of New York, the reigning trade group, is not a part of NAR.

Nearly all of the major brokerages based in the city are REBNY members, but their agents could be forgiven for dismissing the possibility of fallout from the changes coming to NAR-owned MLSes under the trade group’s proposed settlement. An April blog post from Brown Harris Stevens noted that “the impact of the settlement on New York City is anticipated to be minimal, if [felt] at all.”

But it’s become increasingly clear that the New York bubble is close to being popped. REBNY in June opted into the NAR settlement under an option for non-Realtor MLSes — a move that contributed to a federal judge pausing two antitrust commission suits against the group while pushing agents in the city closer to the world outlined in the national trade group’s proposed deal.

Specific settlement terms are still being hashed out, but the most notable changes are from NAR’s agreement that agents will be required to enter into a written agreement with prospective buyers before touring a home and MLSes will not display buyer agent commissions.

But REBNY has been ahead of the game, at least in one respect.

In a rule change that went into effect on Jan. 1, REBNY requires offers of buyer agent compensation to come directly from the seller, not the listing broker. Its Universal Co-Brokerage Agreement (UCBA) also did not mandate that listing brokers make offers of compensation to buyer brokers on the RLS, a target of the antitrust lawsuits filed against NAR — but it was still hit with two copycat lawsuits.

REBNY, which is still finalizing terms of the NAR settlement, laid out changes and recommendations for its members covered by an existing or pending settlement in an August memo.

The memo states that broker compensation fields in the RLS will be optional as of Aug. 17, and recommends, but does not require, the use of written buyer representation agreements. Given that the updates from REBNY constitute suggestions more than directives, agents in the city are moving forward in fits and starts.

“I’m waiting for my brokerage, who’s waiting for REBNY,” William Krooss-Tadas of Keller Williams said. “We’re waiting for a law to follow — we want to know what it is, we just don’t know yet.”

Tali Berzak of Compass said that her team has started using buyer agreements in the last several weeks, but fellow Compass agent Scott Fava said he hasn’t introduced them yet.

“I will use them when I’m told I have to use them,” Fava said, noting he knows of other colleagues who haven’t begun asking buyers to sign on the dotted line before touring.

Beyond REBNY

The complications posed by REBNY membership stop short of agents in the outer boroughs. Staten Island MLS and OneKey MLS, which collectively count thousands of members working in Staten Island, Queens, Brooklyn and the Bronx, are NAR-owned listing services and have always been bound by the proposed settlement.

The Staten Island Board of Realtors removed buyers agent compensation from its MLS and released new listing agreements and buyers agreements on Aug. 5, said CEO Sandy Krueger, while OneKey rolled out its commission and buyer agreement changes on Aug. 8, according to CEO Richard Haggerty.

Despite the best efforts of MLSes, trade associations and brokerages, the prevailing sense in the city is one of confusion. Both Haggerty and Krueger said that they have been holding training sessions, but even Krueger himself admitted that he still doesn’t understand how certain scenarios will unfold.

“Nobody knows what’s going to happen, to be honest,” OneKey member Roman Nissim said. “They told us a lot of different things.”

Confusion and mixed forecasts abound

Buyer agreements have been the biggest source of stress for agents in a city that has traditionally not relied on them.

Nissim said he estimates more than half of the brokers from his office have left after his brokerage stopped buying leads from Zillow and StreetEasy in anticipation of reduced buyer agent commissions.

Corcoran’s Tay Tiwoni said that he worries about “having to tell people they have to pay us on top of the property” when beginning to use buyer agreements. “It is very confusing,” he said.

Some agents at a Forbes Global Properties panel held just over a week before the practice updates went into effect still argued that nothing will fundamentally change in how business gets done.

Panelist Vince Rocco of Brown Harris Stevens said he’s pushed back as a listing agent when clients propose skimping on buyer broker commissions, even severing ties with one seller who refused to include buyer agent compensation.

Frances Katzen, a top broker at Douglas Elliman, said that the “saving grace” of the settlements and practice is that “it’s not a law, it’s an industry standard practice.”

“Nothing has changed in regards to the structure, except what is supposed to be signed,” Katzen told attendees.