Change Is Kind of Our Thing

In real estate practice, change is not just a constant but a defining element. And of course, adapting to change can be daunting, yet it also serves as a catalyst for advancement.

Over the past three decades, the industry has continuously evolved with the advent of technologies like the internet, electronic signatures and mobile communication. 

In real estate, change is kind of our thing. Frankly, we thrive on change.

So, when the National Association of REALTORS^® (NAR) announced in March a proposed settlement agreement to resolve nationwide claims by home sellers regarding federal antitrust conspiracy claims, we knew change was coming. We just were not sure what it would be and when.

Over the last few months, the WRA has used NAR’s frequently asked questions and presentations to understand the nature of the change and provide guidance for WRA members.

Per the proposed settlement agreement, NAR agreed to make two practice changes even if the settlement agreement is not approved by the federal court in November 2024.

These two practice changes are effective August 17, 2024. 

1. The Multiple Listing Service (MLS) will no longer include offers of compensation. Consequently, listing firms will no longer be able to offer compensation to cooperating firms via the MLS. 
2. Firms working with buyers need a written buyer agreement before touring a home with a buyer.

No later than August 17, 2024, the MLS must eliminate offers of compensation. Listing firms will no longer be able to indicate offers of compensation via the MLS. Since the MLS is responsible for regulating the practice changes, each MLS will create rules and enforcement measures. Therefore, be prepared that your MLS will not allow offers of compensation via private or public remarks, associated documents, communicated compensation agreements, or a link to your firm’s website that indicates the offer of compensation. Contact your MLS about the specific MLS changes in your area.

The settlement agreement allows: 

• Listing firms may display offers of compensation on their website for their own listings.
• Seller concessions may be offered on the MLS if the MLS rules permit, but the seller concession cannot be conditioned on the payment to the buyer’s firm:
  • Listing contract: May indicate the concessions, including what they will be used for, which may include payment to the buyer’s firm.
  • MLS: May indicate concessions but cannot condition concessions on payment to a buyer’s firm.
  • Offer to purchase: May indicate concessions, including what they will be used for, including payment to the buyer’s firm.

The settlement agreement prohibits:

• Blanket compensation agreements or policy letters are prohibited. Per the settlement, all offers of compensation require seller approval and must
  1. Be in writing.
  2. Be provided in advance of any payment or agreement to pay a cooperating firm.
  3. Specify the amount or rate of any such payment.
• If your firm has any blanket compensation agreements or standing policy letters, it is recommended to communicate to those impacted by the agreement that the agreement is no longer enforceable.

The practice changes include these two new requirements:

1. MLS participants working with buyers must enter into written agreements with buyers before touring a home.
2. The written agreement must include specific language as stated in the settlement agreement.

The following chart outlines the implementation of this practice change in Wisconsin. 

*As provided in NAR's FAQs.

Under Wisconsin law, there are three different ways to have a relationship with a buyer. Each way varies by the level of service. 

• When the buyer is a customer, the agent is with one of the following:
  • A cooperating firm and not the listing firm. The agent is then a subagent.
  • A listing firm. The agent is then the agent of the seller.
  • A firm representing the buyer, and the seller is selling for sale by owner (FSBO).
• When the buyer is a customer, the agent owes duties to all parties and loyalty to the seller if the agent is a subagent or the agent of the seller, and loyalty to the buyer if the seller is FSBO.
• Wisconsin law requires specific written disclosures to be made to a customer.
• Although not required per the settlement, the WRA revised its Disclosure to Customers form to include language to meet the spirit of the settlement agreement.

• When the buyer is a customer, the agent is with one of the following:
  • A cooperating firm and not the listing firm. The agent is then a subagent.
  • A listing firm. The agent is then the agent of the seller.
  • A firm representing the buyer, and the seller is selling for sale by owner (FSBO).
• When the buyer is a customer, the agent owes duties to all parties and loyalty to the seller if the agent is a subagent or the agent of the seller, and loyalty to the buyer if the seller is FSBO.
• Wisconsin law requires specific written disclosures to be made to a customer.
• Although not required per the settlement, the WRA revised its Disclosure to Customers form to include language to meet the spirit of the settlement agreement. 

• An agent has provided a client a WB buyer agency or tenant representation agreement
• When the buyer is a client, the agent owes duties to all parties and duties to the client
• A Wisconsin real estate licensee is required to use a WB form — for example, a WB-36, WB-38 or WB-39 — to create a client relationship.

Again, these are just quick general facts about the impact of NAR’s practice changes on Wisconsin REALTORS^®.