The Northwest Multiple Listing Service, where thousands of Western Washington real estate agents share information on properties for sale, will not opt into a national settlement that brought new attention to agent commissions this year.
Following a series of legal challenges accusing the National Association of Realtors of inflating agent commissions, the association in March agreed to a $418 million settlement agreement that will make key changes to agent commission practices in many areas of the country and shield the national trade group from certain future legal actions.
The agreement covered scores of listing services that are affiliated with the association, but independent listing services like Washington’s NWMLS were left to choose whether to join and agree to the same terms.
The listing service, which covers 26 of Washington’s 39 counties, including King, Pierce and Snohomish, announced Tuesday it will not join the settlement. The organization said its existing practices already offer “an open, fair, and transparent marketplace for consumers and brokers.”
At the core of the lawsuits against NAR was the common way real estate agents are paid.
Typically, homebuyers don’t pay their agents directly. Instead, home sellers pay a commission split between their agent and the agent representing the buyer. Home listings often include information about how much commission the seller’s agent plans to offer the buyer’s agent. While a seller can theoretically offer the buyer’s agent any commission rate they like, total commissions have stayed relatively stable for years at around 5%-6%, split between the two agents.
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Critics argue this payment structure allows buyers’ agents to steer home shoppers away from properties that offer low commissions, discouraging competition.
While some have called for decoupling the two agents’ commissions entirely, many agents representing buyers argue that would make homeownership even more expensive for their clients.
In the March settlement, NAR agreed to prohibit sellers’ agents from displaying offers of commission in any NAR-affiliated multiple listing services starting in July. Agents could still communicate commissions by phone or other means. The association will also require agents to have written agreements with their clients.
Opting into that settlement would have required the Northwest Multiple Listing Service, which is independent from NAR, to make the same changes in exchange for some protection from similar lawsuits.
In announcing its decision not to join the settlement, the NWMLS argued that removing commission offers from home listings hurts transparency and could lead to “deceptive practices.”
“That change is a step in the wrong direction and is detrimental to consumers and brokers alike,” the organization said in a statement.
“NAR’s removal of compensation transparency from the MLS pushes consumers and brokers to make secret deals off MLS, inviting deceptive practices, discrimination and unfair housing,” the statement said. “Depriving buyers of information about the transaction risks harming buyers, especially those buyers who are already disadvantaged, including first-time home buyers and members of protected classes.”
Preventing sellers from including their offer of pay for the buyer’s agent “also unnecessarily restrains the seller’s choice and absolute right to offer compensation to a brokerage firm representing the buyer,” the statement said.
NAR is a powerful industry player and even owns the trademark on the word Realtor, but legal challenges and internal turmoil have shaken some agents’ faith in the group. At least two Seattle-based brokerages, Redfin and Coldwell Banker Danforth, have left the organization.
In a statement Tuesday evening, NAR defended the settlement as “a constructive path forward for consumers and the industry.” The national association said it respects the NWMLS’ decision not to opt in, but also added that “any MLS participant” who offers commissions on a listing service “could have potential exposure to litigation claims.”
It’s not the first time the NWMLS has gone its own way.
The organization has undertaken an array of changes as NAR’s legal troubles stacked up in recent years, likely an attempt to avoid the same kind of liability the national association has faced.
The local listing service made commission offers public on property listings and eliminated the requirement that sellers offer compensation to buyers’ agents in 2019. Even so, those changes haven’t done much to lower commissions in Seattle, according to a 2022 analysis by the Consumer Federation of America that found most Seattle listings offered buyers’ agents commissions of 2.5%-3%.
Starting earlier this year, Washington law requires real estate agents to enter written agreements, including details about agent pay, with their clients, similar to the requirement in the NAR settlement.
Those changes in Washington already “provide for consumer-friendly brokerage relationships,” the NWMLS said.
“Sellers negotiate how much to compensate the listing firm and decide whether to offer to contribute toward the buyer’s broker compensation and the amount of any such offer. Buyers agree how much to pay their own brokers at the outset of their relationship and can then negotiate for the seller to help cover that cost as part of the purchase.”
Stephen Brobeck, a senior fellow at the Consumer Federation of America who has studied real estate commissions, disagrees that local changes have been enough.
“NWMLS ‘reforms’ have had no discernible effect on consumers,” Brobeck said in an email Tuesday, adding that commission rates in Washington “remain relatively high and uniform.”
Brobeck argues instead for a complete separation of commissions paid to buyers’ agents and sellers’ agents and for lenders to allow homebuyers to include payment to their agent in their mortgage.
Seattle King County Realtors, the local NAR affiliate, declined to take a position on the NWMLS decision. “We maintain our respect for their independence as a broker-owned MLS not affiliated with NAR,” the group’s president Michael Orbino wrote to fellow board members Tuesday.
Orbino wrote that he believes “our region is the role model for how real estate is best practiced in our country and beyond.”
This story has been updated to clarify that home sellers, through agreements with their agents, determine commissions paid to buyers’ agents.
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WA real estate service will not join national antitrust settlement – The Seattle Times
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