By Michael T. Jackson
This Saturday, 17 August, is the date established by the National Association of Realtors (NAR) by which changes associated with its proposed settlement to multiple U.S. buyer broker compensation litigation cases need to go into effect. Many local Realtor associations, multiple listing service (MLS) networks, and brokerages across the country have already implemented new or revised forms, updated MLS fields, or enacted process changes, and others are doing so in the coming days.
WERC continues to engage with stakeholders across the talent mobility industry, including with the 60+ volunteers comprising WERC’s member-led buyer broker litigation ad hoc group, related to these changes and their impacts on talent mobility. Based on conversations with corporate and service provider practitioners, below are five ways that mobility professionals and their organizations can prepare for the changes that have or will be occurring in the coming days:
1. Make sure you understand what forms are going to be required of transferees in different locations.
With the settlement-related process changes, usage of buyer agency/representation agreement forms will become common practice across most of the United States and generally be required to be signed before a transferee can tour a home. Many locations have already started requiring the use of such forms either under state law (as Indiana did as of 1 July) or via practice requirements implemented by local Realtor associations, MLS networks, and/or brokerages.
State and local Realtor associations have been rolling out a range of updated forms in recent weeks, and more are becoming available in the coming days. Additionally, most major brokerages have also created or updated their own forms, including buyer agency/representation agreements. Given this spectrum of forms, it is important for talent mobility professionals to ensure they understand from their service provider partners at relocation management companies (RMCs) and/or brokerages which form(s) to use for transferees in different parts of the country and any location-specific requirements that will need to be adhered to.
NAR has released a resource providing more information on written buyer agreements that can provide additional information about these forms and their associated requirements.
2. Ensure that transferees understand that buyer agency/representation agreements are contracts.
Buyer agency/representation agreements are a contract between a buyer and their agent outlining the terms of the relationship and signed by both parties. By signing the document, the buyer is agreeing to the outlined terms, and they need to ensure that they are familiar with and understand the associated requirements. These include, but are not limited to, the duration of the agreement, the amount of compensation to be paid to the agent, and whether the agreement involves exclusive representation.
Failure to understand the terms of an agreement or signing multiple buyer agency/representation agreements could result in a transferee facing significant legal and/or financial ramifications, so it is critical that mobility professionals work with their transferees to ensure they understand the purpose and requirements of these agreements.
3. Clear communication regarding how to address questions or cases arising around buyer agent compensation will be critical.
WERC research released last week indicated that while most companies are considering a range of options on how to handle buyer agent compensation for their transferees, nearly four out of five have not yet implemented policy or process changes around this. While some mobility professionals have yet to see a single situation arise related to buyer agent compensation, many WERC corporate members have reported seeing an uptick in individual cases that they have had to navigate with their service provider partners. This is expected to increase as the bulk of changes go into effect around the 17 August date established by NAR, and clear communication and alignment between the corporate client and their service providers around the processes and parameters for handling circumstances as they arise, particularly if the company is going to handle them on an exception basis within existing policies for the short to medium term, will be important for allowing all parties to efficiently managing the changing landscape.
Additionally, corporate mobility practitioners should ensure that their key internal stakeholders, including function leaders, HR business partners, business units, and their finance teams, are aware of the changes occurring around buyer broker compensation, what it might mean for their organizations in terms of operational and financial considerations, and how their organization is or will be handling cases that come up around buyer agent compensation for transferring employees.
4. Ensure that any ongoing/open files with U.S. residential home transactions are reviewed and updated as needed.
As new requirements continue to be rolled out across the country, talent mobility professionals recommend conducting an audit of ongoing/open files to ensure any required updates, including signing of new or updated buyer agency/representation forms, have or will be completed depending on local requirements.
5. Partnership and communication between corporate mobility professionals, RMCs, brokers, mortgage and lending, title and closing, and other service provider partners will be essential for navigating the changing landscape.
The new requirements around buyer broker compensation reflect some of the most significant changes to impact both the U.S. real estate sector and the talent mobility industry, and successfully managing these new processes and requirements will require corporates and service providers to partner together to effectively communicate about and educate on the new changes and ensure that transferees are supported.
Resources for talent mobility practitioners related to U.S. buyer broker compensation and changes to the U.S. real estate industry can be found on WERC’s website. New and updated resources are currently being created by WERC and mobility practitioners from across the industry and will be added to the website as they are finalized. WERC and its ad hoc member group will continue to monitor developments in the coming days and beyond and will provide updates to members.