KW leaders send message of calm at Open House  

Keep calm and carry on.

That's the message Keller Williams leaders sent to agents and brokers anxious about what the recent NAR commissions settlement means during an online Open House on Monday.

In the hour-long presentation, KW CEO Mark Willis, along with Jason Abrams, head of industry and learning; Wendi Harrelson, president of KW-owned regions; and Jay Papasan, vice president of strategic content, addressed questions about the NAR settlement and upcoming rules changes that have been coming in "hot and heavy," according to Abrams.

"Whenever change occurs, we have a certain level of discomfort and we are automatically hard-wired, almost like we're chemically wired to focus on what we're giving up," Willis said. "That's not the way this needs to be at all."

The Keller Williams leaders reiterated that nothing is changing right now, or for at least the next few months after the court approves the settlement. "We have four months to get through these changes," Willis said. 

"Nothing is changing in terms of what buyers need, what sellers need and the value that we provide," Willis said. "What we know is that we are in a for-profit business … and being in a for-profit business, we understand we have to provide value in exchange for what we receive."

Cooperative compensation isn't going away

The NAR settlement mandates that, starting in July, buyer agents must have signed agreements detailing what they will be paid, either as a set dollar amount or a specific percentage — but there is nothing in the settlement that says who ultimately has to be responsible for that payment, Papasan stressed.

"Let's be really clear. Cooperative compensation can still be offered by the seller," he said. "The seller can still offer cooperative compensation to the buyer agent as long as it's not offered on the MLS."

"You can still use any marketing channel you want, other than the MLS," Harrelson said. "That includes emails, newsletters, postcards, radio, TV, billboards, the phone, of course, and texts that are TCPA compliant. And carrier pigeons, ravens, tin cans with string and of course social media."

Agents can get creative with concessions, purchase agreements

And while buyer agent commissions can't be offered on the MLS, seller concessions can be.  

"Seller concessions is money that is being given by the seller directly to the buyer," Papasan explained. "The buyer can use those funds for anything that they would like, including paying their agent if they choose."

Even absent sellers offering concessions or commissions upfront, buyers can also write compensation for their agents into the purchase agreement. "As long as it's in writing, there's very little that you can't put into a purchase agreement," Abrams said.

Buyers can also negotiate to pay a higher price in exchange for the seller paying the buyer commission. "The one caveat is if you're working with a lender, it's going to have to appraise."

It's also not clear how FHA and VA loans will be affected. "There's a ton of incentive for them to make some changes," Papasan said. "Nobody wants to shut out first-time homebuyers. No one wants our veterans to be shut out of the market. So there will have to be some changes made. We just don't know what they are yet."

Buyer agents and buyer agent agreements

"The NAR settlement absolutely assumes that there will be buyer's agents," Harrelson said. And they will be paid. "No one can force you to work for free."

But agents will need to have a signed agreement with a buyer explicitly listing compensation before showing a house.

What those agreements will look like is still a work in progress.

"Will a buyer menu of services show up where specific services dictate specific percentages or amounts, just like a seller menu?" Papasan said. "You could have a buyer menu, but we just don't know. But we'll keep an eye out."

Under the new rules, a buyer agent can ask a buyer to sign a new, customized contract for every house they are shown, depending on the concessions or commissions offered, Harrelson said.

Papasan believes that will evolve: "I think we're gonna see how the best practices will play out over time."

"The fundamental thing here is it's about transparency," Papasan said. "Your buyer working with you knows what they're paying you for, the services that you're offering. That is going to be in writing. It has been revealed that it's totally negotiable. And they've agreed to it in writing. When we hit that standard, I think we're gonna be okay."

Keller Williams agents not on the hook for settlements

Abrams reminded Keller Williams agents and franchisees that the parent company didn't ask them to help pay for the $40 million settlement it made last year for alleged TCPA violations.

"As far as the KW Sitzer/Burnett settlement is concerned … the same will be true," Abrams said. "All KW agents and all KW market center franchisees will not [have it] come out of pocket."

But he cautioned that the National Association of Realtors will make its own decisions on how it will cover its commissions deal.

"As far as NAR goes, it remains to be seen how they're going to be handling the settlement," Abrams said. "They have said that fees are not going up in 2024. But what happens over time? We just don't know."