The story behind the ‘hard line’ of MLS fines 

Change can be painful and doesn't come without cost, as the real estate industry is learning in its post-NAR settlement era.

One particular cost — $500 — made waves last week when a Realtor shared their frustration at being fined that amount for mentioning "co-op commission" in agent-only remarks for a listing.

Yes, it was before August 17, the deadline for most MLSs to eliminate offers of compensation and require buyer broker agreements. But some MLSs started early. One of them was Florida-based Stellar, the third-largest MLS in the nation.

"We did it intentionally so we would have some time for people to get acclimated a bit before the 17th," said Stellar CEO Merri Jo Cowen.

And Stellar did it after a major educational campaign: 104 different communications, broker forums, agent forums, Facebook Live presentations with more than 50,000 views, other videos with 25,000 views, and a website with more than 70,000 views.

"We did our absolute best to prepare everyone," Cowen said. But with more than 83,000 subscribers, "it's hard to reach everybody personally."

Not just 'enforcers,' but protectors

It's also hard to please everyone when you take a hard line on commissions-related rule violations.

"We have to protect not only Stellar, but our brokers and our agents," Cowen said. "These remarks, these comments, they go out on the internet and that's just waving a flag: 'Hey, look at me!'"

Yes, $500 "is hard," Cowen said. "It's not that we want to make a lot of money," but people (read: lawyers) are watching. "We have to get everyone to understand that we're not the bad guy here. But we are the enforcers. We had that responsibility come to us from NAR through the settlement, and we're taking it very seriously."

Since the beginning of the year, Stellar's staff has devoted more than 13,000 hours to prepare for the NAR settlement changes. "MLSs will certainly know this, but I don't know if even NAR understands the work that had to go into this," Cowen said. Stellar had to rewrite policies and procedures, change bylaws, remove content that mentioned shared compensation. "Every single piece had to be redone," she said.

While there have been some frustrations, the vast majority of listings have followed the new rules.

Since August 6, Stellar has had about 14,000 new listings with fewer than 2% of those showing a compensation violation, Cowen said on August 19. "So far, we've issued less than 300 fines," she added. "I'd like to see it be zero, but I'm very pleased with that number."

'Change is not over'

And what of the future?

"I think within a few months, things will settle down a little bit, and this change will become more second nature," Cowen said. New agents will enter the business and "this will be their norm from day one, instead of having to change everything they've learned."

Brace yourselves, however: "Change is not over," Cowen said.

The seeds of other challenges have already been planted, most recently a lawsuit filed by agents challenging the "three-way agreement," which ensures that Realtors who join at the local level automatically become members of both their state association and NAR.

And then there is the revived litigation involving NAR's Clear Cooperation policy, which requires publicly marketed listings to be submitted to an MLS within one business day of going live.

The question for Stellar and other real estate institutions remains the same, Cowen said: "How can we be nimble and adjust and change and help our customers manage that change?"