LEAP
Department of Justice Objects to Key Part of the NAR Settlement as Anti-Competitive
When the National Association of Realtors (NAR) agreed on March 15th to a $415-million-dollar settlement with a class of home sellers in Missouri, there were two changes which NAR agreed to make.
The first was to remove from the nation’s MLSs all mention of commissions being shared cooperatively with buyer brokers. The second was that all buyers must sign an agreement with any broker (other than the listing agent) before showing another agent’s listing.
If a buyer were to call one of us to see a listed home, we would want to make sure they were a qualified buyer before taking the time to show them a listing, but few of us would bother with any paperwork unless and until they wanted us to compose an offer to buy that or another listing. And we universally got away with that approach.
Last week, the judge in that case was scheduled to affirm or deny that settlement, and on Sunday, Nov. 30th, the U.S. Department of Justice filed a 5-page “statement of interest” stating that, in the DOJ’s opinion, the latter provision was anti-competitive and should be struck down.
So it was a bit of a pain (and an annoyance to the buyer) when we were told that from now on we had to get any prospective buyer to sign a “showing agreement” or a “buyer agency agreement.”
provision of the settlement. And let it be said that this rule was pretty meaningless in the context of the complaint on which the NAR settlement was based, namely that listing agents shouldn’t be sharing their commission with buyer’s agents.
Regarding the other requirement of the NAR settlement outlawing commission sharing and the publishing of “cooperative” commissions on MLSs, it has had little effect here in Colorado. All that happened was that offers of compensation were rephrased on listing agreements and on contracts to buy real estate.
judge in the settlement case deny that aspect of the agreement, too? Perhaps, but one can always hope!
The Origin of the 2.8%
Co-op
Have you ever wondered why 2.8% became the typical or standard commission offered to “cooperating brokers” who represent buyers? Here’s a history lesson.
At press time for this column, the judge had not yet affirmed the settlement, so maybe this is old news to readers, but I wanted to share it with you in case you haven’t heard about the DOJ filing.
We Realtors had taken a grin-and-bearit attitude toward both rules, and I personally hadn’t considered what the DOJ is now espousing — namely, that when you ask a buyer to sign a representation agreement with one broker just to see a home, no matter how short the term of that agreement, you are limiting the ability of other brokers to compete for that buyer’s business.
Prior to the NAR rule, it was considered proper practice to provide a buyer with whom we interact with a “Brokerage Disclosure to Buyer” stating that they are a “Customer” and not a client, but I don’t know any brokers who actually did that.
Since the NAR settlement didn’t say what kind of agreement that should be, I created a simple “Showing Agreement” which I printed up for our broker associates and gave to them, padded, to keep in their glove compartments. Before entering a listing, they were to fill in the blanks and have the buyer sign it before entering the listing. That copy would be given to the buyer, and I suggested that our broker associates take a picture of it on their smartphone — not to print and file it, but just to keep it on their phone as a record.
The fact remains that there is no one to audit whether this form is completed, although I suppose there could be “secret shoppers” who would test agents to see if they are doing that. But, remember, this is a NAR rule, not a state law, so any audits by the Real Estate Commission would not include verifying that such forms were being completed. For that reason, I wouldn’t be surprised to hear of agents who simply ignore that NAR rule.
Regardless, it would be a relief if, following this DOJ filing, the judge in the NAR settlement case were to deny that
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Now, the listing agreements still state the same total commission — 5 to 6 percent, or whatever — but instead of saying how much of that commission the listing agent will offer to an agent for the buyer, the listing agreement now says how much the seller will offer to an agent for the buyer and then says that, if that amount is indeed paid to a buyer’s agent, that percentage will be deducted from the commission paid to the listing agent. In other words, no change except in phraseology.
Why the amount the seller is offering can’t be stated on the MLS makes no sense. Would it be too much to have the
It was explained to me that, before the U.S. Department of Justice said that the Denver Board of Realtors (DBOR) was engaging in price fixing by dictating commission rates, DBOR set the listing commission at 7%, and dictated that 40% of that amount, or 2.8%, was the proper amount to be shared with agents representing buyers.
After price-fixing was outlawed, listing commissions declined, but the 2.8% co-op remained a fixture, so to speak, because sellers and their agents didn’t want buyer agents to avoid their listings in favor of listings still offering 2.8%.
Nowadays, with buyers doing their own searching online (where that co-op commission was hidden from consumers), the reluctance to offer less than 2.8% diminished and now is far less important.
My Feb. 17, 2022, column reported that the percentage of listings offering less than 2.8% had grown from 2% in 2015 to 30%.
Is Your Home Fully Prepared for Winter?
Now that our warm autumn is giving way to the cold spells of winter, have you done everything you should to prepare for cold weather?
Frozen pipes should be your number one concern, given the damage burst pipes can cause. Are your outdoor hose bibs the kind that resist freezing? They’re easy enough to install. They work because the valve itself is deep within the unit so that it benefits from the warmth within your house.
Does the caulking around your windows need refreshing? Leakage around windows is a major source of lost heat.
ommend annual cleaning and servicing of HVAC systems.
If you have a wood-burning fireplace, when was the chimney last cleaned? Chimney fires are all too common.
Tree trimming is expensive, but should be considered, given the increase in hurricane-force winds due to climate change. Is there a tree that could fall on your home? Consider removing it, or at least trimming threatening branches.
This is a good time to test your smoke and carbon monoxide detectors and maybe install fresh batteries.
Condos in this building at 722 Washington Avenue (called Washington Station) are in great demand because of its location right in downtown Golden. This new listing is for Unit 201, which has a great corner location directly above the unit’s deeded parking spot. Moreover, the stairs to the parking garage are right next to the door to this unit. (There’s also an elevator, of course.) This is a mixed use building, with commercial units, including the Golden Bike Shop, on the main ground floor. The unit itself features an open floor plan, with slab granite countertops and cherry cabinets with handles, and an island with breakfast bar to complement the dining area. At left is the view from the 5.5’x11.3’ balcony outside the living room. That view is also from both bedrooms. The bathrooms and kitchen have ceramic tile floors, and the rest of the unit has carpeting in like new condition. There’s a 7’-deep storage room and laundry closet with vinyl flooring. Take a narrated video tour at GoldenCondo.info, then come to the open house this Saturday, 11am to 1pm.
There’s so much to love about this home at 7085 W. 32nd Pl.! For starters, it’s a handyman’s delight with an oversized 2-car garage that is heated and has 200 Amps of power, including two 240-Volt circuits! Also, one of the basement bedrooms has been converted into a sound studio with professional soundproofing such that neighbors and the people upstairs wouldn’t be aware of it! Altogether, including that studio with its ensuite bathroom, this home has five bedrooms and three full bathrooms. And it has a full-size bar with bar stools next to that studio in
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Check your dryer vent for built-up lint, a major cause of house fires.
Change the filter in your forced-air furnace to improve its efficiency. I rec-
Golden
Clean your gutters so water doesn’t collect, freeze and back up on your roof. We have vendors to recommend for each of these tasks under the “Resources” tab at www.GoldenRealEstate.com
Real Estate’s Broker Associates
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303-908-4835
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303-929-2727
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303-885-7855
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303-990-7428
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