Why was this rule change put into effect?
For more than 30 years, the compensation framework in the real estate industry was structured for the seller to pay the listing firm and for the listing firm to "share" its compensation with the buyer brokerage firm. This framework was a vestige from "sub-agency" where every broker represented the seller and brokers did not work directly for the buyer. Sub-agency was eliminated in the mid-1990s with the adoption of the Agency Reform Act (RCW 18.86) and the creation of buyer's agency. Yet, the "commission sharing" structure remained.
Rule 101 and the listing agreement will be revised to provide for a direct offer of compensation from the seller to the buyer brokerage firm. The concept of "commission sharing" by listing firms will be removed from the Rules and the listing agreement. Of course, the seller and listing firm can work together to determine the amount of compensation, if any, to offer the buyer brokerage firm. The listing agreement will be reformatted to clearly differentiate between the listing firm's compensation and the buyer brokerage firm's compensation.
The revisions further enhance transparency regarding broker compensation and create additional opportunities for consumers and brokers to discuss and negotiate compensation. The changes provide greater flexibility for consumers and brokers when selling and purchasing real estate and promote innovation and competition in the market.
These revisions build upon changes made in 2019, when NWMLS began publishing, and allowing its member firms to publish, the amount of compensation the seller offers to pay a broker representing the buyer. At that same time, NWMLS eliminated the requirement that a seller offer compensation to the buyer's broker.
Again, these revisions further enhance transparency regarding broker compensation, create additional opportunities for consumers and brokers to discuss and negotiate compensation, provide greater flexibility for consumers and brokers when listing and purchasing real estate, and promote innovation and competition among member brokers. These revisions are critical to the evolution of the real estate brokerage industry and will help NWMLS members better serve their clients for years to come.