NAR's New FAQs, Dual Agency, MLS Pushback and more…

Read the full video transcript below:

Anthony Lamacchia: The fox is guarding the chicken house, says Michael catch Mark. When he heard that northwest MLS is opting not to get into the no deal, and they’re saying they want to continue to be able to allow sellers to offer cooperating brokers compensation in the MLS.

I’m going to break that down in detail. I also want to talk to you all about dual agency. There are many getting confused into thinking that every time a buyer comes directly to a listing that is automatically dual agency, it is not. Also, I’m going to discuss with you our general counsel’s write up that he did last week.

Tremendous article on fiduciary duties, steering the DOJ’s past positions. Two days later, after he put that out, Nar came out with an updated FAQ. They broke down steering and fiduciary duties. A lot of talk about that ever since I was on the stage at Nar about four weeks ago, and I’m going to break that down as well. Their FAQs were phenomenal. They took it at a little bit of a different angle that I’m going to break down for all of you, and last night Inman came out with an article Nar says settlement eliminates steering plaintiffs attorneys issue warning Michael catch Mark out with a warning. Ooh okay so that’s out. And then I’m also going to discuss with you how CRM, MLAs and bright MLS have come out with a seller’s concession field. I’m going to break it all down now getting back to the beginning, northwest MLS, they came out and stated that they want to continue to allow cooperating brokerage compensation to be offered. I give them credit for doing it. I hope that other private, some of them broker own, some of them private MLS is do the same thing. I love what they said in their comments here. Northwest MLS put out some tough comments. Nah. Removal of compensation transparency from the MLS pushes consumers and brokers to make secret deals off the MLS, inviting deceptive practices, discrimination and unfair housing. That’s that’s a little tough, but overarching comment there. I agree depriving buyers of information about the transaction risks harming buyers. Have I said that this is why agents have to talk to their buyers about what is being offered, if anything, especially those buyers who are already disadvantaged, including first time buyers and members of protected classes. Why does that sound familiar? How many months have I been saying first time buyers will be affected? I’ve also added that VA buyers will be affected. Sounds like VA buyers are going to get a little bit of relief with some of those rules getting, loosened up at least temporarily, but it’s still difficult on them. This last comment I love prohibiting offers of compensation in the MLS also unnecessarily restrains the seller’s choice and absolute right to offer compensation to a brokerage firm representing the buyer. Folks, I’ve said that all along. Why should a seller not have a right to offer compensation regardless of the product being sold? Stopping the seller for from doing that would be an act of Congress. It would have to be law, and it would be a tough one to enforce. So I wanted to point that out, then catch Mark’s comment about this time will tell how the new northwest MLS rules benefit home sellers compared to Nar settlement to that settlement.

But as a rule, I’m always suspicious when the fox says it’s guarding the chicken house. And that’s what’s happening now in Washington. You know, catch Mark called me the mouthpiece Frontier, which is a bunch of B.S. on my own, man. I’m my own business owner, and I say what I want and no one controls me. But he sounds an awful lot like the mouthpiece for the DOJ, doesn’t he?And I know he’s visited them a lot and he talks to them a lot. Kind of interesting to me. Now moving on. Let’s spend a couple of minutes on dual agency. I’m hearing and I’m seeing some articles and some of the discussion shows me that some don’t understand dual agency, and I just want to break it down for two minutes here. Okay. If a buyer comes directly to a listing agent, no preexisting relationship with listing agent, no buyer agency signed with with with the listing agent as a buyer. Agent. And they want to make an offer on a home. And that listing agent writes the offer. Right? Just right. The purchase and sale, whatever contract is used that doesn’t make the listing agent to double agent.Fox dual agency occurs when there is a preexisting relationship with a buyer and the seller. So if a agent signs up a buyer to work with them in under a buyer agency agreement shows them multiple homes and that same agent two, three, four weeks later with the home, and the buyer says, hey, I want that home. Because remember, buyers are finding most of the properties. I’ve talked about that before. There’s no hiding properties from buyers. Buyer says, I want that home now. That agent is in a dual agency situation, he or she has obligations to properly disclose that to seller to buyer, depending upon the state. There’s different forms here in Massachusetts, you have to supply not only a consent to dual agency on the front end, but you have to supply a notice of dual agency once it occurs.

I just wanted to break down that fast version because I’m seeing many reporters and some folks in our industry saying there’s going to be so much more dual agency. I don’t agree with that. Just because the buyer comes directly to an agent, a listing agent doesn’t create a dual agency automatically in itself. Okay? So please keep that in mind. Cobra will remain over 90% of transactions of Cobra nationally, roughly. Oh, I do expect that number to go down a bit, probably for the first 6 or 8 months, because more buyers will say, well, I don’t want to pay my agent out of pocket and it’s going to be bumpy with how people are getting paid. Thanks to catch Mark, the plaintiffs attorneys in the DOJ, these buyers are going to struggle, and there will be more that go directly to listing agents.

I’m sure, but that doesn’t create dual agency. So moving on now, our general counsel put out a phenomenal write up about fiduciary duties, steering and multiple other points that he made. Stay with me here. I want to point some of these things out. He put this right up out last week. It was named Fiduciary Duties and Steering in Real Estate. And this gentleman, Mr. Michael McDonough, was the past Massachusetts associate of Realtors general counsel. He was of counsel there for 20 years. This person is an encyclopedia of real estate information. Okay. So he put this right up out. And I thought it was phenomenal. And it’s been read by folks all over the country. Let me pick out a couple things that I want to make sure you see. Page two of the write up buyers now have instantaneous access to data. And as a result of policy changes by Nar, many portals now publicly display compensation being offered to buyers, agents. He goes on to say properties cannot be hidden from buyers. I’ve been saying that for months. The DOJ and FTC foresaw this 1 in 2007, they came out with a report entitled competition in the Real Estate Brokerage Industry. I’m going to read a little bit of that statement. If consumers have enough information about the quality of the service they have received, then firms that choose to engage in steering will develop a poor reputation for having done so, and will consequently lose future business going forward. The internet offers consumers increased knowledge of homes available for sale, and consequently may limit the ability of cooperating brokers to steer buyers away from desirable homes listed by discount fees, blah blah blah. Folks, they said that in oh seven buyer access is even better now. Now I understand that they’ve got a right to change their opinion. I mean, federal agencies, they change employees, they change staff, industries change. I’m not saying that they don’t have a right to change their opinion, but they change their opinion. That goes against what has transpired. This was, what, 17 years ago? And now they have a problem with it and the system has gotten better in 17 years. Buyers have better access. I thought that was a great point by Mike. Another thing I want to point out that I’ve heard no one else say. I’ve never said it, but he said it and I thought it was brilliant.

The fiduciary duty of disclosure is mainly thought of as a common law duty, developed and applied by courts over time in our judicial system. Some states have incorporated this duty into the statute or regulation. Massachusetts Regulation, for example, declares that

It is a false and deceptive act when a real estate agent fails to hear in quotes, fails to disclose to a buyer or prospective buyer any fact the disclosure of which may have influenced the buyer or prospective buyer to not enter into the transaction.

Brilliant, Mike. Now, most of the time when I’ve been talking about this subject, I’ve been pointing to the fiduciary duties. Mike obviously did this in the write up, but he went a step further and he pointed out state law. Various states have these laws, folks. I was recently talking to someone who’s on a real estate board somewhere in the United States, and this person said to me, Anthony Anthony, licensing law has not changed.These people need to remember this, right. It hasn’t changed. Agents have a fiduciary duty. They have a legal duty to disclose things. Nar came up with an FAQ last week. Friday night. The FAQ matches up with what I’ve been saying, matches up with what Mike has been saying. But they went a step further and they said something else that I didn’t think of.


Number 48 in the facts and folks, Mike’s article, the fax, Inman’s article, we’re going to put it all right on the cases page right next to the video. So don’t worry, you can see it yourself. Number 48. Can a broker tell a potential buyer the amount of broker commissions and explain who is paying those commissions? Yes. In fact, Realtors must provide this information to buyers under Nar Code of Ethics number 49. Can a listing broker explain to a seller that the buyer will know who is paying the commissions? Yes. Article two and article 12 of the DNR’s Code of Ethics apply equally to brokers working with sellers. The listing broker should explain to her client the benefits and costs of various types of marketing that can be done to listings, and how potential buyers might respond to such marketing, including any buyer cost that the listing broker or seller shall offered to pay.

A listing broker should inform the seller about cost the buyer will incur. Folks, this is what I’ve been saying all along. Let’s take a look at article two though. And then I have a little summary article two of the Code of Ethics. The disclosure article says that you cannot conceal pertinent facts related to the property or transaction. Folks, this has been my point all along.

Article 12 says Realtors shall be honest and truthful and their real estate communications and shall present a true picture in advertising, representations, etc. so this is how I look at it. Rob. Hand in some folks in that corner. Very few of them are essentially telling realtors to violate the law, to violate their fiduciary duty by not informing buyers of what’s going on, by not informing sellers of what buyer’s agents will have to inform their buyers.

Now, I noticed catch Mark in the article and catch Mark is always smart. He didn’t take a position, but he of course flexed his muscles like he always does. Steering is a very serious legal issue in the antitrust world. No way captain Obvious, I didn’t know that anyone who thinks they can send out a few emails or bury their head in the sand and avoid the application of law is wrong. as these new rules take effect, we will take legal action to enforce the settlement agreement. Michael, what action are you going to take? Are you going to say that it is wrong for realtors to implement and here to the law? Is it wrong for Nar to implement the settlement that they’re agreeing to with you and the court?

That’s right. You’re going to you’re going to sue. I mean, I don’t speak for any other folks. I’m my own man. But if I was Nar, I’d be on a mountaintop with a microphone saying, bring it. That’s what I’d be saying. Under these practice changes, Nar has eliminated. This is another part of the article, that Andrea Brumbaugh wrote.

Under these practice changes, Nar has eliminated any theatrical steering because a broker will not make more compensation by steering blah, blah, blah. There’s some comments in here from President Kevin Sears. then there’s a comment from me and asked, I mean, I wish she took the whole comment and not part of it, but that’s okay. right here it says Anthony LaMacchia told the crowd of MLS executives that if a seller client asks about buyer broker compensation, the listing agent should tell the seller that you’re going to turn away a lot of buyers.

If the seller doesn’t offer that compensation, it’s a fact. Now, when I said that, I said that with a lot more before it and a lot more after it, but folks, I’ve said it many videos. If a seller doesn’t either, and in most cases if a seller doesn’t either proactively offer or at least have a willingness to negotiate and have a conversation and negotiate within the transaction for that compensation to be paid, there will be a percentage of buyers that take their bat and ball and go away. They will go somewhere else. I’ve said that all along. It’s true. Andrea goes on to point out in this article, the FAQ does say, however, that listing brokers should not tell sellers that buyer brokers will steer buyers based on offers of compensation. Of course it says that, and it’s good that Andrea put that in there.

Then the bottom comment of this article. Inman also asked whether this means a listing broker can tell a seller that a buyer may or may not choose to stay away from a listing based on broker compensation, as LaMacchia warned. Nar declined to comment. Well, it says in there like five times. Nar declined to comment. I don’t know why it says that all that time. That’s their choice. But they put the facts out. And for any of you that might say, geez, that’s interesting. Anthony’s facts and Michael McDonough his facts and Nar sound the same. Yeah, because we’re stating law. We’re stating law. This is this is lunacy to me. And remember what I said in a prior video and we should show it.

We should show it how I said, if any of you that are doing this settlement think that catch Mark and all these plaintiffs lawyers are just going to take their bat and ball twice with that reference today and go home. They’re not they’re going to keep tormenting our industry. Take a look at that. When I said that in the prior video. They’re not going to just take their 418 million plus the 206 million they got from the other defendants, and take their bat and ball and go home. They’re going to terrorize our industry

I already predicted that. Now now he’s out there making idle threats. He’s got the settlement he wants. He’s got 100 and something million coming to him each year for the next four years, which is an absolute rip off of our industry. And he’s still out flexing his muscles. This is insane. Next CRM class in California and bright MLS in the Mid-Atlantic region.

They came out with a whole, announcement in varying times, but they basically said they’re going to have a field for seller’s concessions. I thought that was interesting. I will say that I think sellers concessions, i.e. closing cost credits, they’re getting a bit overstated in the media by some folks in the industry by the MLS is. And look, I understand that the MLS is are trying to make sure they hold on to relevancy.

My message to all of you in the MLS world, I know many of you watch these videos. You’re not going anywhere. MLS is aren’t going to just disappear. So you disruptors that are also watching these these videos, I have a message for you. You’re not going to totally upend the system. We’re on a great system. Maybe it has a flaw here or there.Little details, like every system, every industry in the world. But we have a great system that’s fair, honest, open, transparent and disseminating housing information throughout MLS and syndicating them out to various other websites around the world is a wonderful thing. They’re not going away, but the seller’s concessions, they’re getting overstated. They’re they’re kind of sounding like some of these folks are making it sound like it’s something new. Closing cost credits have been around for decades. They’ve been negotiated into transactions for decades. The idea of a portion of them being used for compensation, or the whole thing being that’s been going on, that’s been going on for years. I’ve been teaching our realtors at LaMacchia Realty how to utilize the closing costs, credit for compensation or part of it for years.

This isn’t something new. So I just think that’s getting a bit overstated. And that’s all I wanted to say on that, folks. For many updates along the way, make sure to follow me on Instagram. stay tuned into Question and Real estate on YouTube. I suspect that the next time I will see you will be about two weeks from now when, MLS pen comes out with their statement, rebuttals ING the DOJ in the nose elect case and I hope their statement says that they’re going to follow suit with northwest MLS. We shall see. I don’t actually know what they’re going to do, but we will see. Thank you all. Good luck.

 

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