Anywhere Real Estate and RE/MAX will require their agents to be clear and transparent about the cost of buyer agent services as part of their bombshell commission settlements in the US.
Both agencies have released the business practice changes they propose to make as part of the settlements, in addition to Anywhere paying $83.5 million and RE/MAX forking out $55 million.
The agencies continue to deny the allegations made in the complaints and in no way acknowledge any wrongdoing.
The settlements come after a federal judge in Chicago ruled in March that home sellers accusing the NAR and a group of real estate agencies of conspiring to inflate commission rates, could go ahead as a class action.
The lawsuit challenges a requirement that sellers make “blanket unilateral offers of compensation” to buyers’ brokers when a home goes on sale via a multiple listing service.
That system puts pressure on sellers to offer high commissions to attract buyers’ brokers, the sellers claimed.
The proposed settlement includes injunctive relief requiring practice changes in Anywhere Advisors, the company’s owned brokerage operations, which includes Coldwell Banker Realty, Corcoran, and Sotheby’s International Realty, for a period of five years following final court approval.
Anywhere has also agreed to recommend and encourage these same practice changes to its independently owned and operated franchise network across the Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Corcoran, ERA, and Sotheby’s International Realty brands.
The practice changes are consistent with positions for which Anywhere has previously indicated support in the industry.
In the injunctive relief, Anywhere has agreed to make three practice changes, including prohibiting company-owned brokerages and their affiliated agents from claiming buyer agent services are free.
They will also require company-owned brokerages and their affiliated agents to include the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible in each active listing, consistent with MLS rules and/or capabilities of third-party website operators.
Company-owned brokerages and their affiliated agents will also be prohibited from using technology (or manual methods) to sort listings by offers of compensation, unless requested by the client.
“The proposed settlement provides releases for our owned brokerage operations and agents as well as our franchisees and their affiliated agents, a priority for Anywhere in resolving these claims,” Anywhere Brands and Anywhere Advisors Chief executive Officer Sue Yannaccone said.
“Anywhere has been adopting or calling on the industry to adopt many of the settlement’s proposed practice changes, which promote more transparency and simplification for both consumers and real estate agents.”
Anywhere will also advise and remind company-owned brokerages, franchisees, and affiliated agents that they have no rule requiring offers of compensation, in addition to not requiring agents to belong to theNational Association of REALTORS (NAR) or follow the NAR code of ethics or MLS Handbook.
The Agency will also require company-owned brokerages and their agents to clearly disclose to clients that commissions are not set by law and are fully negotiable, as well as eliminating any minimum client commission requirements that company-owned brokerages may have.
Finally, Anywhere has agreed to develop training materials for company owned brokerages, franchisees, and affiliated agents that support all the practice changes outlined in the injunctive relief.
RE/MAX settlement conditions
RE/MAX has also outlined eight business-related conditions that form part of its settlement, with President and CEO Nick Bailey saying in a statement that the company would also settle, on a nationwide basis, any similar claims brought against it.
“We continue to deny the allegations made in the complaints and in no way acknowledge any wrongdoing,” he said.
“We also continue to believe in buyer agency, cooperative compensation and the idea that consumers are best served when they are working with real estate professionals.
“At the same time, we believe that protecting the network from costly litigation and the risk of further damages makes this settlement the right course of action.”
The eight practices include RE/MAX encouraging agents to be transparent in their dealings with sellers and buyers about cooperation and compensation but will not require them to make or accept offers of compensation from brokers.
“We’ll also continue to encourage you to be very clear that commissions are negotiable and not set by law or RE/MAX corporate policy,” Mr Bailey said.
“That can and should be communicated in listing agreements, buyer representation agreements and pre-closing disclosure documents. If you use documents mandated by the government or MLS, we’ll recommend that you include an additional disclosure outlining these facts.”
RE/MAX will continue to expect RE/MAX buyer-side brokers and agents to be honest and upfront about how much their services cost and how they expect to be paid.
They will also continue to display offers of cooperative compensation made by listing brokers and agents where such data is available and will encourage agents to do the same on other platforms.
RE/MAX will continue to not provide software that filters or restricts MLS listings based on the level of compensation being offered and encourages agents not to filter search results in this way, unless a client directs them to do so.
The agency will also continue to not express or imply a minimum commission requirement in its franchise agreements, training materials or other policies and will remind agents to show and market properties irrespective the cooperative compensation offer,
RE/MAX has also said it will develop educational materials reflecting and consistent with the business practices and will not require agents to be members of the National Association of Realtors (NAR) or follow NAR’s Code of Ethics or the MLS Handbook.