Navigating the New MLS Commission Rules: A Guide for Real Estate Professionals

Starting on Aug. 13, 2024, significant changes will be made to the WMLAR MLS that will impact how real estate professionals handle commissions. New rules prohibit the display of commission offers in the MLS and its crucial for agents and brokers to understand how they will determine their earnings on transactions. Here’s what you need to know and how to prepare for the changes.

How to Know Your Commission: Steps for Real Estate Professionals

  1. Written Commission Agreements:
    • Broker-to-Broker Agreements 101: Offers of compensation can still be made off-MLS through various methods such as broker websites, signs, or direct communication, provided seller consent is obtained and documented in writing. Broker-to-Broker agreements will help clarify compensation terms, reduce misunderstandings, and provide a clear record in case of disputes. Read more
    • Preferred Contracts: Which contracts to use and not use are independent business decisions of the broker, not WMLAR.  Revised forms that comply with the NAR settlement are available via the Michigan REALTORS® and West Michigan Regional Group libraries in DotLoop and Ziplogix.  Licensees are encouraged to get direction from their broker on what forms to use.
    • Required Verbiage on Contracts: All contracts must must specify the exact amount or rate of compensation the Participant will receive, prohibit receiving more than the agreed amount from any source, and include a clear statement that broker fees and commissions are negotiable and not set by law.
    • Pre-Policy Change Agreements: Commissions offered in active, pending, and withdrawn listings entered as of Aug. 17, 2024, the official implementation date of the NAR settlement, are still valid and arbitrable.  Listings not pending by Aug. 17 are required to have signed ‘Amendment Striking Participation in MLS‘ which can be located in the West Michigan Regional forms library in DotLoop/Ziplogix.
    • Post-Policy Agreements: Listings published in the MLS on Aug. 17 and after, will require written commission agreements outside of the listing agreement/purchase agreement.  Form options:
      Compensation Agreement Between Brokers (MR Form)
      Buyers Broker Compensation Addendum (MR Form)
  2. Remove MLS References: If existing agreements reference MLS for commission offers, update them to reflect that commission offers will not be made on the MLS.
  3. Direct Negotiations:
  4. Written Agreements: Michigan law requires that all agreements related to real estate must be in writing unless the contract is for a lease of one year or less.
  5. Clear Communication:
  • With Clients: Have open and transparent conversations with your clients about how commissions will be handled under the new rules. Explain the negotiability of commissions and the need for clear agreements.  Here are some tips from NAR.
  • With Other Agents: Ensure that all parties involved in a transaction are aware of the commission structure. This helps avoid confusion and ensures everyone is on the same page.

MLS policy changes represent a significant shift in how real estate professionals handle commissions. By understanding the new rules, engaging in direct negotiations, and ensuring clear documentation, agents and brokers can navigate these changes effectively. This proactive approach will not only help you determine your commission earnings but also enhance transparency and trust in your client relationships.

Stay informed, stay prepared, and embrace this new era of commission transparency in real estate transactions.

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