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The Real Estate Board of New York (REBNY), the largest trade association for real estate professionals in New York City, is set to implement a groundbreaking change in the way real estate commissions are handled.
This change, effective January 1, 2024, signifies a major shift in the traditional real estate model and positions REBNY as a frontrunner in the industry.
The Fundamental Shift: Decoupling Commissions
Starting in 2024, the way commissions are offered and handled in New York's real estate transactions will undergo a significant transformation. The key change is the decoupling of commissions for listing and selling agents. This means listing brokers will no longer be permitted to offer compensation to the buyer's broker – a task that now falls directly to sellers or property owners.
How Will This Change Be Implemented?
This new approach requires sellers to make a written offer of compensation to the buyer’s broker. This offer can be accepted, rejected, or negotiated by the buyer’s broker. Importantly, current listing agreements extending beyond January 1, 2024, will remain valid under the old rules until their expiration. However, any renewals or extensions post this date must comply with the new system.
Impact on Entering Exclusives onto the RLS
Under the new rules, while the Real Estate Listing Service (RLS) will continue to display the buyside compensation, this compensation offer must originate from the seller or owner, not from the listing broker or firm.
Compensation for Buyer’s Brokers
In the new scenario, if the seller offers compensation, the buyer’s broker will be directly compensated by the seller at closing, as customary in New York City. In cases where the seller does not offer compensation, the buyer's broker may negotiate directly with the buyer.
Why This Change?
This shift towards transparency and consumer confidence is in line with the RLS’s objective of promoting a more open and trustworthy residential marketplace. Decoupling commissions is seen as a forward-thinking move likely to be adopted by other listing services nationwide.
Compliance and Enforcement
Non-compliance with these changes will result in financial penalties for RLS participants. Additionally, the use of listing management systems that filter listings by compensation level will no longer be permissible, ensuring agents prioritize client needs over commission rates.
Do you think that a similar change is coming for REALTOR® Associations in North Carolina? Leave a comment below or discuss in an upcoming CE Class!
References
"Decoupling Commissions FAQ." Real Estate Board of New York (REBNY).