“…so even though this new law was meant to protect the buyer, I am not sure that’s the case.” – Kathy Fettke

Click here to listen.

According to the Wall Street Journal:

“The $418 million agreement will make it easier for home buyers to negotiate fees with their own agents and could lead more buyers to forgo using agents altogether, which has the potential to drive down commission rates and force hundreds of thousands of agents out of the industry.”

“Buyers are likely to be more price conscious when selecting an agent and might opt to save money by not using an agent at all, or by paying their agent a smaller fee in exchange for limited services. For example, a buyer could pay an agent to put together an offer and review an inspection report, but not to accompany the buyer on home tours.”

In a media release, the National Association of Realtors said:

“The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years.”

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR.

This is a developing issue…stay tuned.

Click here to read the full media release at the NAR.

Click here to read more at the Wall Street Journal.

“The verdict by a federal jury in Kansas City, Missouri, could upend decades-old practices that have allowed real estate agents to boost commissions as home prices and mortgage rates rise, hurting consumers by making housing transactions more expensive.”

Reuters is also reporting that the U.S. Department of Justice has asked a federal appeals court in Washington to let it revive an antitrust probe into the NAR’s practices.

Click here to read the full story at Reuters.com.

Click here to read the NAR’s response.

“We’ve had many meetings with NAR execs to explore compromises on the policies that would let us continue our support. Since a Redfin-wide initiative to join NAR in 2017, we’ve paid more than $13 million in dues, in an effort to influence NAR to advocate for an open, technology-driven marketplace that would benefit consumers. We’ll now explore other ways to advance those goals.”

“We’d already been uncomfortable with the NAR’s positions on commissions when we read reports of sexist behavior and sexual harassment, by the NAR’s president and others, based on interviews with 29 former NAR employees. NAR was aware of the allegations for months and in some cases years, but reacted only when those allegations became public, and only after the CEO said there wasn’t a problem. Many employees described a culture of intimidation and retribution; many are still calling for more accountability.”

Click here to read the full release at Redfin.

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.

NAR spokesperson Mantill Williams said this practice “saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers.”

Click here to read the full story at Reuters.

Click here to read the Court order.

“…Bough does make clear that he agrees with plaintiff’s proposed remedies for moving the antitrust case forward: Certifying a class of plaintiffs that includes: “All persons in the United States who, from April 29, 2015 to the present, used a listing broker affiliated” with either Realogy, Berkshire Hathaway HomeServices, RE/MAX or Keller Williams in the sale of the home listed on the Heartland, Columbia Board of Realtors, Mid America Regional Information System, and the Southern Missouri Regional multiple listings services.”

The NAR had this to say in a statement to HousingWire:

“We are disappointed in the decision and plan to appeal. The pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers. Local broker marketplaces ensure equity, transparency, and market-driven pricing options for the benefit of home buyers and sellers. These marketplaces reduce transaction costs by ensuring, among other things, that a buyer broker and their client understand how much the listing broker will pay the buyer broker for procuring a buyer for the listed property. Local broker marketplaces also level the playing field among brokerages, allowing small brokerages to compete with large ones, and provide for unprecedented competition among brokers, including different service and pricing models.”   The NAR’s statement to HousingWire.

Click here to read the full story at HousingWire.

“According to the complaint, NAR’s anticompetitive rules, policies, and practices include: (i) prohibiting MLSs that are affiliated with NAR from disclosing to prospective buyers the commission that the buyer broker will earn; (ii) allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free; (iii) enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered; and (iv) limiting access to the lockboxes that provide licensed brokers with access to homes for sale to brokers who work for a NAR-affiliated MLS. These NAR rules, policies, practices have been widely adopted by NAR-affiliated MLSs resulting in decreased competition among real estate brokers.”

In addition, they filed a proposed settlement:

“The Antitrust Division simultaneously filed a proposed settlement that requires NAR to repeal and modify its rules to provide greater transparency to home buyers about the commissions of brokers representing home buyers (buyer brokers), cease misrepresenting that buyer broker services are free, eliminate rules that prohibit filtering multiple listing services (MLS) listings based on the level of buyer broker commissions, and change its rules and policy which limit access to lockboxes to only NAR-affiliated real estate brokers. If approved, the settlement will enhance competition in the real estate market, resulting in more choice and better service for consumers.”

Click here to read the DOJ’s media release.

Click here to read the full story at Realtor Magazine.

The Real Estate Commission: A Guide to Who Pays, How Much, and More

Today President Obama and the U.S. Department of Labor announced the publication of the Department’s final rule updating overtime regulations.  The new rules go into effect December 1, 2016.

The text below was taken directly from the DOL’s website.

Final Rule: Overtime

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

In 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards. Consistent with the President’s goal of ensuring workers are paid a fair day’s pay for a hard day’s work, the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA’s intended overtime protections are fully implemented.

The Department published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on July 6, 2015 (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. The Department received over 270,000 comments in response to the NPRM from a variety of interested stakeholders. The feedback the Department received helped shape the Final Rule.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Although the Office of Management and Budget (OMB) has reviewed and approved the Final Rule, the document has not yet been published in the Federal Register. The Final Rule that appears in the Federal Register may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register’s published version when it becomes available.

Click here for more information from the U.S. Department of Labor

Click here for an Overtime Rule Fact Sheet

Click here for an infographic explaining the new rules