The Northwest Multiple Listing Service, the listing service where thousands of Western Washington real estate agents share information on properties for sale, will not opt into a national settlement that brought new attention to agent commissions this year.
Following a series of legal challenges accusing the National Association of Realtors of inflating agent commissions, the association in March agreed to a $418 million settlement agreement that will make key changes to agent commission practices in many areas of the country and shield the national trade group from certain future legal actions.
The agreement covered scores of listing services that are affiliated with the association, but independent listing services like Washington’s NWMLS were left to choose whether to join and agree to the same terms.
The listing service, which covers 26 of Washington’s 39 counties, including King, Pierce and Snohomish, announced Tuesday it will not join the settlement. The organization said its existing practices already offer “an open, fair, and transparent marketplace for consumers and brokers.”
At the core of the lawsuits against NAR was the common way real estate agents are paid.
Typically, homebuyers don’t pay their agents directly. Instead, home sellers pay their agent a commission, which that agent then splits with the agent representing the buyer. Home listings often include information about how much commission the seller’s agent plans to offer the buyer’s agent. While a seller’s agent can theoretically offer the buyer’s agent any commission rate they like, total commissions have stayed relatively stable for years at around 5%-6%, split between the two agents.
Critics argue this payment structure allows buyers’ agents to steer home shoppers away from properties that offer low commissions, discouraging competition.
While some have called for decoupling the two agents’ commissions entirely, many agents representing buyers argue that would make homeownership even more expensive for their clients.
In the March settlement, NAR agreed to prohibit sellers’ agents from displaying their offer of commission in any NAR-affiliated multiple listing services starting in July. Agents could still offer commissions by phone or other means. The association will also require agents to have written agreements with their clients.
Opting into that settlement would have required the Northwest Multiple Listing Service, which is independent from NAR, to make the same changes in exchange for some protection from similar lawsuits.
In announcing its decision not to join the settlement, the NWMLS argued that removing commission offers from home listings hurts transparency and could lead to “deceptive practices.”
“That change is a step in the wrong direction and is detrimental to consumers and brokers alike,” the organization said in a statement.
“NAR’s removal of compensation transparency from the MLS pushes consumers and brokers to make secret deals off MLS, inviting deceptive practices, discrimination and unfair housing,” the statement said. “Depriving buyers of information about the transaction risks harming buyers, especially those buyers who are already disadvantaged, including first-time home buyers and members of protected classes.”
Preventing sellers from including their offer of pay for the buyer’s agent “also unnecessarily restrains the seller’s choice and absolute right to offer compensation to a brokerage firm representing the buyer,” the statement said.
NAR is a powerful industry player and even owns the trademark on the word Realtor, but legal challenges and internal turmoil have shaken some agents’ faith in the group. At least two Seattle-based brokerages, Redfin and Coldwell Banker Danforth, have left the organization. NAR did not immediately respond to a request for comment Tuesday.
It’s not the first time the NWMLS has gone its own way.
The organization has undertaken an array of changes as NAR’s legal troubles stacked up in recent years, likely an attempt to avoid the same kind of liability the national association has faced.
The local listing service made commission offers public on property listings and eliminated the requirement that sellers offer compensation to buyers’ agents in 2019. Even so, those changes haven’t done much to lower commissions in Seattle, according to a 2022 analysis by the Consumer Federation of America that found most Seattle listings offered buyers’ agents commissions of 2.5%-3%.
Starting earlier this year, Washington law requires real estate agents to enter written agreements, including details about agent pay, with their clients, similar to the requirement in the NAR settlement.
Those changes in Washington already…
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