State associations, MLSs and other forms providers across the U.S and here in Oregon are revamping forms in response to the NAR settlement. This includes Oregon REALTORS®. We convened a Task Force of Principal Brokers and Brokers from around Oregon to assist us in reviewing our forms and making changes. We started with the Oregon REALTORS® Listing Agreement and we wanted to give you a preview of the changes we are working on. Below are a few key highlights of proposed edits to our Listing Agreement, along with a link to the draft. Note that your MLS is likely making changes to its own listing agreement, and the changes may look different from ours. Here are the highlights:
Removal of Cooperative Compensation
Under the revised Oregon REALTORS® Listing Agreement, there is no provision for the seller and listing agent to agree that a portion of the listing fee will be shared with the Buyer’s agent’s brokerage. The listing fee will be the amount paid to the listing brokerage for its services without any inclusion for buyer brokerage compensation. Any amount that seller contributes to help a buyer pay for buyer brokerage services will need to be negotiated in the sale agreement between buyer and seller. While cooperative compensation has always been optional and negotiable in the Listing Agreement, under the revised Agreement the fields are removed entirely.
No Upfront Seller Offers to Pay Buyer Brokerage Fees
Some forms providers are updating listing agreements to remove traditional cooperative compensation (where a listing brokerage and seller agree that a portion of listing fee will be shared with buyer’s agent’s brokerage) while providing an option for the seller to include an amount or percentage that seller is willing to contribute directly (not through the listing agent) to help the buyer pay buyer brokerage fees. Oregon REALTORS® is taking a different approach. Our Task Force discussed the matter at length and determined that any amounts paid by seller to help a buyer pay for buyer brokerage services should be negotiated, in the first instance, in the Sale Agreement. The reasons are multifold including:
- Under the NAR settlement agreement, the buyer’s agent cannot accept more compensation that was agreed to in the Buyer Representation Agreement. Because at the time of signing the listing agreement the seller and listing agent do not know how much any particular buyer’s agent is owed for their services in a Buyer Representation Agreement, we concluded that it was better to leave discussions about any particular amount of seller contributions toward buyer brokerage fees to the Sale Agreement, as is currently the case with other contributions towards buyer’s closing costs.
- Seller “offers” aren’t really “offers.” They are advertisements. On the first day of contracts class in law school, law students learn about the difference between “offers” and advertisements, or what lawyers like to call “invitations to make offers.” If a seller says in a listing agreement that they are willing to contribute $X to help the buyer pay buyer brokerage fees, that isn’t a firm offer. Really what they are doing is inviting buyers to submit offers that include $X as a concession from the seller. It’s not as if the buyer or the buyer’s agent—neither of whom are party to the listing agreement—can “accept” an offer from a seller included in a listing agreement (previously, it was possible for buyer’s agent’s brokerage to accept cooperative offers from listing brokerages because the agents and brokerages had agreed to MLS rules providing such a mechanism). Rather, the ultimate amount that a seller will be obligated to contribute to buyer brokerage fees is the amount, if any, that the seller agrees to in the sale agreement with the buyer. In most cases, buyers are the ones submitting offers in which case the power of acceptance is with the seller, not the buyer. It’s like offering a fridge or other personal property with the listing. If it isn’t in the sale agreement, it isn’t binding (while it may be possible to design a listing agreement that creates a binding offer of compensation from the seller to the buyer’s agent’s brokerage, it is a legal stretch, and our presumption is that these offers are not binding)
- KISS (Keep It Simple, Stupid). As we have traveled the state discussing the NAR settlement with members and listening to their feedback about how we can help them navigate the changing environment, we have heard a strong desire from members to keep things simple to avoid agent and client confusion. Encouraging all negotiations around seller contributions to buyer brokerage fees to happen in the sale agreement between buyer and seller was the simplest and clearest path we could take.
Willingness to Consider Offers that Include Seller Payment of Buyer Brokerage Fees
Rather than providing fields for sellers to communicate an amount or percentage that they are willing to contribute to buyer brokerage fees, our updated listing agreement includes a section explaining to sellers that buyers and their agents are now required to enter into buyer representation agreements that set the fee for the buyer brokerage services, and that some buyers may request in the sale agreement offer that seller contribute toward buyer brokerage fees, and that some buyers and buyer’s agents may inquire in advance about seller’s willingness to do so.Sellers can check a box instructing their agent to communicate to buyers and buyer’s brokers that the seller is willing to consider offers that include requests for seller contributions toward buyer brokerage fees, without specifying a particular amount. Sellers can then evaluate all offers, including those that request seller payment of buyer brokerage fees, based on their overall price and terms.
Additional Listing Fee Options
The updated listing agreement allows for variations in the listing fee based on the details of the transaction that materialize. For example, the listing agent and seller can set a different listing fee if the buyer is unrepresented, to account for the variation in the listing agent’s workload.
Limitation of 24 Months
HB 4058, which was brought forward by Oregon REALTORS® and passed the Oregon legislature in February, prohibits real estate licensees in Oregon from entering into listing agreements lasting longer than 24 months. We have updated the Oregon REALTORS® listing agreement to limit the term to a maximum of 24 months.
Fair Housing
This change was not a result of the settlement, but based on feedback received from members. Oregon REALTORS® Listing Agreement always included a provision requiring the seller to abide by all laws including fair housing laws. We’ve now pulled out Fair Housing into its own section and provided more detail regarding Seller’s obligations under federal, state and local fair housing laws.
It’s important to note that other listing agreement providers, including your local MLS, may choose a different approach with their listing agreement. There is not one right or wrong way to address the issues discussed above, and you may find that each MLS takes a different approach. Our hope is that by explaining the logic behind our choices, you will understand why we made them.
Have feedback on the updated listing agreement?
Please use the Listing Agreement Feedback Form to let us know. We greatly value your feedback.