More on the Revised Real Estate Agency Law

A watershed change in Real Estate Agency Law  in Washington State went into effect on January 1, 2024.  The Following is a brief summary of the reasons for the changes and why they’re important.

The National Association of Realtors (NAR) and large real estate firms have long been the target of US Department of Justice (DOJ) antitrust investigations and lawsuits centered around the remarkable stability of the 5-6% commission rate. Also at issue is the lack of transparency around how real estate firms and brokers are paid. The investigations have been met with limited success. Since 2019, there have been more than a dozen class action lawsuits filed against the NAR and various regional and national firms.The first jury trial ended on October 31, 2023 with a large ($1.8+ Billion) victory for the plaintiffs. The suits still awaiting trial contemplate much higher penalties.

In 2019, as a direct response to both the DOJ and consumer lawsuits, real estate brokers and firms who subscribe to the Northwest Multiple Listing Service (NWMLS) began changing the way we practice. These changes culminated in major revisions to the Real Estate Agency law, which took effect on January 1, 2024. Previously,  real estate brokerage firms were required to enter into written agreements only with sellers, not buyers. The Agency Law now requires firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and buyers. This change is to ensure that sellers and buyers clearly understand the terms of the firm’s representation and compensation.

The revisions allow real estate firms and brokers to more fully and fairly compete both price and service in the market because compensation is now effectively decoupled (each party is responsible for their broker’s compensation). The buyer and the seller both have  the ability to negotiate with their broker the terms of their compensation. This is a tectonic shift in the real estate brokerage industry. There is also an opportunity and mechanism to negotiate compensation at the individual transaction level

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