Few changes expected in WI after real estate agent commission settlement

The head of the Wisconsin Realtors Association predicts only “minimal” changes following a national settlement related to commissions, due in part to Wisconsin’s existing consumer protections. 

The National Association of Realtors settlement announced last month came after lawsuits focused on the issue of transparency in home purchases and how commissions are paid and shared among buyers’ and sellers’ agents, WRA CEO Tom Larson said Friday in an interview.

“The root of the lawsuits was the claim that … sellers were not aware that the sellers’ agent was offering compensation to pay the buyers’ agent,” he said. “The argument was that the seller was unaware, and therefore did not have the ability to decide whether or not to have the sellers’ agent offer the compensation, and if so, what amount.” 

The proposed settlement agreement includes two main provisions, Larson explained. The first of these is related to requiring buyer agency agreements, which detail the relationship between agents and their clients. But he says this element of the settlement won’t change much in Wisconsin, noting the state “has had pro-consumer laws in place” for decades. 

“We’ve always required a buyer’s agent to enter into a written contract to identify what services they’re going to provide to a buyer before negotiating property on their behalf,” he said. “We’ve had that in place. A lot of states haven’t; they don’t require any written agreement for buyers. And I think that was one thing that they wanted to be addressed.” 

Under the other key settlement provision, offers of compensation between sellers’ agents and buyers’ agents could no longer be displayed in the multiple listing services — or MLS, Larson explained. 

He says that was included in the agreement due to buyers and sellers being unaware of these terms, “in an effort to make it more transparent” for agents’ clients. Under the settlement, any offers between agents will need to be listed in an online portal other than the MLS, which is typically not accessible to the general public. 

“The other provision … will have the same impact in Wisconsin as [it] will elsewhere,” he said. “Realtors will have to accommodate that, and they’ll have to figure out other ways to offer compensation to a buyer’s agent.” 

As a result of the settlement and related media coverage, Larson expects consumers will be asking agents more questions about commissions. 

“And that’s a good thing,” he said. “It’s good for consumers to ask, what are you doing in exchange for the commission? And I think it’s really going to require realtors to have to explain the value they add to the transaction … and then the consumer will decide whether it’s worth it.”