As a real estate professional, you know the best way to provide equal service is to be consistent in your business practices and how you treat each client. That consistency is key as the Aug. 17 deadline to implement practice changes nears and you endeavor to address your compensation with clients.
You need to establish consistent policies and procedures for how you’ll guide the compensation conversation—and follow those practices every time. This is where your fair housing expertise comes into play. Pair your knowledge of your responsibilities and your clients’ rights under the law, as well as how to avoid implicit bias, with the information you have on NAR’s proposed settlement at facts.realtor to inform your strategy around the compensation conversation.
“The settlement will result in a new system for compensating buyers’ agents, which will likely produce many different payment options and levels of service,” says attorney Robert Schwemm, who is the Ashland-Spears Distinguished Research Professor Emeritus at the University of Kentucky College of Law. “Agents who offer multiple compensation options will inevitably deal with buyers, sellers and other agents on different terms.”
There’s nothing wrong with providing options, adds Schwemm, but the hallmark of fair housing compliance is consistency. So, the variety of approaches that agents and consumers adopt means there will be many opportunities for differential treatment. “Such differential treatment may lead to feelings of unfairness and discrimination, which, in turn, may raise fair housing issues,” Schwemm continues. “Don’t be surprised if fair housing groups use testers to see if buyers’ agents are discriminating on the basis of race or other prohibited factors.”
You should already have guardrails in your business to protect consumers from discrimination based on race, sex, national origin and other protected characteristics. Those guardrails, which are set forth in the REALTOR® Code of Ethics, will serve you well when negotiating compensation, too. Your business should have standard policies and practices on the presentation of written buyer agreements and any resulting negotiations. If your brokerage offers different levels of service, such as full service versus limited service, provide all buyers with all options and let the consumer choose the one that works for them.
“Agents should have a clear, legitimate reason for differences in levels of service, should be consistent in applying their pricing policies and should keep good records of when and why different prices or services were offered,” Schwemm adds.
To further limit the risk of unintentional discrimination, approach compensation negotiations with implicit bias in mind. It’s common human behavior to favor people in your own group and give them the benefit of the doubt over members of other groups—and it can play out in ways that violate the law. Take advantage of NAR’s award-winning implicit bias course, “Bias Override: Overcoming Barriers to Fair Housing,” and make efforts to combat the stereotypes that may unintentionally influence disparate treatment in your negotiations.
This is important not only for your interactions with home buyers but also with sellers. Remember, home sellers can discriminate and be held liable under the Fair Housing Act. If a seller denies housing or a housing-related service—such as an offer of compensation to a buyer broker—based on the buyer or buyer broker’s protected characteristics, the seller and the listing agent could face liability. If the seller authorizes offers of compensation as part of the marketing strategy for their property, the listing agent cannot communicate different offers of compensation based on the buyer or the buyer agent’s identity. The advice when a seller discriminates is always the same: Inform the seller of their responsibilities under the Fair Housing Act, document it, report it to your broker—and if your client won’t change, part ways.
As a REALTOR®, you hold yourself to the highest standards of ethics, professionalism and integrity. You can take steps to protect buyers from discrimination and to educate sellers about their obligations under fair housing law. Explore education and resources from NAR’s Fair Housing Action Plan to raise your value to your clients.
