Important Dates
On May 29, CRMLS introduced new entry fields to our MLS systems which we call the Concessions in Price (CiP) fields. You can read more about them in our CiP FAQ. In addition, starting August 13, following the settlement of the NAR commissions lawsuit, new Rules and Policies updates will remove mentions of compensation in the MLS. You can find more information in our Rules & Policy Changes summary.
Concessions vs. Compensation
Based on the timing, you may think that CiP fields are simply replacing concessions fields. This is NOT true. Concessions and compensation work fundamentally differently.
While concessions have been a part of common real estate practice for some time, usually relegated to Private Remarks and recorded at the Close of a transaction, we found it prudent to now introduce them formally into the MLS at the listing level. In 2023, 40% of closed sales had the seller pay for some of the buyer’s closing costs, which under the current system, has nothing to do with broker commissions. In fact, CRMLS convened a task force of the Rules Committee to develop the concepts surrounding concessions in October 2023, before the lawsuit verdict and 6 months before the NAR Settlement.
Starting in August, mandatory buyer representation agreements will set the amount that the Buyer’s Broker will be paid before the buyer tours a property. The buyer can use the information in the CiP fields to design an offer to purchase that better meets the needs of that individual buyer. The Buyer Agent has no incentive to guide the buyer to a higher concession, because the Buyer Broker will only receive the fee amount that is in the written agreement with the buyer, and no more than that. This means the buyer will get to decide how to use any concession amount to pay for any of the costs the buyer incurs to secure the property.
Since the CiP field is not an offer of compensation, it forces the buyer to include any request for the seller to pay any of the buyer’s costs into the purchase agreement, which is subject to negotiation between the seller and buyer. The buyer may decide to apply all of the concessions to loan points, or towards title and escrow fees, or the buyer can reduce the purchase price, or pay for their agent. The buyer can even use the concessions for multiple different purposes. This is very different than an offer of compensation from a Listing Broker to pay only the Buyer’s Broker. The money committed by a seller to an offer of compensation is limited to only being used for the Buyer Agent, and no other purpose.
Additionally, a seller is not required to indicate a specific dollar or percentage amount and may simply indicate that they are willing to consider concessions, which is helpful for the buyer to know when drafting an offer. This is consistent with what we believe the DOJ sought as the outcome to these issues when they filed their Statement of Interest in the Noselak case.
As we, both the collective of professionals using CRMLS and the real estate industry at large, adjust to these new practices, we must allow for and be patient with the adjustment period. It can take time for new standards and practices to fully mesh with the realities of conducting business, and some issues out of our control may resolve faster or slower than others. However, we’re committed to not just sorting through any new components to make the most efficient workflow we can, but also to being as transparent as possible with our users about how we’re aiming to manage and adjust to all the developments that will continue to come down the pipeline.
Stay tuned for more updates as they develop. Thank you for your continued support as we dedicate ourselves to building an even-better MLS.
Thank you,
California Regional MLS
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