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After the National Association of Realtors failed to pass a broad referral disclosure requirement, some major real estate players are embracing transparency on their own.
Big brokerages and Realtor organizations are moving to enact their own policies in favor of broad disclosure of referral fees in the wake of inaction by a group of local real estate leaders.
EXp Realty and Benchmark Realty both announced this week that they were enhancing their requirements for agents to disclose to their clients when referral fees are paid or received.
The moves follow a failed attempt to amend the Realtor Code of Ethics last week. The move would’ve broadened which referrals Realtors must disclose to their clients. The amendment was widely approved by the full Board of Directors just minutes before it failed to pass a vote by a group of local Realtor leaders known as the Delegate Body.
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In an apparent response, the brokerages and even one large Realtor association have issued statements in favor of broad disclosure.
“The real estate landscape is evolving rapidly. We are seeing massive acquisitions of search portals by mortgage lenders and aggressive vertical integration,” Leo Pareja, CEO of eXp Realty, said in a statement. “In this environment, silence is not an option. Transparency is not just good business, it is the foundation of public trust.”
EXp also said it would release a new disclosure form on Dec. 1, and that it would add more sections to an existing form to give clients added clarity around referral fees. It declined Inman’s request to discuss the updates before a scheduled webinar on Monday.
But apparent copies of the forms shared by various brokers online show the new buyer broker representation agreement would be updated to include a disclosure about whether the broker must pay a referral fee to anyone for connecting the buyer with the broker.
That language appears to make clear whether an agent was connected with a buyer via a lead-generating platform like Zillow or Realtor.com.
The firm’s exclusive right to sell or lease form would also include a referral fee disclosure.
Moreover, a new “Consumer Choice in Your Real Estate Transaction” form will outline the consumer’s right to choose their ancillary providers.
The brokerage also said in its statement that its Full Referral Fee Disclosure would expand referral fee disclosures and give clients added clarity.
James Dwiggins, CEO of NextHome, shared the forms online and applauded eXp for leading the way toward greater transparency.
“To be clear, this is in response to NAR governance failing to pass a rule change to Article 6 of the Code of Ethics to require disclosure of referral fees to clients, as well as the new litigation against Zillow regarding referral fees,” Dwiggins wrote.
Also on Wednesday, Benchmark Realty — which operates in Tennessee and Kentucky — updated its policy on disclosures, effective immediately.
The firm said that all referrals — “whether paid or received” — must be disclosed to clients in writing before or at the time of the referral arrangement.
The brokerage made clear that it was beefing up its policy in response to the failed vote by the Delegate Body.
“While the national Realtor association, as well as most state and local associations have declined to adopt mandatory transparency policies, Benchmark Realty believes our clients deserve complete clarity regarding how real estate professionals are compensated,” the company said in a statement. “Our policy is designed to preserve trust, protect consumers, and strengthen professionalism in the industry.”
The Benchmark Realty policy applies many different types of referrals: agent-to-agent referrals, relocation networks, lead-generation platforms, broker-to-broker referrals, marketing or advertising networks that pay agents, and any third-party provider that provides money or other incentives.
Agents who fail to meet the disclosure requirements face termination from the brokerage, the company said.
In addition to eXp and Benchmark Realty, the California Association of Realtors in recent days also publicly expressed support for referral fee transparency. The organization said it was revising its forms accordingly, which will “make it easier to disclose receipt and payment of referral fees.”
Referral fee transparency remains a hot topic among industry professionals, but overall the changes were welcomed on Wednesday by Summer Goralik, a California-based real estate compliance expert.
“If you’re rolling out new policies and forms, that’s fantastic, I commend you,” Goralik wrote. “Just make sure you enforce them.”
