Last month, Alabama Governor Kay Ivey signed a bill that explicitly bans any requirement that homebuyers sign an agreement with an agent before touring a home, essentially repealing a change made by the National Association of REALTORS®’ (NAR) settlement agreement.
While the settlement was crafted to defer to state laws, the bill would appear to be a repudiation of the national mandates that emerged from the lawsuit. At least one more state—Lousiania—is considering a similar law, explicitly banning buyer agreements as a “prerequisite” to tour a home.
Across the country, as policy changes sift down into local markets, more states considered or are considering pushback—to settlement changes, MLS policies or NAR in general—while other states have instead chosen to affirm the new policies.
In Arizona, a bill introduced by Republican State Representative John Gillette—a real estate agent and member of NAR—would have banned brokers from requiring their agents to be members of “a real estate trade association” or “a REALTOR® organization.”
“I am a member of NAR, not by choice,” Gillette said at a recent hearing. “I and many others, including my broker, would like to have just the ability to sever from NAR.”
Gillette also referenced the NAR settlement extensively as he advocated for the bill, saying that the “three-way agreement” requiring REALTOR® membership in local, state and national associations was the “catalyst” for the commission lawsuits by ensuring rules were propagated and enforced across the country.
That bill narrowly passed out of committee, but appears to be dead, never having received a full floor vote. In response to emailed questions, Tim Beaubien, senior director of government affairs for the Arizona Association of REALTORS® (AAR), said the proposed law would have created new burdens and new conflicts on practitioners in the state.
“Had it been successful, (the bill) would have required real estate brokers to hire and be responsible for agents who do not have access to Arizona REALTORS® forms or other membership services. In turn, these brokers would need to employ lawyers to draft forms, pay increased insurance rates and be responsible for educating and supervising two different classes of agents,” Beaubien wrote.
AAR worked “in consultation” with NAR to oppose the bill, according to Beaubien.
Gillette did not respond to multiple requests for comment.
In Oregon, a similar bill was introduced by Representative Dwayne Yunker (also a real estate agent), that would make it “unlawful” to deny “membership or participation in, any real estate multiple listing service solely because the individual is not a member of a real estate brokers’ organization or other organization or association relating to professional real estate activity.”
A violation could result in a fine of up to $25,000, according to a member of the Oregon Association of REALTORS® (OAR) testifying against the bill, and would allow private lawsuits against violators.
That bill also appears to have died in committee.
At a public hearing in February, Yunker called the current system of REALTOR® membership requirements “unfair.”
“I want to note that many brokers reached out to me today, and they were kind of afraid to testify, because they don’t want it to be known that they support this bill,” Yunker claimed.
Notably, the effort to change the REALTOR® membership requirements for MLSs have also emerged in the form of lawsuits filed by agents and brokers in a handful of states. It was not clear if any state has ever passed similar legislation, with the four states that currently allow non-REALTOR® MLS access having made the change through court decisions.
Yunker also did not respond to emailed requests for comment. OAR also did not respond to emailed questions about the bill. An NAR spokesperson referred questions about the bills, and NAR’s involvement in advocating for or against them, to the state associations.
A house divided?
The dynamic of REALTOR® associations rallying against bills proposed by REALTOR® lawmakers shows the tension and continued disagreement in the wake of the NAR settlement. It also underscores the power of REALTOR® advocacy at the state level—notably, the Alabama Association of REALTORS® strongly supported the law repealing buyer contract requirements, and that bill passed almost unanimously through the state legislature.
At a hearing in February for the Arizona law banning REALTOR® membership requirements, Tom Farley, former CEO of the Arizona Association of REALTORS® (AAR), argued that preventing associations or brokerages from requiring REALTOR® membership was actually taking away choice, and claimed that REALTORS® had driven from around the state to speak against the bill.
“It’s a choice today if you want to be a REALTOR® or not,” Farley said. “There’s always been non-members who have a real estate license, they park with a non-member firm…we are very proud to be a ‘freedom of contract’ state. We allow businesses to make their own policies.”
The largest MLS in Arizona, Arizona Regional MLS, does indeed allow non-REALTORS® to participate, but all agents have to conform to their broker’s status—if the broker is a REALTOR® member, all the agents must be members, and vice versa. That practice is mandated by NAR at the national level.
Alex Kolodin, another state representative in Arizona, said he has heard from agents that it’s not practically viable to join a non-REALTOR® brokerage, whatever the rules actually say. He asked Shelley Ostrowski, a broker and immediate past president of AAR who was testifying against the bill, if that was accurate.
“I cannot say that I feel the same as you,” Ostrowski said.
Gillette made sure to clarify that he did not see NAR as “bad people” despite his other criticisms.
“They’re good, and they provide a lot of good service to those members that want to be there…some of the tools especially for a new REALTOR® are tremendous tools to get started, but for those who don’t want to be a member, there should be an avenue,” he said.
In Oregon, Rick Harris, chair of Southern Oregon MLS, said at a hearing the bill was “bad.”
“The current environment that we’re in allows for choice…between being a REALTOR® MLS or a non-REALTOR® MLS,” he said. “This is a decision about REALTOR® MLS that is best left at the local level.”
Jeremy Rogers, director of government affairs at Oregon REALTORS®, pointed to NAR-independent Northwest Regional MLS over the border in Washington—which does not require REALTOR® membership—as evidence the market is “pro-competitive.”
One local broker, Chris Barnett, testified that because most MLSs do require REALTOR® membership, and because of NAR’s “three-way agreement,” he is effectively required to be a member of multiple REALTOR® organizations to run his business.
“I’m licensed through the real estate agency—not NAR,” he said, claiming that Oregon REALTORS® have “monopolistic power” and use dues for political contributions.
Rogers clarified that the state association does not directly control any of the seven MLSs operating in the state, and said that “base dues” are not used for political action committees.
At the national level, NAR has sought to delegate decisions to the local level while still explicitly standing behind REALTOR® membership requirements for MLS access. In a detailed post on its website (that was deleted without explanation after the first broker lawsuit back in August), NAR explained how it changed its bylaws in 1994 to allow MLSs to make their own individual decisions about MLS access following an Eighth Circuit court decision finding that mandate violated antitrust lawsuits.
That effectively allowed NAR to avoid more lawsuits, though several MLSs and local associations were subsequently sued, according to NAR’s website, with some changing their policies around MLS access.
“NAR believes that limiting MLS access to REALTORS® is legitimate and lawful, and that litigation challenging the MLS membership access rule can be successfully defended,” the website read.
Affirming or clarifying
Outside of the pushback against REALTOR® membership requirements, the initial response by state legislatures to the new NAR rules—and increased scrutiny on the real estate profession—appears decidedly mixed. Other states have proactively affirmed elements of the settlement, or rather than roll back rules, have tightened licensure requirements or standards.
A bill in Illinois would notably affirm at least some of the principles of Clear Cooperation, requiring anyone with a real estate license in the state to “publicly advertise or market a property on a platform or website accessible to the general public” within one day of signing an agreement with a seller.
Notably, that bill does not provide any other specifics as to what kind of platform, seemingly opening up the possibility of marketing properties through other means besides the MLS. It also wasn’t clear if the MLS would fulfill the requirement as “accessible to the general public.”
That type of bill aligns with new standards imposed by portal giant Zillow, which announced on April 10 it would explicitly affirm Clear Cooperation and ban listings that were previously limited to private networks or platforms.
The Illinois Association of REALTORS® did not respond to emailed inquiries about the bill.
In Iowa, a new bill proposes to tweak buyer agreement mandates, ensuring agents don’t have to sign a contract with a buyer looking at multifamily homes of more than four units, properties at auctions or “a property that is not intended for human inhabitance.”
Back in Arizona, a bipartisan bill also co-sponsored by Gillette (but with support from three other state representatives) would have mandated that “a real estate website that uses the multiple listing service shall provide a homeowner an option to opt out of and to opt in to having the homeowner’s property advertised on the real estate website.”
That bill never received a committee vote, and Beaubien said AAR never took “an official position” on the bill, but had monitored it.
Another law proposed in Oregon would make significant changes to licensing laws and responsibilities, specifically creating a whole new category for licensees that largely mirrors the responsibilities of a designated broker. That law also expressly codifies what a real estate team is, including requirements for teams to disclose supervisory responsibilities to clients, and banning teams from using “real estate” or “realty” in their names (the reason for this was not immediately clear).
In a letter submitted to the state, OAR broadly supported the bill, saying it would increase professionalism and clarify vagaries in the current statutes. That bill passed the Oregon house, and is currently on track for a vote in the Senate.
In Virginia, a new proposed law would do the opposite of the Alabama legislation, and codify the NAR settlement by requiring that agents sign a buyer agreement before showing a property. That bill defines “showing” very broadly, as physically touring, virtually touring or even providing information to a client while at the property. The law specifically carves out agents who are working with landlords, who don’t have to sign an agreement with prospective tenants.
Other states have already affirmed aspects of the settlement rules, including Ohio, which now also requires buyer agreements before touring a property based on a bill that passed around the same time the NAR rules went into effect in August.
Also last year, New Jersey passed a bill that among other things, removed the term “multiple listing service” from its consumer rights laws, replacing it with the phrase “database established to provide data about properties for sale, such as a multiple listing service.”
That law also creates a new requirement that agents disclose how their compensation will be calculated, as well as dual agency and any “actual or potential” conflicts of interest.
The Ohio and New Jersey bills both had support from state REALTOR® associations.
