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A wave of lawsuits threatening to disrupt the way agents are compensated has spurred the development of a new platform to disclose commissions — allegedly while remaining compliant with new requirements resulting from the changes.
The data provider, Grand Rapids, MI-based Nesthook, claims to offer a neutral platform untethered to multiple listing services or the National Association of Realtors, “for agents seeking to effectively communicate commission amounts while remaining fully compliant with settlement requirements,” according to executives. Presumably, brokers can use it to publish information about buyer-agent commissions.
The impetus for the platform grew out of the NAR settlement, which proposes a prohibition on offers of compensation in MLS databases and listings.
In a phone call with Inman, Nesthook President Ryan Kelley cited Section H, paragraph 58, item v. of the settlement (pg. 29), which prohibits the use of data aggregators for the purpose of distributing commission terms and percentages. In other words, NAR-affiliated data sources can’t use a proxy to recreate the current system, Kelley argues. Thus, part of Nesthook’s value proposition is that its lack of direct connection to any industry source meets that requirement, and listings will be entered manually via Nesthook’s interface and with all proper compliance attached.
“You can still offer a buyer’s agent commission, and it goes on to say that a listing agent has to conspicuously disclose to their seller that their commissions are negotiable, and they have to gain approval from them to offer any amount of compensation to any other party,” Kelley said. “If those things are done, it’s [paying a buyer agent] still a viable thing.”
Nesthook will charge $3.99 monthly and allow agents to search for homes that offer buyer agent compensation.
Kelley said the company is aware the settlement terms may change based on how the U.S. Department of Justice responds, but the March agreement gave the company’s founders confidence to move forward.
“I understand that changes could still happen [and] it’s all very unclear, and none of us really know, but we’re confident with what we built, [and] is something we’re going to move forward with now,” Kelley said.
Kelley and his co-founder, CEO Dontay Robinson, lead NuCon Realty in Allendale, MI. Kelley started as a real estate investor and transitioned into brokerage and now focuses on commercial property sales and leasing. Kelley once ran for governor of Michigan, and was also present at the Capitol Riots on January 6, 2021, which led to his arrest and being sentenced to 60 days in jail.
Robinson has been an agent since 2017.
Currently, Nesthook’s website displays mostly commercial investments, such as multifamily properties and land offers. A five-bedroom, seven-bathroom mansion in Chicago listed for $4.5 million by Frank Paganis of Coldwell Banker Real Estate Group offers buyer-agents a 2 percent cut of the net sales price.
Inman spoke to Paganis about his listing on Nesthook, who said he heard about them and wanted to give it a shot.
“It is manual but it’s super quick and easy to use, very straight-forward, which I like,” Paganis said. “If everything happens with NAR the way they say it’s happening, you know not being able to post anything on the MLS about commission, it’s nice to know there is a landing site where you can look in your area to find out what you might get paid on something.”
“We’re obviously in the very beginning stages of this world, but I felt if there’s a way I can get opportunity out there to let people know about my product and knowing that my seller is okay with me paying a commission, then fine.”
Despite Redfin distancing itself from NAR last year, its use of MLS data requires that its agents adhere to the settlement’s provisions upon their finalization, the company confirmed in an email to Inman.
Earlier this week, the U.S. Department of Justice, which is monitoring the settlement approvals from the sidelines, made it known that commission offers published anywhere might be a sticking point, according to RISMedia. The article focused on an MLS PIN hearing in Massachusetts last month in which a DOJ lawyer in attendance described NAR’s preliminary settlement as “an improvement.”
“We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” the attorney, Jessica Leal, said.
Mantill Williams, vice president of public relations and communication strategy for NAR, told Inman in a May 22 email that consumers would be harmed if a blanket ban on publicizing commissions became reality.
“Prohibiting all offers of compensation will harm consumers, including by making it more costly for home buyers to access capable representation and by reducing access to fair housing,” Williams said. “There is a great deal at stake for buyers and sellers all across the country, and NAR will continue to work, in and out of court, toward the best possible outcome for property owners in America and the professionals who represent them.”
A hearing to finalize the settlement is scheduled for November and multiple listing services will be tasked with implementing and enforcing the rules in August. On that timeline, Williams said NAR has to default to what’s written in the settlement.
“Our settlement requires NAR to implement the practice changes no later than the date of the class notice,” he said. “Through the preliminary settlement approval process, we now know the earliest date of the class notice is August 17, 2024. Our settlement requires NAR to implement the practice changes no later than the date of the class notice. Through the preliminary settlement approval process, we now know the earliest date of the class notice is August 17, 2024.”
