Real Estate Industry Grapples With Fee Disclosure Requirements Amid Market Changes

Real estate professionals across the United States are evaluating fee disclosure practices as the industry implements changes following recent settlements and regulatory updates. Various state associations are developing disclosure forms and guidance documents while agents and brokerages adapt to new negotiation frameworks where buyers and sellers directly negotiate compensation with their respective agents.

Courtney Poulos, Founder and CEO at ACME Real Estate in Los Angeles, observes the ongoing implementation process in California markets. "Buyers negotiate with their agent for the fee, sellers negotiate with their agent for the fee," Poulos notes. "The market-based negotiation framework allows clients to evaluate service offerings and make decisions based on their needs."

Recent changes eliminated pre-negotiated buyer agency commissions, requiring direct fee negotiations between agents and clients for each transaction. This structure shifts compensation discussions to one-on-one conversations rather than pre-established arrangements. "Everything is negotiated between agent and client," Poulos explains. "Clients evaluate the services being offered and determine whether the proposed terms work for their situation."

The implementation continues across different markets as agents, brokerages, and clients adjust to updated practices and disclosure requirements. Agents present service packages that bundle various components of representation, marketing, and transaction management. Clients assess these offerings during negotiation discussions. "Agents present their services and associated compensation," Poulos says. "Clients can accept terms, negotiate adjustments, or seek alternative representation based on their assessment."

However, Poulos raises questions about the scope and ultimate objectives of expanding disclosure requirements. "The question becomes what level of business expense detail appropriately belongs in client conversations," Poulos notes. "In what other profession do practitioners itemize their marketing costs, advertising expenses, or business development investments when quoting service fees?" Some professionals question whether the agenda extends beyond transparency to itemizing all income streams, potentially diminishing agent value by suggesting agents overcharge clients to cover lead acquisition costs, though evidence of systematic overcharging remains absent from the discussion.

State real estate associations are developing forms and guidance materials to support members in implementing updated practices. These materials vary by jurisdiction based on local market conditions and regulatory environments. California has released updated forms as part of its implementation process, while other states are developing their own approaches suited to their markets. The industry continues adapting to updated negotiation frameworks and disclosure practices as agents, brokerages, and clients work through new processes.

Professional education and training programs are addressing updated practices to help agents navigate client conversations and transaction documentation under current requirements. Market participants are gaining experience with updated frameworks as transaction volume continues through different market conditions. The evolving landscape represents a significant shift in how real estate services are priced and communicated to consumers, with implications for industry transparency standards and business models.