Real Estate Industry Adapts to New Fee Disclosure Practices Following Regulatory Changes

The real estate industry is actively discussing and implementing new fee disclosure practices following recent settlements and regulatory updates that have fundamentally changed how compensation is negotiated between agents and their clients. Various state associations are developing disclosure forms and guidance documents as agents and brokerages adapt to new negotiation frameworks where buyers and sellers directly negotiate compensation with their respective agents rather than relying on pre-established arrangements.

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." This represents a significant shift from previous practices where buyer agency commissions were often pre-negotiated between listing and buyer agents.

Recent changes have eliminated these 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.

Under the new framework, 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." This approach aims to create more transparent relationships between real estate professionals and their clients while allowing for customized service arrangements.

However, Poulos raises important 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?" These questions highlight ongoing industry discussions about where transparency ends and unnecessary disclosure begins.

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. This concern reflects broader industry apprehension about how disclosure requirements might evolve and what information will ultimately be mandated for sharing with clients.

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, available at https://www.car.org, while other states are developing their own approaches suited to their markets. This state-by-state variation creates complexity for national brokerages and agents working across multiple jurisdictions.

The real estate industry continues adapting to updated negotiation frameworks and disclosure practices. Agents, brokerages, and clients are working through new processes as implementation progresses. 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 implications of these changes extend beyond individual transactions to potentially reshape how real estate services are valued and marketed. As clients become more directly involved in fee negotiations, they may develop different expectations about service levels and compensation structures. The industry's adaptation to these changes will likely influence consumer perceptions of real estate professionals and potentially affect how services are packaged and priced in the future. These developments represent a significant evolution in real estate practice that could have lasting effects on how the industry operates and how consumers engage with real estate services.