Panel to study bonuses policy

RALEIGH -- State regulators on Wednesday punted on the question of whether to soften a rule designed to make sure consumers are told about hidden real estate bonuses.

After a brief debate over the rule, which grew out of a Charlotte scandal, the N.C. Real Estate Commission promptly opted to appoint a task force to study the issue.

Actually, the commission didn't appoint the task force. The members plan to do that in March.

"We're going to have to have a lot of discussion on this," said commission chairwoman Marsha Jordan. "I don't think most people out there know how this is supposed to work."

The state's three largest metro real estate organizations are pushing to rewrite, or at least reinterpret, the rule. It requires buyers' agents to provide a written disclosure of compensation they would receive from sellers when a home is sold.

Real estate brokers typically receive a commission, a percentage of the sale price. Some sellers, such as home builders, also will kick in a bonus for finding a buyer. That's legal, but before 2008 it didn't have to be disclosed to the buyer.

A rule approved that year required that real estate agents disclose everything they will be paid before an offer is made. That rule followed a Charlotte Observer investigation revealing millions of dollars paid to agents for steering buyers to particular homes without the buyers knowing about the cash, gifts or free trips paid out.

The real estate organizations don't object to buyer's agents having to disclose everything. Their complaint centers around deals in which the agent for the buyer and the agent for the seller work for the same real estate firm. Since only one firm is involved, the money paid to both agents would have to be disclosed, according to real estate commission staff.

That requires the buyer's agents to chase down information from the seller's agents, said Tony Jarrett, a Greensboro realtor with Allen Tate, speaking on behalf of the Realtors association there. He offered examples of information that likely wouldn't concern the buyer, such as when a seller's agent charges the seller an extra 1 percent to cover the advertising costs of promoting a new subdivision.

Jarrett cautioned against overreacting to the Charlotte cases.

"We're paying for the sins of a small group that did something that's not rampant," Jarrett said.

Bonuses prevalent

Commission staff countered, though, that after the Charlotte cases, they surveyed and found that bonuses were common throughout new developments.

Miriam Baer, legal counsel for the commission, emphasized that if both the buyer's and seller's agent work for the same firm, the question is disclosing what the firm will earn from the sale. Disclosing everything reveals any incentives paid to the firm as a whole to encourage a buyer to purchase a particular house.

Buyers should know if their agent's firm will receive a combined cut of 12 percent of a sale in one neighborhood but 7 percent in another, Baer said.

The commission is expected to present names of potential task force members and a narrowed mission statement for that group next month.