Dear Monty: I am a practicing real estate agent. The National Association of Realtors (NAR) just wrapped up the annual Realtor conference. It made some significant changes in multiple listing service (MLS) rules, which are controversial. The rule changes have divided agents in my own office. I am curious to learn your take on these changes and what is driving them. Where do you stand on these new rules?

Monty's Answer: The NAR changed what American consumers will discover as they study real estate listings. The rules also notify homebuyers that agent services are not free. In my opinion, the NAR took up these changes because they are in a legal cat-and-mouse fight with the Department of Justice. The DOJ works closely with the Federal Trade Commission on real estate matters. Here is the DOJ press release on the litigation that is still percolating. The NAR also has several active consumer lawsuits over commission disclosures and transparency. Without this pressure, they would not have implemented the changes because NAR knows these are controversial rules within their membership. It is a no-win situation with their customers, their dues-paying members. They made these rule changes internally to preempt the federal government from making the rules for them. Here is the NAR press release on the rules change.

No. 1: Consumers will have more helpful information

The new rules will not allow real estate agents to promote that their services are "free." To say their services are free, the agents must not receive compensation. All agents receive compensation for selling a home, but the fee is not apparent to the buyer. Additionally, agents cannot filter out the listing agent or the buyer broker commission when performing an MLS search for a prospective homebuyer, which is a common practice. Over many decades these deceptive practices have led many homebuyers to believe they don't pay for real estate brokerage services. The fact of the matter is that they are paying. The DOJ has concluded that these practices are anticompetitive. Additionally, some homebuyers may prefer to talk with the listing agent, who may have more information about the property.

No. 2: The agency relationship

The root source of these legal conflicts lies in agency law, a theory in legal practice that came to America with the Pilgrims. In the late '70s and early '80s, agency law (put the customer's interest ahead of the provider's in a fiduciary relationship) crept into real estate law to replace the caveat emptor theory of law: let the buyer beware. Homebuyers raised their voices because some real estate agents took advantage of caveat emptor, and complaints were common. As a former practitioner and an observer of the industry, it is unclear whether or not one theory is superior, as complaints are still common. This article on DearMonty suggests that neither agency nor caveat emptor is the problem.

No. 3: Will these new rules make a difference?

While hopeful, I am skeptical all the hullabaloo and publicity surrounding the rule changes will filter down to individual real estate transactions. The history of caveat emptor and agency relationships suggests that these changes may not reduce the volume of real estate complaints. And the rule changes may not change the competitive playing field. These changes are a step in the right direction. Only time will tell.

Richard Montgomery is the author of "House Money: An Insider's Secrets to Saving Thousands When You Buy or Sell a Home." He advocates industry reform and offers readers unbiased

real estate advice. Follow him on Twitter at @dearmonty, or at DearMonty.com

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