New rule, new realities: Real estate decision affects Guam buyers

BY PAULY SUBA
Journal Staff

Following a pivotal Missouri jury decision against the National Association of Realtors and major brokerages over commission practices, the real estate industry is bracing for significant changes. Christopher K. Felix, president and principal broker of Century 21 Realty Management Company Inc., said these changes will impact brokers, agents, and clients.

The court ruling has introduced new rules effective Aug. 17, which primarily focus on transparency and fairness in commission practices.

“The main changes we’re looking at are removing commission details from Multiple Listing Services (MLS) and requiring all buyers to sign a buyer’s representation agreement before viewing properties,” said Felix.

These steps aim to ensure that buyers are fully aware of their obligations in terms of commission fees, aligning with the court’s push for greater clarity.

Felix said there aren’t any losers, the process just becomes more complicated.

“I’ve said it before and I’ll say it again, it’s silly. All this does is muck things up,” he said.

Felix explained the practical implications.

“From Aug. 17 onwards, MLS listings won’t show commission rates. This means agents will need to discuss commissions directly with listing agents for each property. We also have to ensure that buyers understand their share of the commission, which they’ll need to agree to before we can show them any homes,” he said.

These changes, while straightforward in principle, add layers of complexity to real estate transactions.

“We’ll have to work out new processes with our clients. For instance, if a seller isn’t willing to cover the buyer’s agent’s commission, we’ll need to renegotiate the deal. But in the end, the price of the house or property remains the same. It’s a matter of finding alternative ways to cover those costs. Which again just mucks things up,” Felix said.

Felix also highlighted the importance of legislative support to standardize these practices across all agents.

“Realtors are pushing hard to have the legislature pass rules that puts everyone on equal footing. We’ve been discussing this with local legislators, including Senators Telo Taitague and Sabina Perez.”

Sen. Telo T. Taitague confirmed that both her office and Perez’s office are looking to introduce a bill similar to a Washington state law.

“We have been looking at how we can mirror a Washington law that promises to change the relationship between real estate brokers and buyers,” Taitague said.

Washington Senate Bill 5191, which went into effect at the start of 2024, aims to provide significant protections for consumers in real estate deals.

Real estate brokers now need to have a written agreement with buyers ahead of performing any services, or as soon as reasonably possible afterwards. According to the new law, brokers owe duties to both parties in a purchase – this means that a broker can’t just act on behalf of the seller, but must consider the buyer too.

The bill, which was signed into law in May 2023, classifies tenants under the category of buyers, so its protections extend to renters as well.

Felix said some of the other rules come with some stipulations, however they are mostly irrelevant to smaller markets like Guam. “These other rules only apply to brokers who receive over $2 million in commissions a year. That’s not something we need to worry about here,” Felix said.

In adapting to these changes, Felix and his team are preparing to educate their clients and agents thoroughly.

“We’re planning comprehensive training sessions to ensure everyone understands the new requirements. Although we won’t start implementing these changes until Aug. 18, it’s important that our clients are prepared for what’s coming,” Felix said.

Despite the additional complications, Felix remains optimistic that the industry will adapt. "Yes, it is confusing, but we have to follow the law. It’s something we’ve got to do,” he said. mbj