T
he Northwest Multiple Listing Service (NWMLS) has implemented new disclosure requirements to increase transparency in residential real estate transactions across Washington state. The changes include a standalone Referral Disclosure form and updated brokerage services agreements.

    These additions aim to inform buyers and sellers when a broker receives or pays a referral fee, often a portion of the overall commission, for connecting clients with another brokerage. According to NWMLS President Justin Haag, "Buyers and sellers should have complete transparency regarding all fees paid to a real estate brokerage firm."

    Referral arrangements are common in the industry, allowing brokers to direct clients to professionals with specialized expertise or market familiarity. When a transaction closes, the referring firm may receive a share of the commission or a fee.

    The new Referral Disclosure form identifies the broker and firm receiving the referral, the broker being referred to, and the amount of the referral fee. Haag emphasized that disclosing referral fees at the outset is essential, as some fees can be as high as 50% and impact buyers' or sellers' decisions about which broker to engage.

    Brokerage service agreements will also include a "Referral Fee Disclosure" section, ensuring the fee is disclosed when a buyer or seller formally engages a brokerage. This provides consumers with information about referral fees at two critical points: when the referral is made and when they negotiate brokerage services. Even if the referring firm fails to disclose the fee initially, it will be included in the brokerage services agreement.