At a time when the National Association of Realtors (NAR) is under a microscope, and honestly, for good reason, you’d think transparency would be the one thing everyone could agree on. But at this week’s NAR NXT conference in Houston, a proposed change to the Code of Ethics that would have expanded referral fee disclosure requirements was shot down. Not by the NAR Board of Directors, mind you, they passed it by a strong 84 percent margin. It was the so-called Delegate Body, which had the final say, and they said no.
The proposal would have required Realtors to disclose all referral fees, including those from lead-gen platforms like Zillow and other “partners,” and to obtain written client consent when receiving any kind of rebate, profit, or compensation from referrals. Right now, the rules only require disclosure of commissions, leaving referral fees largely out of sight. The change would have closed that gap.
This wasn’t some obscure rule tweak, either. It was aimed directly at one of the more controversial blind spots in the business. Think about Zillow Flex, where an agent could pay up to 40 percent of their commission to Zillow after closing. That’s a big number. And if the buyer doesn’t know that’s happening, or that their agent might have been selected more for who pays the highest fee than who’s the best fit, that’s not exactly consumer-friendly. There’s also the recent lawsuit against Zillow that specifically targets this lack of transparency, claiming buyers were “tricked” into working with agents in the Flex program.
Victor Lund of the WAV Group compared the rejection of the proposal to the Sitzer/Burnett commission lawsuit fallout, arguing that when compensation is not disclosed, the client can’t evaluate the value or negotiate. I agree. When you keep people in the dark about how you’re getting paid, especially in a service industry where trust is currency, it creates a crack in the foundation.
Now, to be fair, referral networks and lead platforms are legal and often useful tools. But that doesn’t mean clients shouldn’t know when there’s money changing hands behind the scenes. The committee that proposed the change acknowledged that the 1999 exemption for referral fees might’ve made sense back then, but that in 2025, there’s no valid reason to keep consumers in the dark. They’re right.
The whole thing feels like a missed opportunity. Especially in a moment where the public is already suspicious of how agents get paid and where lawsuits are reshaping how commissions work, this would’ve been an easy, meaningful step toward rebuilding trust. Instead, we punted.
I’m not surprised, unfortunately. The real estate industry doesn’t move fast, even when the writing is on the wall. But I am disappointed. We keep saying we’re committed to transparency and consumer protection. Votes like this tell a different story.