All Realtor Bonuses to be Disclosed. Commission wants homebuyers to learn of incentives in writing.

N.C. regulators have moved closer to making the state among the most rigorous in the country in letting homebuyers know about their real estate agent's financial interests.

The nine-member N.C. Real Estate Commission decided unanimously Wednesday to draft a rule that would require agents to provide a written disclosure of bonuses they receive from sellers before their clients make a decision to buy a home.

The rule change, prompted by an Observer investigation, could take effect as early as July 1. It will be subject to a public hearing before the commission decides to send it to the state for approval.

Real estate brokers are typically paid a commission, or a percentage of the sales price. Some sellers, particularly homebuilders, also pay agencies a bonus for finding buyers. Such extra incentives are legal.

State rules currently require agents to tell customers of bonuses before an offer for purchase is made, but agents are only required to disclose bonuses orally, making the rule hard to enforce.

"The buyer needs to know 100 percent of what's going on in that transaction," said commission Chairman Skip Alston of Greensboro. "It should be transparent."

If the new rule is approved, North Carolina would be among just a few states nationwide requiring written disclosure of bonuses before a purchasing decision. Most don't require any disclosure of bonuses beyond including them on the HUD settlement statement at closing.

In the Southeast, only Tennessee requires the type of disclosure pending approval in North Carolina.

One commission member questioned Wednesday whether a rule change was necessary, given that bonuses are seemingly infrequent in some markets. "I'm not sure how egregious the problem is," said Joe Hodge, a Raleigh-area Realtor. But Executive Director Phillip Fisher said his staff's research showed that bonuses are common in Charlotte, indicating substantial use of the practice.

Mecklenburg County real estate agents have told the Observer that bonuses are offered on as many as 40 percent of newly built homes and about one-fourth of existing homes.

Tom Miller, the commission's director of legal services, said the new rule wouldn't require that agents provide written disclosure of bonuses each time they approach a house. He hoped, however, that the rule would prompt agents to be more diligent about notifying clients of bonuses orally when they are considering a house, then putting the bonus in writing before a contract is signed.

The written disclosure would likely come in a separate form created by the N.C. Association of Realtors or individual real estate agencies.

The commission could still change or scrap the rule following public comment. But, said chairman Alston: "I don't think you're going to have any opposition once it becomes a proposed rule."

The move to change the rules followed an Observer investigation published in September of Realty Place, a Charlotte-area company that received millions of dollars in bonuses from homebuilders in exchange for finding buyers. Observer reporters spoke to more than 50 Realty Place clients, none of whom remembered being told about a bonus the agent received.

The Observer investigation found that Realty Place maintained a close relationship with builders after vowing to protect clients from them. Company records showed -- and former employees affirmed -- that the company funneled buyers into low-priced starter home developments, many of which are now plagued by foreclosures.

Miller said a Real Estate Commission investigation of Realty Place, opened in response to the Observer's reporting, is ongoing. The company's owners have denied wrongdoing.