Hope Springs Eternal
Suffice it to say, it has been a bumpy couple of weeks for Brokerages and Realtors. In the unlikely event that you missed it, there was landmark settlement in the anti-trust case against the National Association of Realtors that will hasten a bevy of change in the business of Real Estate. Admittedly, I have been processing my own emotions on the subject and waffling on how best to present it to you.
In the end, staying quiet on a difficult subject is the wrong approach. New business processes require a lot of educating so we might as well begin now. Even with the finality of the decision, it is still a very fluid situation, so please bear with me as I sort through the limited details so that I can best inform you moving forward.
The thrust of the settlement revolves around the decoupling of commissions paid in a transaction. This means in theory that Sellers will pay only for their representation and Buyers will only pay for their own. For as long as I have been in the business (22 years), Sellers have been paying a negotiable commission to their listing brokerage who would then split that commission with the Buyers brokerage. While the process seemed to work quite well in our market by creating a level playing field and allowing buyers to act with confidence, it suddenly led to lawsuits in a couple of other markets in the country which brings us to today.
On the bright side, there appear to be positive aspects for consumers. The most obvious beneficiary seems to be the sellers whose costs should be significantly reduced (in theory). On the murkier side, buyers absorbing the cost of paying for the services of agents seems like it could be a challenge in more ways than one.
This is what we know so far along with possible predictions and scenarios. In July, the following will take place:
1. Listing Brokerages (representing the seller) will no longer be able to advertise in the MLS that they are paying a cooperating commission to the buyer’s brokerage. It is unclear if this means sellers will still be able to offer compensation off the MLS but that seems to fly in the face of transparency. If I were guessing, Buyers and Sellers will end up negotiating on a case-by-case basis. This may make more sense after you read #2 below but if a buyer is required to pay the commission or a fee for their broker then they may ask sellers to pay a portion of it with their offers. I won't deep dive here because there are a plethora of considerations and scenarios that will come to light as we move forward.
2. Agents will need to have a "Buyer Broker Agreement" signed when working with buyers that lays out the agents duties, the amount they will be paid for those duties and the buyers responsibilities to pay them. This will be an interesting process. Buyers are not accustomed to paying for the services of their agent and agents have not had to speak to the specific value they bring to the process to be paid. Like anything else, this will take some time to take shape, but my sense is that this will create a couple of new layers to the home buying process. Buyers and their own agents will first negotiate amongst themselves, and then the agent will go to work, ultimately trying to negotiate the best deal for their buyer which may include getting the cost of commission paid for by the seller (if appropriate). As stated above, there are a plethora of considerations and scenarios that will come to light as we move forward so I will circle back as things develop.
And now a word from our Sponsor:
I do understand that change is often necessary and inevitable in business, and I am always up for a challenge. With that said, I would be remiss if I didn’t share my own disappointment in the way that my profession has been portrayed in the media. I am proud of what we do and sure would appreciate if all sides of our story were shared, but onward now! The thing I want to impress upon all of you is that I will always look forward to working my hardest to help you achieve your goals, protect you, and to create long lasting relationships with you. That has always been, and will always be, the reason I love this business.
Please do not hesitate to call or email if you would like to discuss any of this in greater detail. I would love to hear from you. As always, I look forward to what lies ahead and am grateful for your support!
