03/19/2024
Some clarity about this NAR announcement that has been all over the news…
🏡 commissions are not being eliminated; however, they will be negotiated in a different, and much more confusing and convoluted way.
🏡 what has been proposed is dropping the language in MLS listing that states what will be paid to a cooperating brokerage.
🏡 Sellers have been under the impression for a long time that they solely pay for a transaction and the Buyers don’t have to pay anything - WRONG - the Buyers pay for the entire transaction, which in turn pays for all commissions, including the Sellers.
🏡 I believe that many Sellers think this because it is specified in their listing agreement that they are being charged X% by the listing brokerage, and in a subsequent paragraph, it specifies that if a Buyer is represented by a Buyer’s Agent, then a portion of X% (commonly half) is paid to the Buyers brokerage is paid at closing.
🏡 At closing, even though the Buyers are the ones bringing ALL the money to the table, on paper it appears that the Sellers pay all commission and the Buyer pay “nothing”. Which clearly isn’t true or accurate.
🏡 The way it had been done allowed for all parties to pay for their representation at closing, and not directly out of their pockets.
🏡 This “news” is a moving target and has not been fully settled or approved yet, and it was released in the media that “Sellers no longer had to pay Buyers Agents” - what it didn’t state, specifically, is that if Sellers no longer *had* to pay Buyers Agents, then that would decrease that listing brokerages were paid per transaction.
🏡 The push back on this is that, if Seller believes that they pay for “everything” and now choose to not pay the listing brokerage enough to cover the Buyers Agent, then MANY Buyers will not be able to use a Buyers Agent in the the process of buying a home.
🏡 The thought of a buyer purchasing one of the largest (if not the largest) purchases in their life without representation to help them through the process is scary!
🏡 Imagine sorting through all of the available homes on the market (especially if you are relocating to a new city), working with lender, scheduling all of the showings, gaining accountable access to all the homes, running comps to come up with a strategic offer price, negotiating to an accepted deal, helping with title companies, escrow deposits, scheduling and attending inspections, getting all disclosures from the listing agent, helping decipher through an inspection report, negotiating repairs all within contractual deadlines, appraisals & appraisal gaps, and in the case of a buyer wanting to cancel, handling everything including escrow disputes, etc (and this is only a glimpse of what Buyers Agents do for their clients).
🏡 Now imagine doing all of this 👆🏼 for yourself in addition to your normal full-time job, family, kids, etc.
I genuinely worry for the Sellers and Buyers in the next couple years who will look at this headline and think they will be okay without a licensed Realtor, or think that they won’t be able to afford to pay for a Buyers Agent because they are being told that if the Seller doesn’t agree to compensate Buyers Agent at closing (again, from the proceeds the Buyer will bring to the table) then they will have to pay for their Agent out of pocket - which is unfair to the Buyers.
I am not saying that there haven’t been some successful transactions between a buyer & seller without Realtors involved. There have been. I would also venture to guess that in some of those situations, something wasn’t done per contract and one or both parties may have violated some part of the agreement without realizing it - and the potential risk of that is not worth not using an agent, in my opinion. I can only imagine the plethora of lawsuits that will be flying around in the next few years.
