03/29/2024
I had a potential seller ask me, "Now that the 6% commission rule is ending in a couple of months I wonder if the buyer needs to pay for his own agent. In that case it's probably better to wait a few month before we consider selling, agree?"
My response ended up being a few paragraphs long, and honestly needs to be a phone or in-person conversation, but I wanted to talk about it a little, and let you know that if you have any questions I'm happy to get together or pick up the phone to talk.
Let's start at the 6% commission rule. Commission has always been negotiable. If an agent has come to you with a presentation and says their services cost 6%, you can ask for them to lower that commission. They can say no, and you can keep shopping for an agent that aligns with your expectations financially. The fact is that most people don't go through that process, but I think they should. I'm not popular on certain Real Estate groups when I say that I think 6% is an outdated number that doesn't make sense on most deals in a market that is priced like ours.
Now, let's get to the other part of the question. Will the seller no longer be paying the buyer's agent? Again, this is something that was never required, but has become customary over time. A long time ago, there weren't buyer's agents at all, and buyers were not well represented. The co-broker commission allowed for the seller's agent to share their commission with the buyer's agent. This is where people are hearing news that they're no longer going to be paying the other agent, and this will present some real problems for some buyers, but we will see how it all fleshes out. This settlement is still PROPOSED and yet to be approved by a judge. So there may be more changes.
Essentially, what it comes down to is this. One, you can negotiate the terms of your commission. Two, you don't have to offer money to the buyer's agent, but there are compelling reasons to do so (and I'd be happy to have that conversation with you!) Three, the buyer's agent commission field will also be removed from the MLS, which is a whole conversation that I'll address in another post soon. And finally, buyers will have to have a signed representation agreement when working with an agent going forward, and that agreement will spell out the financial terms that they are responsible for in hiring that agent.
Do I think this will lower house prices? Nope. Do I think that commission structures may shift and leave more money in the hands of the seller? Maybe. Will this change have an effect on buyers who are trying to enter the market? Almost certainly. And there will need to be policy changes on the lending side as well.
But what I see as a positive in these changes is the transparency to consumers. There will be more documentation on all sides showing exactly where the money is coming from and who is responsible for that money. These kinds of shifts take time to understand and this will certainly w**d out agents who can't pivot to new models of thinking.
I'm here for it.
