02/08/2024
I need to talk about the latest headlines: there is so much conversation around the Keller Williams lawsuit settlement. They agreed to settle for $70 million.
The general idea stems back to the $1+ billion judgement that was placed on anti-trust violations or commission price-fixing. The long story short is that some brokerages were apparently forcing their agents who were taking listing agreements to offer some level of compensation to a buyer’s agent. The problem is that it was forced.
How Commissions Have Always Been Handled
The reality is that this is the way we’ve done it in the real estate industry in the United States for many years. When you buy a house, the commission is typically paid by the sellers. Basically, the commission is covered when you are buying a house so you don’t have to pay on the way in, but you will pay when selling and moving out of the house.
It makes sense because buyers (especially first-time homebuyers) are squeezing every dollar to cover the closing costs and other expenses of moving into a new home. What is going to happen if all of sudden they need to start paying for their side of the real estate commissions as well?
If Keller Williams decides to fight this, not only will it cost millions of dollars but they are also facing a lot of bad publicity. The headlines have been crazy!
Buyer’s Agents Need Commissions for Their Hard Work
Think about all of the work that goes into the process for a buyer’s agent: from connecting with the buyers to discovering what they want, all of the time and effort of finding the house, showing so many multiple homes, negotiating the deal, and more.
There are 2 alternatives: sellers stop offering commission to a buyer’s agent, or we just deal with the listing agent. But the 2nd option doesn’t really make sense to have a buyer negotiating with the seller’s agent directly. That’s a terrible idea! You need to have your own representation in these massive transactions!
I have heard a lot of opinions about this. In my opinion, we have been doing this for years and the whole situation is fully negotiable. If you are a seller offering $0 commission, I don’t think many buyer’s agents are going to want to show your house. People might try to do that, but there is no question that it is going to shrink the buyer’s pool. Many buyers don’t have the extra funds to pay for their own agent’s commissions.
What Do You Think?
I would love to hear differing opinions and even debate this topic. I would love to hear any opposing sides in this. I’m always here to talk!
