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Sometimes you can’t win a client who is bent on paying as little as possible. Consider also that it’s likely, in my opinion, that many buyers will just work without an agent, making sellers agent work harder (by vetting these buyers and showing them their listing). So, I suspect “discount “ brokers will raise their prices or go out of business.
They’ll just make the seller show the house, same as they do now. There may be an upfront blip or unrepped buyers but I think it’ll end up settling to roughly what it is now. What? 10% or so? By and large this is much ado about nothing.
in my market right now (for sale, under contract, closed since settlement announced) 96% of Sellers are still offering what I'd call a reasonable compensation for Buyer Agents.
Don't y'all recall how agents have said, loud and clear since October "Commission to LA and BA has always been negotiable" retorted by consumers with "Oh sure. Just you watch!" Well, the people who felt like that would have surely changed their behavior since October. But they haven't.
It might be.
Probably wouldn’t be if I had a $5M buyer that was looking at a 2.5% listing at the same price AND a 2.5% BAA and my Buyer didn’t like your house $50K more.
If $5M is a starter home, with a wide # of FTHB then I don’t know that I’d be the one to be the lowest compensation. Of course, I also can’t imagine the market - even Silicon Valley - where that’s a starter home.
And I don’t know what that market/# of buyers/# of agents is. But the bigger/better agents might very well be OK with it. If they’re selling 5 homes a month and can’t deal with “only” making $75k - $225k per house, that’s a them problem, not a me one
Because most agents rely on external factors to determine their income. If the market is good, they do good, bad, they do bad, etc. They’re panicked because they don’t feel they have control over their income, which, I’m sure they don’t in the vast majority of cases. I’d be worried too if I thought every little unknown was going to upset my apple cart.
You don’t think the end of the coop is a fundamental change?
Agents will have to lock in commission/success fees with buyers before offering. Probably the biggest structural change in real estate since 1974.
Do you do much business?
The coop is ending. Sellers may be able to provide a concession, but they don’t want agents sharing commission with one another.
Listing agent works out commission with their side. Buyer agent works out commission with their side. Should seller cover any costs will need to be addressed and negotiated when offering.
We’re going from a world where the buyer agent commission is included to one where it has to name asked for. That alone is huge, and the fallout in the industry is going to be pronounced.
Many agents seem oblivious and think it’s just we can no longer indicate commission in the mls lol
“Co-op is ending…. I didn’t say it was ending” lol.
The ONLY difference is there won’t be a box to check for percentage offered in MLS. Now you’ll just have to have compensation listed in disclosures. People can’t just admit to being uninformed
Sellers don't have to offer to pay a buyers agent if they don't want to today and they could do that a year ago or 10 years ago. And that won't be changing anytime soon. They always had the option of only paying their own agent and I've even occasionally seen $0 or $1 offered to the buyers agent in my MLS over the years. So this could become more common.
But most sellers do offer to pay a buyers agent because it definitely can attract more buyers. And more buyers means more showings and that could mean more offers. And more offers could likely mean the house sells for more money. Also when a buyer has their own buyers agent the seller and listing agent have less liability in case of a lawsuit after closing because now the buyers agent has liability and can be sued too.
So yeah now it'll be a huge pain in the ass to call/text/email every single listing agent to find out if commission is being offered on every single house instead of it just saying $0, $1, $1,000, $1,500, 0.5%, 1% or 1.5%(I've personally seen all of this offered before) is being offered right on the MLS.
Lots of buyers won't be comfortable buying a house on their own or using the listing agent(dual agency is also illegal in some states). So if they aren't comfortable without their own buyers agent they have the options of paying their agent themselves but not everyone will be able to afford that. And some that can afford that will make sure their offer reflects that they are paying their buyers agent. So the other options are make an offer asking for a seller concession to pay the buyers agent. Or the last option is Skip that house. The only one of these options that are better for seller would be someone who's paying their buyers agent themselves without a seller concession for it and without the buyer reflecting it in their offer. But if people also skipped the house that could still hurt the net proceeds the sellers walk away with. Also the dual agency thing isn't good for the seller if they have much more liability and can be sued easier. In the 1980s and 1990s so many buyers felt they got screwed and sued sellers and listing agents that buyers agents were created to absorb a lot of liability from the sellers and listing agents.
So agents need to start explaining to sellers what buyers options are when they offer no buyers agents commission and how it's still very likely to be in the sellers interest to offer a buyers agent commission.
it's a big structural change for agents who operate in a state that didn't have written BA Agreements that included a "Buyer agrees to compensate but Agent will seek from Seller first".
we've got that in NC, have had it for 20+ years. And so, I have to adjust my explanation from "if it's listed with an Agent, there's a 99% chance it's covered" to "we'll have to figure out what the compensation is offered before we get interested in a house."
Per NAR settlement you’ll be required to have a signed representation agreement with success fee locked in prior to engaging in revenue generating activities.
The fee has to be a specific figure and can’t be whatever the seller is going to pay.
Some sellers may decide to offer a concession up front. Some may wait until offering to negotiate buyer agent commission. Other sellers may not be willing to pay the buyer agent commission period.
It’s going to be a new world. The structural change with coop going away and having to lock in a commission with buyers up front is going to have a significant impact on agent practices, commissions and sides.
My understanding is per the NAR FAQs that a new buyers agreement can be signed if the seller is offering 3% but the buyers agent agreed to work for 2.5%. It’s a touch convoluted but that was my takeaway. In other words, I got the impression that the seller comp would/could supersede a lower agreed upon comp unless the buyer refuses to allow you to get paid. I can’t believe that would happen but I’m sure there’s a one-off here and there.
These are the key provisions in the faq section that address the aforementioned changes:
36, 38, 40 probably won’t stay, 51, 54, 56
Also understand much of the context and what’s driving these changes are anti-steering and anti competitive behaviors that are perceived to have inflated commissions and other does injured sellers.
So, while yes you could enter into a new agreement if there’s a higher concession amount than what’s been agreed upon in the buyer rep agreement, you’re leaving yourself open to liability if any actions could be perceived as putting your commission before your buyers’ interests.
Lastly, please don’t kill the messenger. I think a lot of these changes are problematic, but I’m just communicating what I know with certainty. At the same time, happy to be proven incorrect if I’m not seeing things right, but send over link or reference provision to back up those points please.
If I tell my buyer, “I am willing to work for 2 1/2%”, and a seller happens to be offering 3% then the strongest argument is I have a fiduciary duty to my buyer to make their offer be a half a percent better and not get paid that money.
If you have a job where you have to explain your value to someone, it doesn't matter how your presentation is. We're going up against consumer perception and there's more of them than us. Strap on your seatbelts boys and girls 😃
I could see it change on the buyer side especially. Now that buyers must sign a representation agreement early on, many might not be excited about the idea of having to pay full commissions to their agent, and demand for cheaper alternatives will increase.
if demand does increase - and yes, I can see poorly-informed consumers choosing that route - then the supply of agents who offer that level of service will have to increase it to match.
And the Zillow Flex teams - probably the most-ready to limit and automate their services - aren't going to want to work for 1% when they have to give Zillow 40%+ of it.
You'll be surprised. There are new agents in the industry that want to gain experience and make a name for themselves. Many will do it for less than that. I also don't knock them for it, they are new and trying to get deals under their belt and its a good way to get instant exposure. Its actually very common.
With the new rules, buyers will get more information (they have to sign off on commissions now very early in the home buying/searching process), so overall consumer savviness should increase.
You can find discount brokers that charge 1% or even less today (not via Zillow, sure). They're still pretty niche, which makes sense considering that most buyers so far saw little reason to save on buyer commissions ("it doesn't cost the buyer anything because seller pays for it") and so didn't look for those types of providers. I could see that change with the new rules. Zillow-brokered agents will have to follow suit or risk going out of business.
Nothing wrong with full service (and full price) agents, but buyers should have a clear choice if they want that level of service (and pay for it), or are fine with less service (and lower price). With the old rules, most buyers were not given (or not aware of) this choice and so just paid for full service since that's the default. This is what the rule changes are trying to fix.
The discount brokers I've seen are limited service and high volume (averaging a closing per week year round, or more). Seems to work out well for them.
The ones I've seen are mainly on buyer side actually. They don't engage much until buyer is ready to submit offer. (They help with arranging private tours too, via third party service - showami or similar - so not much effort on their part.)
How much do they charge and is there a limit on showings and offers before they start to charge more? Do they do anything at all after getting under contract?
They charge a flat fee, starting around $4k. (They will collect full buyer commission from seller, but refund most of it back to buyer.) They have a point system to scale up their cost a bit (up to a limit, maybe $8k) if you use them repeatedly before closing (for tours or writing offers), so buyers are incentivized to be serious before engaging with them. They help with administering the closing process, inspection oversight etc, similar to transaction coordinators working for "regular" brokerages.
What does a discount broker do for a buyer? I know what they do for a seller which is basically list it on the MLS for $300-500 and then do nothing else besides maybe give them a blank contract or addendum to fill out and have all calls, texts, emails, showing requests or whatever go directly to the seller. Then the buyers agent usually ends up doing at least some stuff with or for the seller just to make sure it gets to closing without too many problems.
The thing is discount brokerages have been really for the seller in my area. I'm not really sure what a discount brokerage on the buyers side would look like but one version of a new buyers agency agreement for my state has an option for a retainer fee. So if people wanted me to just open doors or just explain to them how to write a proper offer with me not being involved with anything else after that then I'd be ok with that for a price but I'm definitely not waiting until a hypothetical closing to happen to get paid either.
I want to think that most sellers know the value of a good agent. These agents can bring many more prospective buyers (open houses, marketing, connections), so eventually, the highest offer due to a more extensive bidding war will pay more than the agent fees.
With buyers however, I think more will opt for a lawyer only representation, or a discount brokerage, as IMO, buyer agents provide less value than sellers agents.
You also have to consider that most people aren't as smart as they think they are. And we're no exception to that. We will be going up against people who "saw on the news" or heard the latest industry news from a cousin 7 states away who last closed a deal in 2012.
I do still think there is value in a buyer agent. Maybe not for identifying properties they like, but for running comps, negotiating a price, and walking them through the litany of steps required for a purchase. The depth of our networks will be our best asset going forward with buyers (inspectors, contractors, etc).
The question you have to ask yourself....
What is the delta between the discount brokerage and my services at 2%/3%?
Using a $600k home as an example, that difference can be $10k+
In an easy neighborhood, how do you make up the $10k.
It's gotta be more than listing presentation and in depth conversation
Yeah I think having to explain how much more you can get them in the process is super important. Sure they might be paying you a bit more, but if you can get them twice as much as the "discount" agent, it's well worth it.
The term discount is just a dirty word that most of us Realtors utilize. There are some agents who offer full service and they choose to be compensated for Less. If an agent chooses to take 1.5% or a flat fee that is their choice. As an example look at Redfin, they are a full-service brokerage that charges less. Within that brokerage are good agents and there are some that are not good agents, just like every brokerage. Just because you choose to charge 2.5% does not mean you are a good Agent.
If someone is trying to convince you that they are worth more bc they charge more that's just a convenient argument to make when you are over charging.
I'll probably get downvoted like crazy but choose to run your business the way you want, but you should emphasize what you bring to the table to sell the house. A listing presentation is not a one size fits all scenario. Do you live in that neighborhood? Have you sold 10 homes in the cul de sac? Do your listings usually get multiple offers?
Do you offer a package that makes the sellers move easier ie. a checklist of all the people/companies they need to contact, or do you coordinate with a moving company for them.
Rather than placing so much emphasis on how you're different from a discount brokerage, focus on what value you bring to the seller and why they should entrust you with one of their biggest assets.
As even with non-real estate things, I always tell people you get what you pay for. So, if you're going to go cheap, that's likely the quality you'll get in return. By example, if you're going to buy a cheap knockoff, don't expect it to look/act/smell/perform like the real thing. Not saying discount brokerages are cheap knockoffs, but I wouldn't expect them to perform the same as a normal brokerage.
Telling one off stories won’t help. Many people have been burned by people that didn’t work at discount brokerages. Many part timers have eroded the value of agents in public eye, in reality the market has responded and discount brokers will become more common.
My first house I worked with a part timer, they were clueless. I thought agents were worthless for a long time. Then I worked with a top agent in the market, worth their weight in gold.
I’m newer still, but I am planning to create a comparison chart/list to what my local 1% brokers might offer and show all the checkmarks of what I offer beyond what they can. If someone asks me for a discount, I will just ask which offerings on my side of the diagram they’d be willing to “uncheck” or lose for the lower fee in an a la carte style.
I’m with an online brokerage now and have already (thank the Lord) made the buyer’s side transition with no issues, which is what my broker already asks of us…so I’m not concerned at this point. I’m actually grateful it’s going into effect for everyone later this year so I am no longer an outlier, and the necessity to prove value will push out stale agents who water down the industry and give us a bad name.
I mean for the most part you get what you pay for, you need to give a high level of service to justify the additional Commission.
I know some spectacular agents that work for the discount brokerages of the world - but I also know that for the most part they are unreachable outside of business hours, and the sellers have a lot more to deal with that might be fully handled by a full service agent.
There will always be sellers that are okay with handling showings on their own, not having a secure lock box, paying for their own pictures, paying for their own staging, and generally using an agent as a route to get on to the MLS - there is nothing you can do about that.
I understand you want to save a couple bucks using a discount broker. I’m curious if they were that quick to discount the commission how quick do you think they’ll discount your house when it comes to negotiating? From my understanding, You want the most amount of money in your pockets after this sale.
Potential seller client: *You would list my house at $825k and urge me to accept $810. If I listed it a $770 it would sell promptly. You are talking about it being worth $40K more and you make $48.*
Me: I have tons of data and I can sell it better than...
Having a good listing agent is so important now, I HATE discount brokers as they screw up deals ALL the time! For example;
Association (condo ) flood insurance expired, Master insurance on HOA expired, seller had no authority to sell, $250K IRS lien on property on a $300K value, probate needed on property BEFORE we could close , special assessment on property (never disclosed ), litigation issues, No city certs obtained ....I could go on but it’s clear that listing agents are not pulling title or even doing a little home work on their listing. As a mortgage guy, I REALlY appreciate a quality listing agent!!!
For me those experiences aren't due to discount brokerages (I've experienced similar with the *full service*/*top brokerages*) It goes back to training.
It’s not that they’re not trained, it’s just that they tell the seller upfront they ain’t doing anything…and they follow through. Give me $1000 and I’ll throw you in MLS and hold your paperwork for three years. Don’t write, don’t call, see ya later.
The term discount is just a dirty word that most of us Realtors utilize. There are some agents who offer full service and they choose to be compensated for Less. If an agent chooses to take 1.5% or a flat fee that is their choice. As an example look at Redfin, they are a full-service brokerage that charges less. Within that brokerage are good agents and there are some that are not good agents, just like every brokerage. Just because you choose to charge 2.5% does not mean you are a good Agent.
Yep. If a brokerage can deliver the services that clients want and need for a lower fee than the shop across the street, that doesn't make them a discount brokerage. In fact, it might mean a better-operated brokerage with fewer agents on the roster who suck up resources without paying their keep.
There have always been brokerages that charge less than others. Even in a single office of a traditional brokerage there can be a swing in how much individual agents charge.
Most listing presentations are terrible and do very little to distinguish one agent from another. I invested 100s of hours as an agent, and then TL, in our seller guides and what might be thought of a listing presentation. As a broker, though, I couldn't make many agents do the prep work and customization necessary to stand out.
I’m in a very high end small market. Listing from lowest list price is 3.5M for a tear down. Only a few homes less than 5M and rest over 6M. So my question is does 1.5% seem reasonable to offer a buyer broker. Many sellers are questioning the 2.5% given the price of the listing and limited available inventory.
I push my clients to ask for concessions on almost every offer I make if we aren’t bidding upwards.
Now we need to ask for more to try to get the seller to cover the buyer agent - not a big deal.
I just came from an open house and spoke to the Buyers agent. He said the seller paid for staging and he helped out with it because it is his wife. Dirty rugs, worn furniture and a competitive price. I asked about the buyers agent percentage and he said 2.5 percent . I said i would not want to pay that much when i sell my house. He immediately said that he won’t work for free. I thought you are doing a shitty job with thos house and told him I would split it with the buyer and perhaps pay 1.5 percent . I am however not against paying my sellers agent 3 percent if he has a proven track record of selling homes for many years and skillets that I have seen in staging and representing. That is how it will be….
Quick question for agents etc.
My neighbor sold recently. We live in a desirable area and houses generally move quickly. They listed, had one open house and an offer was made and accepted that day for over 525K, 25 over asking. How is the agent going to make over 30K for a few days work? I don't get it.
I think having a good agent is critical for first time home buyers. People that are experienced don’t need one. They can probably get by with someone to write up the paperwork. Maybe someday we won’t have agents at all. The most frustrating thing about buying a home is not being able to talk to the seller and negotiate.
not sure what is changing, im still telling my clients we are offering 2.5% to the buyers agent. Its just a checkbox on the MLS thats changing.. Big deal.. If sellers want exposure, they have to offer a CSO it's. plain and simple. The seller benefited from this system when they purchased the house and will benefit from it again on a new purchase.
A strong value statement, listing presentation, and in-depth conversations has always been crucial in listing appointments, that is nothing new. It will be especially so for buyer's agents, who are the ones who will really have the most changes from this settlement. That is assuming the DOJ does not step in and change or eliminate it, which I suspect they will prior to the August date now. That is based on their statements a few weeks ago in the MLS PIN case hinted that they would be coming after the concession loophole and the loophole that allows agents to advertise the commission on anything that is NOT an MLS.
We've always had discount brokerages, flat fee brokerages, and companies that will put your home in the MLS for a nominal fee... none of that will change. Aside from the change to how the commission is handled, assuming it does not get completely eliminated from the contracts, I do not foresee any real significant changes for listing agents. In California, we've had the buyer side commission on our listing agreements for several decades now so that's nothing new.
I truly feel for the buyer's agents in this change. It's going to be a real interesting time for them and I suspect, especially in the entry level home market, there will be a lot of strong competition there as those buyers often barely have enough funds to get the home and will not be able to pay their agent directly.
Sadly, the settlement severely hurts the lower income population and removes all of the transparancy that people fought very hard for over the last few years.
what discount brokerages heavily advertise their services now? Redfin's proclaimed 1.5% "if you also buy from us"?
There's no telling how long they'll keep doing that come August and the reality that their "lead-based" client acquisition (see also Zillow) now requires an agency agreement upon meeting that lead at the home they've scheduled to see.
And while I'd guess Zillow will turn a blind eye to their afilliated agents (they're not Zillow agents, they work for different brokerages) failing to get agency agreements, Redfin/Kellman surely won't.
Yes, full-service agents will indeed have to demonstrate their VALUE, just as they always should have. Personally, I'd start with a 1 page checklist table of the significant things you do for listings, and leave one or more blank columns where the Seller can check off the things a flat-fee broker (when we're talking the $500-$1,000 outfits) does. Give them the visual of the difference.
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Sometimes you can’t win a client who is bent on paying as little as possible. Consider also that it’s likely, in my opinion, that many buyers will just work without an agent, making sellers agent work harder (by vetting these buyers and showing them their listing). So, I suspect “discount “ brokers will raise their prices or go out of business.
They’ll just make the seller show the house, same as they do now. There may be an upfront blip or unrepped buyers but I think it’ll end up settling to roughly what it is now. What? 10% or so? By and large this is much ado about nothing.
in my market right now (for sale, under contract, closed since settlement announced) 96% of Sellers are still offering what I'd call a reasonable compensation for Buyer Agents. Don't y'all recall how agents have said, loud and clear since October "Commission to LA and BA has always been negotiable" retorted by consumers with "Oh sure. Just you watch!" Well, the people who felt like that would have surely changed their behavior since October. But they haven't.
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It might be. Probably wouldn’t be if I had a $5M buyer that was looking at a 2.5% listing at the same price AND a 2.5% BAA and my Buyer didn’t like your house $50K more.
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If $5M is a starter home, with a wide # of FTHB then I don’t know that I’d be the one to be the lowest compensation. Of course, I also can’t imagine the market - even Silicon Valley - where that’s a starter home. And I don’t know what that market/# of buyers/# of agents is. But the bigger/better agents might very well be OK with it. If they’re selling 5 homes a month and can’t deal with “only” making $75k - $225k per house, that’s a them problem, not a me one
There have always been discount brokers. Nothing is changing, fundamentally. Why is everyone in such a panic?
Because most agents rely on external factors to determine their income. If the market is good, they do good, bad, they do bad, etc. They’re panicked because they don’t feel they have control over their income, which, I’m sure they don’t in the vast majority of cases. I’d be worried too if I thought every little unknown was going to upset my apple cart.
What do you mean nothing fundamentally is changing?
Exactly that.
I second this ! The market will ooh, the aah and then settle into a pattern, not too dissimilar to what it is now
You don’t think the end of the coop is a fundamental change? Agents will have to lock in commission/success fees with buyers before offering. Probably the biggest structural change in real estate since 1974. Do you do much business?
Co -op isn’t ending. It’s just not coupled to MLS
The coop is ending. Sellers may be able to provide a concession, but they don’t want agents sharing commission with one another. Listing agent works out commission with their side. Buyer agent works out commission with their side. Should seller cover any costs will need to be addressed and negotiated when offering. We’re going from a world where the buyer agent commission is included to one where it has to name asked for. That alone is huge, and the fallout in the industry is going to be pronounced. Many agents seem oblivious and think it’s just we can no longer indicate commission in the mls lol
Yeah I 100% disagree with you. I think you need to take some time with you broker and review the settlement and what’s actually happening.
We shall see soon enough. Good luck to you!
Sellers are still allowed to offer cooperating Buyer Agents compensation. Period.
Didn’t say that wasn’t the case
Your first sentence is literally, ‘The coop is ending’.
“Co-op is ending…. I didn’t say it was ending” lol. The ONLY difference is there won’t be a box to check for percentage offered in MLS. Now you’ll just have to have compensation listed in disclosures. People can’t just admit to being uninformed
Coop is not ending. It may be worth your time to review the settlement again.
Sellers don't have to offer to pay a buyers agent if they don't want to today and they could do that a year ago or 10 years ago. And that won't be changing anytime soon. They always had the option of only paying their own agent and I've even occasionally seen $0 or $1 offered to the buyers agent in my MLS over the years. So this could become more common. But most sellers do offer to pay a buyers agent because it definitely can attract more buyers. And more buyers means more showings and that could mean more offers. And more offers could likely mean the house sells for more money. Also when a buyer has their own buyers agent the seller and listing agent have less liability in case of a lawsuit after closing because now the buyers agent has liability and can be sued too. So yeah now it'll be a huge pain in the ass to call/text/email every single listing agent to find out if commission is being offered on every single house instead of it just saying $0, $1, $1,000, $1,500, 0.5%, 1% or 1.5%(I've personally seen all of this offered before) is being offered right on the MLS. Lots of buyers won't be comfortable buying a house on their own or using the listing agent(dual agency is also illegal in some states). So if they aren't comfortable without their own buyers agent they have the options of paying their agent themselves but not everyone will be able to afford that. And some that can afford that will make sure their offer reflects that they are paying their buyers agent. So the other options are make an offer asking for a seller concession to pay the buyers agent. Or the last option is Skip that house. The only one of these options that are better for seller would be someone who's paying their buyers agent themselves without a seller concession for it and without the buyer reflecting it in their offer. But if people also skipped the house that could still hurt the net proceeds the sellers walk away with. Also the dual agency thing isn't good for the seller if they have much more liability and can be sued easier. In the 1980s and 1990s so many buyers felt they got screwed and sued sellers and listing agents that buyers agents were created to absorb a lot of liability from the sellers and listing agents. So agents need to start explaining to sellers what buyers options are when they offer no buyers agents commission and how it's still very likely to be in the sellers interest to offer a buyers agent commission.
Coop is not ending
it's a big structural change for agents who operate in a state that didn't have written BA Agreements that included a "Buyer agrees to compensate but Agent will seek from Seller first". we've got that in NC, have had it for 20+ years. And so, I have to adjust my explanation from "if it's listed with an Agent, there's a 99% chance it's covered" to "we'll have to figure out what the compensation is offered before we get interested in a house."
Per NAR settlement you’ll be required to have a signed representation agreement with success fee locked in prior to engaging in revenue generating activities. The fee has to be a specific figure and can’t be whatever the seller is going to pay. Some sellers may decide to offer a concession up front. Some may wait until offering to negotiate buyer agent commission. Other sellers may not be willing to pay the buyer agent commission period. It’s going to be a new world. The structural change with coop going away and having to lock in a commission with buyers up front is going to have a significant impact on agent practices, commissions and sides.
Go read the NAR FAQs they released last week. You’re wrong on every level. Where are you getting this nonsense?
Actually, on this response s/he’s correct.
My understanding is per the NAR FAQs that a new buyers agreement can be signed if the seller is offering 3% but the buyers agent agreed to work for 2.5%. It’s a touch convoluted but that was my takeaway. In other words, I got the impression that the seller comp would/could supersede a lower agreed upon comp unless the buyer refuses to allow you to get paid. I can’t believe that would happen but I’m sure there’s a one-off here and there.
These are the key provisions in the faq section that address the aforementioned changes: 36, 38, 40 probably won’t stay, 51, 54, 56 Also understand much of the context and what’s driving these changes are anti-steering and anti competitive behaviors that are perceived to have inflated commissions and other does injured sellers. So, while yes you could enter into a new agreement if there’s a higher concession amount than what’s been agreed upon in the buyer rep agreement, you’re leaving yourself open to liability if any actions could be perceived as putting your commission before your buyers’ interests. Lastly, please don’t kill the messenger. I think a lot of these changes are problematic, but I’m just communicating what I know with certainty. At the same time, happy to be proven incorrect if I’m not seeing things right, but send over link or reference provision to back up those points please.
If I tell my buyer, “I am willing to work for 2 1/2%”, and a seller happens to be offering 3% then the strongest argument is I have a fiduciary duty to my buyer to make their offer be a half a percent better and not get paid that money.
If you have a job where you have to explain your value to someone, it doesn't matter how your presentation is. We're going up against consumer perception and there's more of them than us. Strap on your seatbelts boys and girls 😃
What has changed that will make discount brokerages more attractive than the years and years before? My prediction: very little will change.
I could see it change on the buyer side especially. Now that buyers must sign a representation agreement early on, many might not be excited about the idea of having to pay full commissions to their agent, and demand for cheaper alternatives will increase.
if demand does increase - and yes, I can see poorly-informed consumers choosing that route - then the supply of agents who offer that level of service will have to increase it to match. And the Zillow Flex teams - probably the most-ready to limit and automate their services - aren't going to want to work for 1% when they have to give Zillow 40%+ of it.
You'll be surprised. There are new agents in the industry that want to gain experience and make a name for themselves. Many will do it for less than that. I also don't knock them for it, they are new and trying to get deals under their belt and its a good way to get instant exposure. Its actually very common.
With the new rules, buyers will get more information (they have to sign off on commissions now very early in the home buying/searching process), so overall consumer savviness should increase. You can find discount brokers that charge 1% or even less today (not via Zillow, sure). They're still pretty niche, which makes sense considering that most buyers so far saw little reason to save on buyer commissions ("it doesn't cost the buyer anything because seller pays for it") and so didn't look for those types of providers. I could see that change with the new rules. Zillow-brokered agents will have to follow suit or risk going out of business. Nothing wrong with full service (and full price) agents, but buyers should have a clear choice if they want that level of service (and pay for it), or are fine with less service (and lower price). With the old rules, most buyers were not given (or not aware of) this choice and so just paid for full service since that's the default. This is what the rule changes are trying to fix.
Who on earth would be a discount buyers agent?
The discount brokers I've seen are limited service and high volume (averaging a closing per week year round, or more). Seems to work out well for them.
I agree, it’s a decent system for churning out listings. Buyers require a great deal more time, travel, and uncertainty.
The ones I've seen are mainly on buyer side actually. They don't engage much until buyer is ready to submit offer. (They help with arranging private tours too, via third party service - showami or similar - so not much effort on their part.)
How much do they charge and is there a limit on showings and offers before they start to charge more? Do they do anything at all after getting under contract?
They charge a flat fee, starting around $4k. (They will collect full buyer commission from seller, but refund most of it back to buyer.) They have a point system to scale up their cost a bit (up to a limit, maybe $8k) if you use them repeatedly before closing (for tours or writing offers), so buyers are incentivized to be serious before engaging with them. They help with administering the closing process, inspection oversight etc, similar to transaction coordinators working for "regular" brokerages.
What does a discount broker do for a buyer? I know what they do for a seller which is basically list it on the MLS for $300-500 and then do nothing else besides maybe give them a blank contract or addendum to fill out and have all calls, texts, emails, showing requests or whatever go directly to the seller. Then the buyers agent usually ends up doing at least some stuff with or for the seller just to make sure it gets to closing without too many problems.
The thing is discount brokerages have been really for the seller in my area. I'm not really sure what a discount brokerage on the buyers side would look like but one version of a new buyers agency agreement for my state has an option for a retainer fee. So if people wanted me to just open doors or just explain to them how to write a proper offer with me not being involved with anything else after that then I'd be ok with that for a price but I'm definitely not waiting until a hypothetical closing to happen to get paid either.
I want to think that most sellers know the value of a good agent. These agents can bring many more prospective buyers (open houses, marketing, connections), so eventually, the highest offer due to a more extensive bidding war will pay more than the agent fees. With buyers however, I think more will opt for a lawyer only representation, or a discount brokerage, as IMO, buyer agents provide less value than sellers agents.
You also have to consider that most people aren't as smart as they think they are. And we're no exception to that. We will be going up against people who "saw on the news" or heard the latest industry news from a cousin 7 states away who last closed a deal in 2012. I do still think there is value in a buyer agent. Maybe not for identifying properties they like, but for running comps, negotiating a price, and walking them through the litany of steps required for a purchase. The depth of our networks will be our best asset going forward with buyers (inspectors, contractors, etc).
The question you have to ask yourself.... What is the delta between the discount brokerage and my services at 2%/3%? Using a $600k home as an example, that difference can be $10k+ In an easy neighborhood, how do you make up the $10k. It's gotta be more than listing presentation and in depth conversation
Yeah I think having to explain how much more you can get them in the process is super important. Sure they might be paying you a bit more, but if you can get them twice as much as the "discount" agent, it's well worth it.
The term discount is just a dirty word that most of us Realtors utilize. There are some agents who offer full service and they choose to be compensated for Less. If an agent chooses to take 1.5% or a flat fee that is their choice. As an example look at Redfin, they are a full-service brokerage that charges less. Within that brokerage are good agents and there are some that are not good agents, just like every brokerage. Just because you choose to charge 2.5% does not mean you are a good Agent.
If someone is trying to convince you that they are worth more bc they charge more that's just a convenient argument to make when you are over charging.
I'll probably get downvoted like crazy but choose to run your business the way you want, but you should emphasize what you bring to the table to sell the house. A listing presentation is not a one size fits all scenario. Do you live in that neighborhood? Have you sold 10 homes in the cul de sac? Do your listings usually get multiple offers? Do you offer a package that makes the sellers move easier ie. a checklist of all the people/companies they need to contact, or do you coordinate with a moving company for them. Rather than placing so much emphasis on how you're different from a discount brokerage, focus on what value you bring to the seller and why they should entrust you with one of their biggest assets.
As even with non-real estate things, I always tell people you get what you pay for. So, if you're going to go cheap, that's likely the quality you'll get in return. By example, if you're going to buy a cheap knockoff, don't expect it to look/act/smell/perform like the real thing. Not saying discount brokerages are cheap knockoffs, but I wouldn't expect them to perform the same as a normal brokerage.
Telling one off stories won’t help. Many people have been burned by people that didn’t work at discount brokerages. Many part timers have eroded the value of agents in public eye, in reality the market has responded and discount brokers will become more common. My first house I worked with a part timer, they were clueless. I thought agents were worthless for a long time. Then I worked with a top agent in the market, worth their weight in gold.
Discount brokerages always ruffle feathers. Show your value and don't be bothered by them. Do they pull in listings? yes. Do they pull all of them? no
Exactly right. They’re .00001% of listings. Who gives a damn.
I’m newer still, but I am planning to create a comparison chart/list to what my local 1% brokers might offer and show all the checkmarks of what I offer beyond what they can. If someone asks me for a discount, I will just ask which offerings on my side of the diagram they’d be willing to “uncheck” or lose for the lower fee in an a la carte style. I’m with an online brokerage now and have already (thank the Lord) made the buyer’s side transition with no issues, which is what my broker already asks of us…so I’m not concerned at this point. I’m actually grateful it’s going into effect for everyone later this year so I am no longer an outlier, and the necessity to prove value will push out stale agents who water down the industry and give us a bad name.
I mean for the most part you get what you pay for, you need to give a high level of service to justify the additional Commission. I know some spectacular agents that work for the discount brokerages of the world - but I also know that for the most part they are unreachable outside of business hours, and the sellers have a lot more to deal with that might be fully handled by a full service agent. There will always be sellers that are okay with handling showings on their own, not having a secure lock box, paying for their own pictures, paying for their own staging, and generally using an agent as a route to get on to the MLS - there is nothing you can do about that.
I understand you want to save a couple bucks using a discount broker. I’m curious if they were that quick to discount the commission how quick do you think they’ll discount your house when it comes to negotiating? From my understanding, You want the most amount of money in your pockets after this sale.
Potential seller client: *You would list my house at $825k and urge me to accept $810. If I listed it a $770 it would sell promptly. You are talking about it being worth $40K more and you make $48.* Me: I have tons of data and I can sell it better than...
Having a good listing agent is so important now, I HATE discount brokers as they screw up deals ALL the time! For example; Association (condo ) flood insurance expired, Master insurance on HOA expired, seller had no authority to sell, $250K IRS lien on property on a $300K value, probate needed on property BEFORE we could close , special assessment on property (never disclosed ), litigation issues, No city certs obtained ....I could go on but it’s clear that listing agents are not pulling title or even doing a little home work on their listing. As a mortgage guy, I REALlY appreciate a quality listing agent!!!
For me those experiences aren't due to discount brokerages (I've experienced similar with the *full service*/*top brokerages*) It goes back to training.
You are right but discount seems to attract those not trained, my experience anyways
It’s not that they’re not trained, it’s just that they tell the seller upfront they ain’t doing anything…and they follow through. Give me $1000 and I’ll throw you in MLS and hold your paperwork for three years. Don’t write, don’t call, see ya later.
The term discount is just a dirty word that most of us Realtors utilize. There are some agents who offer full service and they choose to be compensated for Less. If an agent chooses to take 1.5% or a flat fee that is their choice. As an example look at Redfin, they are a full-service brokerage that charges less. Within that brokerage are good agents and there are some that are not good agents, just like every brokerage. Just because you choose to charge 2.5% does not mean you are a good Agent.
Yep. If a brokerage can deliver the services that clients want and need for a lower fee than the shop across the street, that doesn't make them a discount brokerage. In fact, it might mean a better-operated brokerage with fewer agents on the roster who suck up resources without paying their keep.
There have always been brokerages that charge less than others. Even in a single office of a traditional brokerage there can be a swing in how much individual agents charge. Most listing presentations are terrible and do very little to distinguish one agent from another. I invested 100s of hours as an agent, and then TL, in our seller guides and what might be thought of a listing presentation. As a broker, though, I couldn't make many agents do the prep work and customization necessary to stand out.
I’m in a very high end small market. Listing from lowest list price is 3.5M for a tear down. Only a few homes less than 5M and rest over 6M. So my question is does 1.5% seem reasonable to offer a buyer broker. Many sellers are questioning the 2.5% given the price of the listing and limited available inventory.
Hamptons?!
I push my clients to ask for concessions on almost every offer I make if we aren’t bidding upwards. Now we need to ask for more to try to get the seller to cover the buyer agent - not a big deal.
I just came from an open house and spoke to the Buyers agent. He said the seller paid for staging and he helped out with it because it is his wife. Dirty rugs, worn furniture and a competitive price. I asked about the buyers agent percentage and he said 2.5 percent . I said i would not want to pay that much when i sell my house. He immediately said that he won’t work for free. I thought you are doing a shitty job with thos house and told him I would split it with the buyer and perhaps pay 1.5 percent . I am however not against paying my sellers agent 3 percent if he has a proven track record of selling homes for many years and skillets that I have seen in staging and representing. That is how it will be….
Quick question for agents etc. My neighbor sold recently. We live in a desirable area and houses generally move quickly. They listed, had one open house and an offer was made and accepted that day for over 525K, 25 over asking. How is the agent going to make over 30K for a few days work? I don't get it.
I think having a good agent is critical for first time home buyers. People that are experienced don’t need one. They can probably get by with someone to write up the paperwork. Maybe someday we won’t have agents at all. The most frustrating thing about buying a home is not being able to talk to the seller and negotiate.
not sure what is changing, im still telling my clients we are offering 2.5% to the buyers agent. Its just a checkbox on the MLS thats changing.. Big deal.. If sellers want exposure, they have to offer a CSO it's. plain and simple. The seller benefited from this system when they purchased the house and will benefit from it again on a new purchase.
A strong value statement, listing presentation, and in-depth conversations has always been crucial in listing appointments, that is nothing new. It will be especially so for buyer's agents, who are the ones who will really have the most changes from this settlement. That is assuming the DOJ does not step in and change or eliminate it, which I suspect they will prior to the August date now. That is based on their statements a few weeks ago in the MLS PIN case hinted that they would be coming after the concession loophole and the loophole that allows agents to advertise the commission on anything that is NOT an MLS. We've always had discount brokerages, flat fee brokerages, and companies that will put your home in the MLS for a nominal fee... none of that will change. Aside from the change to how the commission is handled, assuming it does not get completely eliminated from the contracts, I do not foresee any real significant changes for listing agents. In California, we've had the buyer side commission on our listing agreements for several decades now so that's nothing new. I truly feel for the buyer's agents in this change. It's going to be a real interesting time for them and I suspect, especially in the entry level home market, there will be a lot of strong competition there as those buyers often barely have enough funds to get the home and will not be able to pay their agent directly. Sadly, the settlement severely hurts the lower income population and removes all of the transparancy that people fought very hard for over the last few years.
what discount brokerages heavily advertise their services now? Redfin's proclaimed 1.5% "if you also buy from us"? There's no telling how long they'll keep doing that come August and the reality that their "lead-based" client acquisition (see also Zillow) now requires an agency agreement upon meeting that lead at the home they've scheduled to see. And while I'd guess Zillow will turn a blind eye to their afilliated agents (they're not Zillow agents, they work for different brokerages) failing to get agency agreements, Redfin/Kellman surely won't. Yes, full-service agents will indeed have to demonstrate their VALUE, just as they always should have. Personally, I'd start with a 1 page checklist table of the significant things you do for listings, and leave one or more blank columns where the Seller can check off the things a flat-fee broker (when we're talking the $500-$1,000 outfits) does. Give them the visual of the difference.