… in a realtor?
With the changes in real estate practice brought on by the recent class action lawsuit against our industry, that question may be more important to you than before.
Briefly, in case you missed all the noise, a class action suit against the real estate industry alleging price fixing and collusion among realtors was settled in March of this year by the National Association of Realtors. The NAR (correctly) admitted no wrongdoing, but the settlement mandates two changes in the way we do business.
First, listing agents are no longer allowed to offer commission to buyers’ agents via an MLS listing. Second, buyers’ agents are no longer allowed to show listed properties without a signed buyer representation agreement.
Simple. But the ripple effects are more complex.
Despite the accusations in the lawsuit, realtor commissions have never been fixed or mandated. But post-lawsuit, the question of how, and by whom, the buyer’s agent gets paid has gotten more fluid and open to negotiation.
Traditionally, buyer agent commission was factored into the price of the house, offered to the buyer’s agent via the MLS listing, and paid at closing. This allowed buyers to pay their agent as a part of the purchase price of the house and amortize it over 30 years through the mortgage.
But now, there are lots of open questions …
Can sellers still offer compensation to buyers’ agents? Yes. Just not through the MLS listing.
Will they? Well, they certainly should – assuming they want to attract the largest pool of potential buyers.
If not, how will the buyer’s agent get paid? A good question! It is possible more sellers will now decline to offer compensation to the buyer’s agent. If so, how will buyers pay their agent? Out of pocket? Maybe, but that can be a big chunk of change for someone working hard to scrape up enough for a down payment.
Will lenders lend additional money to pay agent commission? Nope.
Will buyer agents work for free? Not a chance!
Can buyer agent compensation be worked into the deal through negotiation? Yes, it can.
Will the practical specifics of all this stay fluid and evolve over the next year or so? Almost certainly, they will.
So, what do you want in a realtor? I’ve got a list you might want to consider.
Someone who is …
Well-trained. Who knows the process, knows what’s in all the contract forms, and knows why it’s there.
Well re-trained. Only someone with solid basic knowledge (see above) can fully grasp how to work with the recent changes, and the changes that might lie ahead.
Is supported by great brokers. Something new comes up in every deal. Every. Single. Deal. So, having accessible, knowledgeable brokers on hand for counsel is critical.
Not afraid to advocate – for his client and for his own value. Honoring a client’s value as well as the value of one’s own counsel is fundamental to getting the best deal for a client.
Not afraid to advise. Someone who understands his duty to advise a client on the best way to market a property, and the best way to write a winning offer.
Hmmm. Sounds a lot like me.