The NAR Settlement went into effect on August 17th, but has been making headlines for the last year. Brought about by several class-action lawsuits and with the weight of the DOJ behind it, the Settlement has effectively changed the way that agents get paid and by whom. As the new reality sets in there still remains a lot of confusion. Keep in mind the new rules* are designed to do several things: Relieve sellers from the obligation of paying commission to the buyer’s agent; prohibit advertising an offer of compensation on the MLS; and make it harder for agents to steer clients based on commission amounts. The goal is total transparency. As the new rules relate to the business of listings, your best way forward is to face this head on. Here’s how to make the most of the new rules on your next listing presentation:
HIGHLIGHT YOUR EXPERTISE
New rules or not, your main job during your listing presentation is to assure your Sellers that you will sell their home quickly and for top dollar. Convincing your Sellers that you have knowledge and experience in determining fair market value and negotiating all aspects of the transaction is key. This includes price, in-depth understanding of current market conditions in the area, trends and comparables. You also have access to the Multiple Listing Service and are connected to a larger network of fellow industry professionals. Determining fair market value and negotiating the best deal requires experience and skill. Thus, your agreed upon commission should reflect your value.
THE REALITY OF THE NEW REALITY
Expect that Sellers are going to want to know how the new rules work so be prepared with answers. The bottom line is that you as a listing agent will no longer specify how much the Buyer agent will be paid because Buyers are now responsible for compensating their agent. And Buyer agents cannot legally show homes or in any way represent the Buyer without a buyer agreement in place which outlines payment. Buyers can pay their agent in a number of ways, one of which is to ask for it as a concession in their offer. But make sure your Sellers understand that it won’t be known beforehand whether a Buyer concession will be expected from them as part of an offer. More importantly, reassure them that you will negotiate on their behalf to come to an agreement that works for all parties.
Other points to touch on:
- Remind your Sellers that they are no longer required to pay the Buyer’s agent.
- In addition, there is no longer a place on MLS where an offer of compensation can be communicated.
- Regardless of whether the Seller is willing to pay a pre-set fee, the Buyer still has the right to request whatever amount they deem necessary in their offer.
- Because it won’t be known in advance what a concession might be, it’s best to wait until you receive an offer.
- Then based on what the Buyer may or may not be requesting the options can be discussed and responded to.
REMEMBER EVERYTHING IS NEGOTIABLE
When it comes to how commission will be paid to the Buyer’s agent, pre-negotiating a set fee structure should not be any part of your listing presentation. The new rules give the Buyer the ability to include a request for compensation in the offer itself. Plus a number of other ways to further negotiate payment to the Buyer agent. In essence, and quite simply, it’s their problem. Once you have an offer in hand–or several–then you can study the nuances of each and negotiate through any concessions that your Seller may be willing to entertain. What hasn’t changed? Buyer concessions will continue to ultimately affect whether or not an offer gets accepted.
Choosing to embrace the new rules and not waste energy on workarounds is the best way to go. Change is the only constant in life. This is just another example of things changing. Being flexible, open and nimble will ultimately get you where you need to be. A couple years from now, all of this will be old news and business as usual. Meanwhile, your clients will appreciate your honesty, integrity and professionalism.
*NAR Settlement “new rules” apply to those brokerages and agents covered by the settlement.