While there have not been any “horror stories” in the first few days since business practice changes mandated by the National Association of Realtors’ (NAR) commission lawsuit settlement agreement were implemented, that doesn’t mean it has been completely smooth sailing for real estate professionals.
For Linda O’Koniewski, the broker-owner of Leading Edge Real Estate, one of the largest hiccups so far was when one of her agents brought a buyer offer that included concessions to a seller. The property had been listed for three months and was not advertised as offering any concessions.
“The seller basically told them to drop dead,” O’Koniewski said. “So, I think a lot of losing agents aren’t preparing their sellers for the new reality. They took that listing, and the seller learned that they don’t have to offer anything, but their agents didn’t prepare them or explain to them that the buyers will ask for help, and that they then have to evaluate those offers based on what their net (proceeds) will be.”
In most markets across the country, agents with active listings that went live prior to Aug. 17 had to have listing addendums signed in order to comply with NAR-mandated business practice changes. Real estate professionals say these agreements have been an easy way to broach the subject of the business practice changes with these preexisting sellers.
“We have been coaching our agents on how to have those conversations with their sellers, and so far, nobody has been phased by it,” said Brad Twiss, the broker-owner of Portland, Oregon-based Neighbors Realty. “We are explaining that due to the terms of the settlement, they should expect that buyers are going to be asking them to contribute towards their buyer agent compensation, but that doesn’t change the agreement they have with us.”
Although these business practice changes are still in their early days, agents and brokers who have received offers on pre-Aug. 17 listings say that some sellers have been confused as to why the buyer was asking for concessions or help in covering their agent’s fee.
“A lot of them signed a listing agreement prior to this and agreed to cooperative compensation. And for them, I’m still willing to do that if they want, but it is just getting them to understand that these changes will not impact their net or be an added cost to what they were already planning on paying in commissions,” said Brian Huskey, the associate broker of Montana-based ERA American Real Estate.
For many in the industry, in addition to discussing the business practice changes, taking time to get listing addendums signed also serves as a natural check-in for clients with listings that might be going stale. When having these conversations with sellers — some of whom may already be frustrated that their home is taking longer to sell than anticipated — industry professionals noted that keeping the seller’s goal for net proceeds in focus should be a priority.
“If that listing has been on for three months, we may also have a conversation about a price reduction,” said Katie Kossev, Side’s managing broker for Texas. “These changes make this conversation easier because you can go through with your sellers what buy-side compensation they had been offering, discuss what they want their net to be, and then reduce the overall price by adjusting how much buy-side agent compensation they are willing offer the buyer.
“This allows them to keep their net but lower the price. I do think this is a benefit for sellers as it makes these options that they have always had that much more clearly understandable.”
Although agents say it is more common now to run across sellers like the one that O’Koniewski mentioned, real estate professionals say they are still working to find ways to meet the seller’s net proceeds goal while getting the buyer into the home they want and making sure the agents involved are compensated for their work.
Over the weekend, Lamacchia Realty sales manager Jason Posnick said that a client ended up in a situation where they were covering their buyer’s agent fee, but on the listing they were purchasing, the homeowner was unwilling to help them with the same fee.
“We wrote a really strong offer, and the seller’s agent came back to us and said the seller won’t pay buyer agent fees, but we ended up getting some of it covered by the listing agent reducing their commission and the seller giving the buyer a concession,” Posnick said. “The seller still got the net they wanted and the buyer was able to purchase the property.”
