Sarasota Real Estate News

AP NEWS.COM: A powerful real estate trade group has agreed to do away with policies that for decades helped set agent commissions, moving to resolve lawsuits that claim the rules have forced people to pay artificially inflated costs to sell their homes. Under the terms of the agreement announced  this month, the National Association of Realtors also agreed to pay $418 million to help compensate home sellers across the U.S.

Home sellers behind multiple lawsuits against the NAR and several major brokerages argued that the trade group’s rules governing homes listed for sale on its affiliated Multiple Listing Services unfairly propped up agent commissions. The rules also incentivized agents representing buyers to avoid showing their clients listings where the seller’s broker was offering a lower commission to the buyer’s agent, they argued.

As part of the settlement, the NAR agreed to no longer require a broker advertising a home for sale on MLS to offer any upfront compensation to a buyer’s agent. The rule change leaves it open for individual home sellers to negotiate such offers with a buyer’s agent outside of the MLS platforms, though the home seller’s broker has to disclose any such compensation arrangements.  

Now, boards, real estate associations, and MLS may not:

1. 1. Fix, control, recommend, or suggest the commissions or fees charged for real estate brokerage services.
2. 2. Fix, control, recommend, or suggest the cooperative compensation offered by listing brokers to potential cooperating brokers.
3. 3. Base dues, fees, or charges on commissions, listed prices, or sales prices. Initial participation fees and charges should directly relate to the costs incurred in bringing services to new participants.
4. 
   

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Argument from real estate perspective: Real estate brokerages are trying to come up with creative solutions to deal with this ruling; however, the reality is that this policy will crush new home buyers who don't have the money to pay real estate fees. Prior to this ruling, the commission for buyer's agents has been published in MLS for the real estate community for transparency. Broker Jason Mitchell has offered his opinion: He says this opens the door for weak real estate agents. DOJ didn't say Sellers couldn't offer compensation. Just say it's optional. A Seller can indicate that he or she will offer "zero" commission to the buyer's agent. Posting the amount of the buyer's agent's commission is about transparency.  Commissions have  always been negotiable! Weak agents will grab listings, and intentionally avoid discussing  compensating buyer's  agents. Some buyers can't financially handle paying  for real estate representation. They don't have the money - and they may not qualify for a mortgage with this added expense. This is making it harder than ever for many Americans to buy homes. Before the selling agent's commission came from  the seller's net. Jason Mitchell believes we are now headed for discussions about how much the Sellers will compensate the selling agent based on the purchase price of the home.  

Consumers may now be able to dictate the future of the housing market. Mr. Mitchell says that the real estate community could and should take a pledge to encourage their sellers to offer to compensate buyer's agents. Sellers should know that he or she should be prepared to offer a co-broke commission or their homes may sit on the market longer than expected--like perhaps 180 days.

Buyers won't want to see homes if they know they will have to pay a real estate fee. Consumer behavior will dictate how representation will be handled in the future. Lenders can come up with a way to help buyers purchase the home if they must pay a real estate fee. Perhaps one day that fee could be financed with the home.  

Everyone in real estate knows that dual agency is a bad scene and it is illegal in many states. This is where the listing agent handles both sides of the transaction. Truth is that no man can serve two masters. The current real estate process has checks and balances - one agent looks out for the seller and another agent insures that deadlines are met and that the transaction is fair for the new buyers. After all, they will be residing in that home for perhaps decades and the seller should want them to be happy. 

A buyer using the listing agent makes as much sense as a wife using her husband's divorce attorney. Another way to look at this is  getting the "rat to guard  the cheese." Would the listing agent protect the buyer by adhering to the prescribed deadlines?  Is the buyers' earnest money at risk? I think it will be! 

If you were to ask me to list your home today, I agree with Broker Jason Mitchell, and say that it's not in your best interest to think that the buyers will pay a real estate commission. Chances are they won't. "Mr. Seller, do you want to just list your home in MLS, or do you really want to sell it? Think about it."

Linda Holley, Realtor, GRI, SRES, CIPS, Fine Properties, Sarasota, FL 941-914-4914  LIndaHRealtor.com