No one can predict the future of real estate, but you can prepare. Find out what to prepare for and pick up the tools you’ll need at the immersive Virtual Inman Connect online Nov. 1-2, 2023. And don’t miss Inman Connect New York on Jan. 23-25, 2024, where AI, capital and more will be center stage. Bet big on the roaring future, and join us at Connect.
The “bombshell” commission lawsuits continue to fuel dialogue among real estate agents. Now that RE/MAX and Anywhere have settled and promised to pay out millions, I see real estate professionals on social media who are worried that buyer’s agents will have trouble getting paid or listing brokers will no longer be allowed to split commissions paid by sellers with buyer’s brokers.
You don’t have to figure out everything on your own when it comes to buyer commissions and the bombshell lawsuits. Let’s talk through why some of these concerns are overblown and who you should really trust when it comes to commission confusion.
Commissions have always been negotiable
I can understand some agents’ concern if, up to now, they have been forcing sellers to pay commissions to buyer’s agents, as suggested in the lawsuits. They might have to start asking.
Agents who have never had contracts to represent their buyers and those who have never had to disclose how and how much they are being paid for representing buyers may be squirming a bit.
The good news is real estate is local and, in some states, commissions have always been negotiable, and sellers are not being forced to pay commissions to buyer’s agents.
I can list a house today in our MLS and promise a payout of $1.00 to a buyer’s agent. I can’t find any rule that states that the money must come from the seller. I can probably find a dollar somewhere. Your MLS may have different rules.
Our MLS currently requires at least one cent in the buyer agent compensation field, but they are working on an update that will make the requirement zero. If your MLS has different rules, you will have to follow those.
Negotiating commissions has always been between the agent and the buyer
A homebuyer may wish to negotiate with his agent for a lower commission, but that is between the agent and the buyer. The commissions we pay buyer’s agents in Minnesota are only payable to the cooperating agent’s broker upon the successful closing of a sale.
I have represented homebuyers in situations where the house they wanted to buy wasn’t in the MLS or listed by a Realtor. I got paid each time, either by the seller or the buyer.
Over the years, I have had buyers ask for a commission rebate, as in they want me to give them some of the commission promised in the MLS. I don’t have a problem saying no or negotiating with the buyer if appropriate.
The buyer has the option of choosing another agent, and there are, like, a zillion to choose from. I am OK with that; it isn’t the end of the world.
Real estate is local. The “bombshell” lawsuits will not have the same impact on all real estate licensees. As companies settle, we will get to read and listen to the opinions of real estate agents, journalists and real estate brokers from all over the country.
Please, just ask your broker
These opinions are certainly interesting, but if you are an agent, and you would like to know how these lawsuits might impact your business or how you conduct your business, you need to talk to your broker. The opinion of a broker such as myself who is not licensed in your state isn’t nearly as useful as what your broker has to say.
If I have any questions, I won’t ask them on Facebook. Even brokers have questions, and we know who to ask. The rules we follow are federal, state, and local laws and assorted MLS rules.
Your broker may not know exactly how the “bombshell” lawsuits will affect your business. They may be waiting for direction from higher-ups or they may need to consult legal counsel.
Technically, we should not be discussing how much we charge or how much we get paid amongst ourselves anyway. We can, of course, discuss broker cooperation. It is broker cooperation that we’re discussing. Real estate agents are not paid directly by buyers or sellers.
As a broker, I haven’t said much of anything about the lawsuits because I don’t believe they will change the way we do things. We have always had to negotiate our pay.
Most real estate agents do not need to change what they are doing right now unless their broker has put some new rules or procedures in place. Brokers need to pay attention to what is going on. Brokers who are “forcing” homeowners to pay buyer commissions might want to reconsider.
Buyers should always know up front exactly how much their agent is being paid and where the money is coming from. It’s not hard to make that happen before the buyer signs a purchase agreement.
Yet I know that it’s best if you ask your broker how they want you to handle contracts.
Teresa Boardman is a Realtor and broker-owner of Boardman Realty in St. Paul, Minnesota. She is also the founder of StPaulRealEstateBlog.com.
