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If you’re unsure how to answer questions about the National Association of Realtors (NAR) settlement, you’re not alone. The lack of clarity leads many agents to a lack of confidence. A lack of confidence leads to worry, fear and less business. This article shares a few ways to answer common questions with clarity and confidence based on current information.
Before I get into the ideas on how to answer these questions, always keep in mind that you should adapt the answers to your own tone and comfort level. The more you can answer these questions with boldness, certainty and in your own voice, the more business you will attract.
General public question: ‘I heard about all the real estate lawsuits. Are you worried about your business or real estate in general?’
This is a general question, and you may have been asked a version of this question in a different way. Many of the questions asked and many of the beliefs the public have are unfounded and not based on facts. Again, our tone and attitude should remain calm and confident when answering questions.
The first step is to gain clarity on exactly what they are asking. This is an example of how to better understand what they are asking.
I’m glad you asked me that question because there is a lot of misinformation out there. If you don’t mind, what have you heard?
Once they tell you what they’ve heard, you can begin to answer their question specifically. However, this is a framework for a way to answer these types of questions by building rapport rather than being confrontational.
First off, let me clarify that the settlement by the National Association of Realtors is proposed and still to be approved, declined or modified by the court before it moves forward and changes are made. But let me start by telling you what I love about this proposed settlement.
No. 1 is that I love the additional transparency it brings to the process. I have always believed the more a consumer is informed, the better decisions they can make for themselves. So I love that the commission will be out in the open so that everyone involved in the transaction is informed.
The second thing I love about this proposed settlement is that it forces agents to be able to communicate their value to buyers in a way that they have not needed to do in the past. This will act as a separation opportunity for professional agents like me who can clearly communicate and show the value they bring to their clients versus the less-than-professional agents. In other words, this proposal will lead to buyers choosing better agents and better agents lead to smoother transactions for everyone involved.
As I mentioned earlier, it is just a proposed settlement at this point but let me explain to you the two main points that we anticipate will not change. The first is that buyer’s agent compensation will no longer be able to be provided on the MLS. The proposal does not say that a seller cannot provide buyer’s agent compensation; it simply means that it will no longer be able to be displayed or communicated through the MLS.
Although sellers have always had the ability to negotiate the amount of compensation they offer buyer’s agents, I anticipate many sellers will continue to offer buyer’s agent commissions due to the competitive disadvantage it may put them in compared to other homes for sale in many cases. We will know more about how this looks exactly when and if the proposed settlement is approved by the court, which is estimated to be this July as of now.
NAR also agreed to create a new rule requiring MLS participants working with buyers to enter into written agreements with their buyers before the buyer tours properties. Think of this like a seller always signs a listing agreement with an agent before listing their home for sale, so in the same manner, a buyer would sign an agreement with an agent who would represent them in their purchase. There are still several details that need to be worked out, but I anticipate this will be approved in some shape or fashion.
The bottom line in all of this is that change is inevitable in every business, and these are a few of the changes happening in our business.
Listing prospect question: ‘I heard on the news that I don’t have to pay the buyer’s side commission anymore. Is that correct?’
Sometimes, the tone and attitude you use when answering questions determines the outcome as much as the words you say. Many agents become defensive or even confrontational when this question is posed. Very few people want to work with someone who is defensive or confrontational.
The best way to build a relationship and a prospect’s confidence is to show respect and provide them with facts. This is an example of how to do so.
That is a great question, and I am glad you asked it. There is a lot of misinformation out there so I am happy to be able to give you the facts so you can make the best decision for you and your family.
The next step is to provide facts in a way that provides them with options. People with options respond with less emotion.
Commission has always been negotiable, and you can pay no commission on either side by selling your home For Sale By Owner just as you always have been able to in the past. But let me give you a few reasons to consider why offering a buyer’s side commission might position you to sell your home at a higher price, in less time and with less hassle.
The first factor to consider is your positioning in the market. The key to selling a home at the highest price possible is garnering as much interest as possible from as many people as possible. If there are multiple homes for sale in your neighborhood, with the others offering buyer’s side compensation and you not offering any, you may be putting yourself at a positional disadvantage with buyer’s agents and buyers.
Think of it as a buyer. If your agent told you that a home does not offer a buyer’s side commission and that you would have to pay the agent’s commission on top of the other closing costs, would you be more or less likely to want to see the home? That is the position the buyers will be in.
Many buyers will choose to either not see your home or expect a lower price if they will be responsible for the commission. Right or wrong, these factors can limit the pool of potential buyers that see your home, which can challenge our ability to sell your home at the highest price possible, netting you the most money, in the least amount of time.
The other option is that the buyer decides to represent themselves without an agent saving you the buyer’s side commission. There will always be a portion of the market that doesn’t think they need an agent. Please know that some of these buyers will be competent and capable of completing the transaction without an agent, but many will not.
Between inspections, escrow deposits, loan documents, timeline deadlines, appraisals, surveys, title work and all the other details needed, it only takes one missed step in the process to create delays to the closing or a late cancellation of the contract due to a miscue that a professional agent could have helped them avoid. These are potential scenarios that can cost you money, delays and frustration that could be worth more than the buyer’s side commission.
As I mentioned earlier, the decision is yours. My job is to provide you with the best information possible, so you can make the best decision you can for you and your family. Once you let me know the direction you would like to go, then I have to make the best decision for me and my business as well.
John Maxwell said, “Change is inevitable. Growth is optional.” Prepare yourself for these changes now and find a way to not only bring more value to buyers and sellers, but learn how to communicate that value in a way that attracts more of your ideal clients.
There will be winners and losers during this time of change. Choose to adapt with an attitude of service and you will be rewarded.
