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James Dwiggins, the CEO of NextHome, offered a warning for real estate pros Tuesday: Clinging to the old commission world will likely lead to trouble.
“The seller has a right to pay the buyers’ agent compensation and can also offer a concession. NAR negotiated so that technically you could collect compensation as you do today. That still exists, you just can’t publicize that commission sharing on the MLS,” Dwiggins said. “I think that is the stupidest idea ever.”
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Dwiggins made the comments during the first panel discussion of Inman Connect Miami. The discussion, which also included new eXp Realty CEO Leo Pareja, focused on what kind of disruption might happen thanks to the numerous ongoing commission lawsuits and settlements. Dwiggins argued during the discussion that the litigation represents an opportunity, and that good agents who can articulate their value may actually see their compensation go up.
However, he also offered what might be characterized as a cold, hard reality check, saying that there may be trouble for some looming on the horizon.
“The mess is going to be this,” Dwiggins argued. “Buyer rep agreements will be so one-sided to the brokerage that consumers are going to say I didn’t know what I signed.”
Dwiggins went on to say that before long “we’re going to be right back int he same spot,” and that the U.S. Department of Justice may have issues with the way the new reality plays out. And he said that professionals who cling to commission sharing as it exists today are likely to be named as defendants in future litigation.
“We can try to fight and stay in the past, and I think that’s a bad move,” he argued.
Moderator Brad Inman tried, repeatedly, to get both Dwiggins and Pareja to say during the discussion what exactly buyers might end up actually paying in the future. Both panelists declined to state an exact number or percentage. But Dwiggins did say that he envisions a “variety” of options for buyers emerging in the future.
“I think you’ll see compensation come down on the buy side for agents who are not good at articulating their value,” he added.
Pareja argued that seller concessions are one possible answer to question of how buyers’ agents get paid. The idea, he explained, is that sellers might offer $15,000 in concessions to the buyer, and that the buyer could then use that money to pay an agent — or for something else. He even suggested that such a concession might appear in multiple listing services the way that offers of buyer compensation do today.
Also during the conversation, Pareja offered some advice for agents, telling them to go back and interview the clients they’ve recently worked with to see what services they actually appreciated.
“Ask them to write Google reviews,” he added, with the implication being that buyers are going to begin interviewing agents the way many sellers already do.
But while both panelists agreed that big changes lie ahead, no one predicted agents themselves are going away.
“I firmly believe there will be operations that pop up that offer different levels of service,” Dwiggins concluded. “I think most Americans will continue to have somebody who walks them through the entire process.”
