May is Commission and Compensation Month at Inman. Sort through the noise with the most up-to-date news on the commission changes. And look for straight-to-your inbox updates with Inman’s new weekly digest, Commission Chronicles.
NextHome CEO James Dwiggins spoke at the inaugural Inman Connect Miami on Tuesday, arguing that clinging to the current status quo when it comes to commissions is a recipe for disaster. However, when pressed by moderator Brad Inman on how much buyers might end up actually paying in the future, Dwiggins and his fellow panelist, new eXp CEO Leo Pareja, declined to state an exact number or percentage.
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Dwiggins said he saw a variety of options for buyers in the future, including compensation coming down on the buy side for buyer’s agents who are not good at articulating their value. He also foresaw seller concessions as a way to allow sellers to help buyers pay their agents.
There are lots of ideas out there and very little certainty, so we wanted your perspective: How will buyers pay for your services post-settlement? Do you think sellers will continue to offer buy-side compensation outside of the MLS? Do you think buyers will favor dual agency or try to negotiate buyer’s agent commission downward? Will lenders come through with a way to finance compensation and, if so, should they?
Here are your predictions:
- There will be new offers from existing and new companies to handle buyer-side for a low flat fee, based on property price, e.g. under $500,000: $5,000: $500,000-$750,000: $7000; and on up, becoming lower percentage-wise as price goes up, e.g.$5 million home: $30,000. Agents won’t like it. One has to realize many buyers at the high end are very experienced, savvy buyers, so there will be a market for a flat fee for higher-priced properties.
- Through a buyer agreement, about 25 percent to 50 percent less than today’s norm.
- Some buyers will go direct to try to save on purchase price. Sellers should still pack in some room on their price to allow for a concession to the buyer if asked; otherwise, they may have nowhere to go in negotiations if asked to concede. I still see many buyers asking for a credit to offset the expense. Expert agents will guide buyers on values and overall cost of the property, which includes buyer’s agent compensation among other factors.
- Sellers will pay/seller concessions. (Many responses.)
- Financed.
- Post-settlement payments will only open the door for agents to place mechanical liens on buyers’ homes due to non-payment. Professional service fees/commissions in Arkansas have always been part of the seller’s listing agreement.
- Seller’s agent will offer lower commissions.
- Sellers will be choosing not to offer buyer agent compensation on the initial listing agreements. That will leave it up to the buyer’s agent to ask the seller for consideration at the time of offer presentation. Sellers likely will agree to some form of consideration, but it is likely to be far less money than was offered historically.
- They will forego the buyer agent and buy through the listing agent.
- I think it should be on a per case (transaction) basis.
- I will include my buyer-broker fee in every offer I make, adding a term to the purchase agreement that the seller will pay my fee directly to me in the transaction.
- I believe buyers, for the most part, will just go direct to sellers and/or seller’s agents. A commission to a buyer’s agent is not something that buyers are going to find value in. This is a mistake on the part of the buyers, but I truly believe that the vast majority of buyers will not find value in paying a buyer’s agent commission. Also, many buyers don’t have extra money. They barely have enough to make a down payment. I’ve had many instances where buyers have been annoyed by other fees (inspection fees, radon test fees, pest inspection fees, appraisal fees, paying a year in advance on insurance, preparing property taxes, etc.). Adding another fee or cost on top of all of that, in addition to a down payment, is not going to happen for a lot of buyers.
- Buyer comp outside MLS.
- Realistically, it doesn’t matter “how will buyers or sellers” pay, because this “settlement” is only going to kick the can down the road for even more lawsuits. Some buyers will feel or believe that they were lied to or misled by their agents; sellers will believe that their agents didn’t properly market or work with some buyers’ agents, etc. Just out of curiosity, how many buyer’s agents will sue their clients for payment of services provided? That is what should be or should’ve been mentioned in the settlement.
- I believe buyers will have to negotiate seller credits to cover or help cover the buyer’s dedicated representation.
- How will buyers pay for your services post-settlement? Via a credit added to the negotiated price. Once Fannie, Freddie, etc., get their act together, our fee will simply be financed. Do you think sellers will continue to offer buy-side compensation outside of the MLS? Yes, at least in the short term. I think that a lot of that hinges on Fannie, Freddie, etc., providing options for lenders to allow buyers to finance our comp. Do you think buyers will favor dual agency or try to negotiate buyer’s agent commission downward? Dual agency, no. Negotiation, sure … why wouldn’t they? But not all of them. Will lenders come through with a way to finance compensation and, if so, should they? Yes, and absofrickinlutely yes.
- Ask the seller, increase the purchase price, pay out of their pocket, and/or get a closing cost concession.
- Either a flat fee for buyer services or an a la carte compensation for buyer-selected services.
- This settlement and the misleading news is driving sellers to think now they don’t have to pay the buyer agent commission. The fact is the only thing that has changed is commissions can’t be advertised on the MLS. The listing agent can advertise the commission on his/her website or over the phone, text or email.
Instagram responses
- I think it is going to inevitably result in a whole lot of nothing. For the most part, business as usual. It is going to behoove the homeowner to offer a reasonable compensation to the buyer agent. Otherwise, it is my belief that the homeowner places themselves at a tremendous disadvantage.
- Depends on what the banks do. They will define with their guidelines the result.
- Cash money.
- Not biz as usual. Get your credit card machines and no more percent of selling price!
Editor’s note: These responses were given anonymously and, therefore, are not attributed to anyone specifically. Responses were also edited for grammar and clarity. Inman doesn’t endorse any specific method and regulations may vary from state to state.
What did we miss? Please share your thoughts in the comments section below.
