Bernice Ross

Buyer’s agent compensation offers seem set to disappear from your local multiple listings service by this summer. And the effects will be wide-ranging.

Assuming National Association of Realtors’ settlement in the Burnett/Sitzer commission lawsuit is approved, MLSs that haven’t already done so will be forced to remove the buyer commission field by July 2024. While you may still be able to post a buyer commission on your MLS at this point in time, the smart move is to start transitioning any future listings to this new model.

Having said that, sellers are already raising questions on listing appointments and based upon the most recent intel I’ve heard from companies and those working with large teams, about 60 percent of the time sellers are already asking agents on listing appointments about how they should handle the buyer’s commission.

Chances are that almost all sellers this spring will be asking about this ruling given how much press this settlement has received.

For the time being, look to your broker, your company’s legal counsel, and your state association hotline for advice on how to handle these inquiries. If you’re going to continue to represent buyers, it’s time to start using buyer brokerage agreements on every transaction.

People Will Pay for Value

When trying to understand the broader impacts of the settlement, ignore the naysayers who claim prices will come down significantly.

The so-called “experts” quoted in the news seem to have forgotten that prices are driven by market forces, not the amount of commission.

But if you’re worried about your commission, remember: Americans are willing to pay a full commission, provided that they see the value in what they’re getting.

In an interview I did with Next Home CEO James Dwiggins last fall, he pointed to research done by 1000 Watt that shows Americans are willing to pay a full commission when they see the value of doing so.

“In 1960, 30 percent of Americans had dual-income households. Today, between 60 percent to 70 percent of Americans have a dual-income household. Because everybody is busy with their careers, kids, and other activities, they want convenience. They’re not going to wake up one day and say we need to sell our house and do it themselves,” Dwiggins told me.

Consequently, it’s incredibly important that every buyer’s agent can articulate the value they bring to the transaction.

NAR published a very useful document that outlines 179 ways Realtors are worth every penny of their compensation. Print up this list and share it with both your sellers and buyers on your next listing or buyer interview appointment.

Affordability Still Challenging

But that won’t overcome the very real affordability problems that would be created by forcing buyers to pay their agents out-of-pocket.

One of NAR’s core strengths is lobbying. The association should work with Freddie Mac and Fannie Mae to let buyers roll agent commissions, as well as closing costs, into the loan amount.

FHA, VA and USDA loans already have provisions that allow borrowers to roll certain closing costs into their loan under certain conditions. These models could be extended to Freddie Mac and Fannie Mae loans.

Residential agents can also take a cue from the commercial side of the business. Buyer agents should include the amount of their commission as well as any concessions as a standard part of any offer they present.

It’s going to take time to navigate through the changes ahead. There’s going to be chaos and confusion, but the bottom line is that the pent-up demand for real estate is still there and the market is already adjusting to having higher interest rates. Moreover, today’s transactions are so complex, most people have neither the time nor the ability to navigate them on their own.

So, polish up your value proposition to buyer clients, and be prepared to help your sellers understand how offering seller concessions can help them attract more buyers, which in turn, will result in a higher price.

Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.