Why working with a discount brokerage may work against you.
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The personal stories of one Realtor’s battles and triumphs in the highly-competitive Bay Area Real Estate Market, seeking to illuminate and humanize the very real ups-and-downs of homeownership.
It’s official, August 17 came and went, and per the new regulations, sign-up sheets simultaneously appeared at ALL of our weekend open houses. For those of you in the hunt, I’m sure you ran into them.
“Can I ask you folks to sign in? I said, “It’s now required by the NAR . . . ”(and it is).
With few exceptions, people politely complied with little push back. (Thank you, I appreciate that.)
What do Realtors® intend to do with your signatures? NOTHING . . . The sign-up sheets are logged into the property file as proof that the Agents followed the rules and prevents us getting fined. In any case, the industry (and the public) will adjust soon enough (we’ve no choice), just as we did when COVID restrictions were in place, albeit they now seem ridiculous in retrospect. (I suspect we’ll find the same here.)
Aside from this minor but annoying concession, the bigger issue – and the one that’s made headlines – is the bifurcation of the commission structure between Buyers and Sellers. And while Sellers are anxious to embrace the idea that they’ll be paying up to half of what they previously paid to sell their homes, in reality, that’s unlikely to be the case. In fact, in states where this rule has already been in place and well established, Sellers are still paying the commission for BOTH sides of the transaction 96% of the time!
Why? Because it’s in their own best interest to do so. When you think about it, It only makes sense (and cents) to incentivize Buyer’s Agents to show your home, especially in a shifting, tightening, and highly-competitive marketplace (per the Supra Box tracking system, showings are down 18% from 2 years ago.) In fact, DO expect the vast majority of offers to stipulate that Sellers absorb the commission for the buy-side AS a condition of the sale. In other words, it’s business as usual; it’s just going to be positioned differently.
With respect to the property Sarah and I sold last week, both offers clearly put this demand in place as part of their purchase agreement. However, and this may be the plot twist, one of the two offers came in from a discount brokerage offering the Buyers a one percent rebate. In short, while asking for 2.5%, the Agent was willing to work for 1.5%. And while I’m no fan of brokerages that undercut our industry’s value, the truth is that had those Buyers folded the rebated dollars back into their offer, they would have likely prevailed. Instead, this tactic worked against them.
Unfamiliar with the brokerage, a simple Google search revealed the true nature of the offer (and NO — Buyers are under no obligation to disclose the kickback) and frankly, it rankled. While I understand that a “rebate” is an attractive lure to Buyers, it just may cost them the house. Ditto for the “flat-fee” agency that has quickly emerged as well. Let’s be clear, having established our value with decades of experience, a race to the bottom isn’t where any of us wants to go.
Consequently, when push comes to shove, Agents are going to lean toward other Agents they know and trust. It’s why we encourage Buyers and Sellers to work LOCALLY, and why we refer out when appropriate. Having sat on both sides of the aisle, we know there’s a distinct advantage in aligning with the home team . . . but there’s also greater confidence that a fully commissioned Agent will cover ALL aspects of the transaction, from beginning to end.
And speaking of “home teams,” I’m off to Aspen to recharge my batteries at the Compass Luxury Retreat, where I’m sure, this topic will be front and center. That’s not such a bad way to decompress and reset as we navigate this strange new landscape.
In a world filled with serious challenges, how the commissions play out should find its footing quickly. At least, that’s our hope. In the meantime, we’re here to assist and answer any questions you may have.
How can we help you?
Julie Gardner & Sarah Abel | Compass Realty
Not just Realtors, but consultants in all things house and home, we’re here to educate, explore, examine and refer . . . In short, you may count on us to take care of your home as if it were our own and anyone who knows us, knows we take pretty darn good care of our homes.
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