The elimination of buyer-agents continues:
The U.S. Department of Justice broke its silence in court on Tuesday on the impending changes coming for the real estate industry in the wake of settlement agreements by major brokerages and the National Association of Realtors in what experts say was a statement Realtors should heed.
During a status hearing for a case in Massachusetts, Jessica Leal, an attorney for the DOJ, said the regulator would neither support nor oppose the NAR settlement agreement, which will lead to sweeping rule changes this summer. “We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” Leal said.
Without any advertised commitment to pay them a commission, what will buyer-agents have to endure? At best, the seller-paid commission will be a moving target, and many, and probably most times it will end up being peanuts. Any agent who expects to be a successful buyer-agent will have to become experts at having their buyers pay them.
But even if an agent can get buyers to sign a commission agreement, the process of buying a home around here is very difficult. I have an entry-level buyer right now who is making full price, all-cash offers, and over the last 45 days has struck out six times in a row.
Buyer-agents are being squeezed out by several market forces, and who will mind? The lack of transparency and the games the listing agents play are so unsavory that buyers and their agents will have to be extremely motivated to succeed just to eventually buy something. Agents won’t want to represent buyers under these circumstances, and just quit instead.
The real issue now is that buyers HAVE to hire a buyer-agent in writing to buy a house. Once they figure that out, will they investigate the choices carefully, or just grab someone? Or have Aunt Bea handle it? Or just go to the listing agents? Once the frustration sets in, going to the listing agent will seem like a way to improve their chances.
But the old-school listing agents will cop an attitude and either not want to do dual agency at all, or they will want the buyers to be unrepresented. Progressive listing agents will encourage buyers to come to them directly, and it is inevitable that it will become the prevailing trend. It’s how the commercial brokers do it, and it’s mostly because agents don’t like other agents – not because it is what’s best for the buyers and sellers.
These agents discuss some of the pitfalls here. They have built a realtor team of 51 agents since covid, and have sold 448 homes in Connecticut over the last 12 months – so they are in the game. But they don’t come up with any perfect solutions – because there are none:
In other words, it’s going to be a mess of a market as agents turn their focus on getting buyers to sign an exclusive agreement. It will just complicate further what is already a very challenging environment.
The problem I can see is that sellers generally don’t want buyers to be represented. Sellers want to unload their properties warts and all on a buyer and have no repercussions.
Buyers agents are supposed to represent the buyers interests. This means they should be pushing for repairs or a discount off list if there’s issues to compensate.
Why would a seller ever choose to pay more commissions (assuming 3% on buyer/seller agents) just to get a huge headache and longer (more expensive) time to close?
Sellers, listing agents, kangaroo courts, the DOJ, and even the buyers themselves will find MANY good reasons to eliminate the buyer-agents.
Even buyer-agents themselves. Who wants the job? Noooobody!
“If MLS PIN rules prohibited sellers and listing brokers from deciding what buyer brokers would be paid, sellers would be responsible for determining only the compensation of their own broker in the listing contract, while buyers would be responsible for determining the compensation of their own broker in a buyer-broker representation contract,” Leal wrote.
Forget my peanuts comment – you will have NOTHING coming from the sellers!
I think all parties seller-agent, seller, buyer agent, buyer should all bring their own lawyer into the equation. That will make everything fair. [/ducks]
Oh yeah, great. Just like New York City? You should hear the stories from Kayla.
To sell a multi-million dollar home, all parties come to a verbal handshake deal, and then send to the attorneys to write the contract.
Guess what – attorneys have egos!
They go back and forth over the tiniest details and argue for weeks before coming up with a contract for buyers and sellers to sign (no preprinted forms like we have here).
Think there are shenanigans happening during those 2-6 weeks? You better believe it!! Agents don’t have any pride in their reputations there either, so anything goes.
A national auction house should get started there – it would be a huge success, and then spread coast to coast.
Frances Riley, an attorney with Saul Ewing, thinks the DOJ is far from finished with NAR… but won’t intervene with the Settlement:
“The DOJ no longer needs that platform to push for the decoupling of seller and buyer agent commission, so no need to expend resources in the venue. The DOJ fervently wants NAR to issue a rule that prohibits any coupling of commission paid by a seller to its listing broker and any commission that might be sought by a buyer’s broker for procuring the buyer,” Riley said. “NAR’s settlement of the class actions did not achieve this goal, thus there will be further investigation by DOJ of NAR and likely litigation.”