When a property is listed for sale, the seller and their agent work together to create a strategy that positions the property to its best advantage when it goes to market.
The considerations are many and include but are not limited to marketing campaigns/strategies, preparing the property to show in its best light through repairs, refreshes, or staging, thorough evaluation of comparable listings and sales, how to engage with buyers and their agents, and so much more.
One new consideration is whether or not to pay buyer concessions.
If sellers are willing to pay buyer concessions, should they disclose a specific amount?
It’s not required. They can just say that they will consider an offer that includes buyer concessions, and leave it open-ended. Let the buyer and their agent submit their request with their offer to purchase, and maybe it will be less than expected or zero!
What are the benefits of publicly advertising and/or telling buyer-agents that the seller will pay a specific amount for buyer concessions?
- It clears the buyer’s mind of having to pay their agent’s compensation – green light to buy!
- It buys favor with the buyer-agent, causing them to push harder for this deal to go.
The seller and listing agent have the ability to influence the outcome. They already spruce up the home and pick an attractive price to impress the buyers and their agents, wouldn’t it make sense to use the buyer concessions as another way to help cause a sale? Yes! By telling the buyer-agent the specific amount of seller-paid buyer concessions is one more way to influence the outcome.
Sure…..if it feels like you are giving money away then don’t disclose an amount.
But do everything you can to make it easy for the buyer to buy!
(see the opposing opinion in the comment section)
The rule requiring the MLS input of every listing within 24 hours of public advertising is being reviewed this week:
In anticipation of the meeting, the WAV Group conducted a survey on the Clear Cooperation Policy in recent days. The survey elicited 670 responses from members of brokerages, MLS leadership and MLS staff. According to a statement on the survey, 28 percent of respondents recommended keeping the rule as-is, while “the majority want to change or remove the policy.”
“Interest in removing the policy completely or making it optional and reworking it differed between MLSs and brokerages,” the WAV Group further reported. “Fifty-one percent of brokerage respondents recommended removing the policy. Forty percent of MLS respondents suggested making the policy optional and/or reworking the policy, the predominant answer for MLS leaders and staff.”
This guy thinks we should not have any set fee offered by the seller……but shouldn’t sellers have the right to incentivize/reward/bribe the buyer and their agent? Yes they should have that right.
Unfortunately, instead of focusing on their own fees and services, we are seeing listing agents trying to pre-negotiate the fee a seller may be willing to offer to a buyer’s agent as a part of their “value-add” as a listing agent. Put another way, they are saying, “Choose to work with us and you will only have to pay _____ percent or a flat fee of $_____ to any buyer’s agent.” Then they have to figure out some way to communicate to prospective buyer agents the level of compensation they are willing to pay.
If more than one listing agent is giving this spiel during their presentation, the seller may be given the wrong impression that their purported fee to a buyer’s agent may be less based on who they hire to list their home. That is, in fact, a complete misrepresentation of the facts and in and of itself could be considered steering.
The irony here is that this behavior from listing agents attempts to remove the buyer’s ability to negotiate the compensation they may be willing to pay their agent, which was one of the major tenets of the settlement. This point is made by Miller, who states,
“For decades, I have had clients complaining about this commission structure and that it seemed unfair for a seller to have to pay this. Realtors would go to them and say, ‘The reason my fees are so high is because I have to share my commission with a buyer’s agent.’ And the question would be, ‘Why? Why do I have to pay a buyer agent to negotiate against me?’ And they were told, ‘That’s the way it’s done.’
But unfortunately, the impact of paying a buyer broker creates a lot of conflicts. No. 1, you’re paying somebody else’s fiduciary to procure a ready, willing and able buyer for the seller. That’s a duty to the seller. You shouldn’t be having duties to the seller if you’re a buyer agent. So it’s an automatic conflict of interest.
No. 2, it eliminates the possibility that the buyer brokerage fee is going to get negotiated with the principal in the transaction, which would be the buyer. Buyers should be able to negotiate the fees of their own agent, but if it’s being preset by the listing agent, who is also a buyer broker half the time, that buyer is never going to have an opportunity to meaningfully negotiate that fee.”
I believe that going forward in the new reality, there will be too many variables to nail down a set fee from a seller.
A few examples could be:
A buyer may be willing to increase the price they are offering in return for a concession for their agent.
A buyer may have been able to negotiate a low fee with their buyer’s agent who could potentially end up with less than a seller is willing to pay.
A buyer may be willing to cover their agent’s fee with no regard to what a seller may be offering.
A seller who has stated they will not provide any concession may only get one offer that (i) includes a request for compensation and (ii) will disappear if the seller attempts to counter the concession out.
A seller may get multiple offers all of which include requests for compensation which can be countered lower in a multiple-offer scenario.
The list of possibilities is endless.
Additionally, regardless of any pre-negotiated fee or percentage a seller may be willing to offer, the new rules provide a buyer with the ability to include a request for compensation regardless of what a seller may have stated they are willing to offer. Which then begs the point, “Why bother?”
Consequently, I do not believe that going forward, pre-negotiating a set fee structure should be any part of a listing presentation.
Sellers are going to want to know how the new rules work. That is normal and fine, assuming we provide accurate information. Some sellers, based on the ridiculous and blatantly false national news media coverage around the settlement, are going to assume that they no longer need to pay any commission to a buyer’s agent.
These assumptions need to be countered with the truth of the new reality so they can then make informed decisions. In truth, the only real answer is, “We do not know whether or not a concession will be required. Once an offer (or offers) arrive, we will see what the buyer(s) are offering and then, based on the terms included in the offer(s), I will negotiate on your behalf to arrive at an agreement that works for all parties.”
Consequently, in my opinion, the only conversation you need to have with your seller during the listing appointment should be as follows:
“You are no longer required to provide a pre-determined compensation for a buyer’s agent. In fact, there is no longer a field on the MLS to show what that compensation could be and there are now very strict rules around how any such fee may be communicated to a buyer’s agent.”
“Even if you pre-set a fee or choose not to provide any concession, a buyer has the right to include a request for compensation in their offer regardless of what you might or might not be offering.”
“When you receive an offer, it is possible it will contain a request for some form of concession to a buyer from which they can compensate their agent. Since we do not know in advance what that might be, once an offer arrives you will have the opportunity to negotiate any and all of the terms of the offer(s) in a counteroffer to the buyer. Once we have an offer(s), based on what they may or may not be requesting, we will discuss your options and then respond accordingly.”
At the end of the day, I believe we are making this way too complicated. Since the intent of the settlement was to decouple commissions, let’s do it and quit trying to come up with workarounds that, at the end of the day, might result in some serious fines and possibly our own day in court.