Brokerages are at the crossroads – they can either encourage sales with all buyer-agents, or go the same way as C.A.R. and make it harder on them (which promotes single agency) and add blustery headlines. I think brokerages should stand up for all buyer-agents; not only because buyers deserve representation but it also gives us more qualified buyers for our listings!
eXp Realty has in recent days taken the notable step of updating its much-discussed listing agreement with language stating the company “does not share commissions with a buyer’s broker” — language that has prompted a flurry of debate online.
The brokerage published its new listing agreement internally on Friday. In a conversation on Wednesday with Holly Mabery — senior vice president of brokerage operations at eXp — she said that the document was updated because “we wanted to make sure our agents are best protected.” She added that “we’re not going to do broker-to-broker compensation.”
“We’re not going to do pre-determined compensation,” she continued, adding that instead, eXp listing agents will provide their clients with “a menu of options.”
The document reflects this approach, stating on the first page that the “broker (eXp) does not share commissions with a buyer’s broker.” However, that language does not mean buyers’ brokers can’t collect compensation from sellers. The document goes on to state that buyers may request concessions from sellers, and those concessions could be used to pay for brokers among other things. Homesellers using eXp agents are free to offer compensation as they see fit.
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Everyone will be able to see the seller-concession amounts on Compass listings:
Compass Technology Platform Enhancements:
On August 15, we will be rolling out enhancements to the Compass technology platform that will empower Compass listing agents to effectively communicate offers of Buyer’s Agent compensation for their listings without relying on data from the MLS.
Compass Listing Agents can open their MLS listing in Listing Editor to add Buyer’s Agent compensation offers for display on Compass.
Compass-entered Buyer’s Agent compensation offers will be displayed on agent and consumer Compass listing pages.
Compass-entered Buyer’s Agent compensation offers will be displayed in agent search results.
Publicizing the seller-concessions amount will make it easier for buyers and their agents to know what to expect, and it feels more like a promise. Those who say they don’t do broker-to-broker compensation or ‘just negotiate it in the offer’ are giving the middle finger to buyer-agents because without some sort of commitment up front, any possible seller concessions during negotiations will be little or none (it’s too late/too easy for seller to say no).
Compass is doing it – can’t every brokerage who believes in buyer-agents at least publicize the seller-concessions amount on their company website? If the seller or agent doesn’t want to disclose, fine – they don’t have to. But buyers and their agents will be flocking to those that do!
The new 19-page listing agreement is out! They didn’t waste any time getting to the listing agent’s pay. Boom, right at the top of the newly revised form, it commits to the commission rate plus a little extra if the buyer is unrepresented.
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All the way down on page 14, the Optional Additional Compensation is described:
We’ve never had this option before and everyone is probably wondering what the extra work is worth? It will look a lot like dual agency in practice and the liability is 2x on those, compared to when two agents are involved. When faced with the buyer wanting to cancel their purchase, most every agent will be forced to provide what’s needed to get them through.
Extra pay is warranted, but how much? It will be interesting to see how this plays out.
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Seller Concessions finally get an explanation on page 11:
The MLS will have an entry for the amount of concessions, but the new form insists that the seller must notify the broker in writing of the amount, BUT THIS FORM DOESN’T PROVIDE A PLACE FOR THE SELLER TO NOTIFY. It is as if the C.A.R. wants to make it near-impossible for buyer-agents to exist.
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They did get around to some explaining on page 15, but if you’re a seller and happen to get this far, it sure looks like the buyer is paying the buyer-agent commission:
Buyer-agents need to rely on their buyers paying their fee, because these forms aren’t giving much hope to sellers paying them any compensation. The authors of these forms have abandoned buyer-agents to cover their own backside. It is embarrassing that they don’t fight for buyer-agents instead.
The California Association of Realtors had to re-write a few of their new forms in order to comply with the DOJ critique. These revised forms get released tomorrow, and they will probably help chart the final path for buyer-agents.
There are two noteworthy points in them.
1. The old listing agreement mentioned the full commission rate the seller would pay at closing, and then in a separate paragraph at the bottom of the same page, it listed how much of that full commission that would be paid to the buyer-agent. The second rate was determined by the listing agent with little if any involvement of the sellers.
The new listing agreement will dictate the commission rate the seller will pay at closing for seller representation only. There won’t be any mention of the seller paying the buyer-agent.
But there will be a second paragraph where the listing agent can add an additional fee for handling the extra work created if the buyer is unrepresented.
In summary: Agents who only use the basic listing agreement can completely ignore buyer-agents, and can also tack on an extra rate or fee for bringing in unrepresented buyers. It will encourage single agency, and buyers will really have to be committed to getting good help!
2. If the listing agent is committed to having their seller offer “concessions” to a buyer that may be used towards a buyer-agent commission, they will need to include a separate and optional form. The form will ask the seller if they want to offer concessions (Yes or No), and if so, how much do they want to offer.
Ed Zorn is the vice president and general counsel of CRMLS, the largest MLS in the state. When asked about the concessions amount, he said sellers should not ‘commit to any kind of number whatsoever.’ Our Compass management agrees.
To the ivory-tower folks, not offering a specific commission rate to buyer-agents sounds safe and compliant. But it will expedite the death march of the buyer-agent.
The listing agreement will be encouraging single agency and if a buyer-agent can find their way to the negotiating table, there won’t be any guarantee of the seller paying anything towards your commission.
Literally, there was a chance for this to all work itself out by using concessions to pay buyer-agents. But everyone is so nervous about future litigation that these revised forms will lead us down the path of eliminating the buyer-agents. Single agency is upon us!
The other day I popped off about how the market was deteriorating and we’d be lucky to see 100+ monthly sales the rest of the way in 2024. What do I know? Here is the sales data for this month so far:
There are two solid weeks left in July – could we get to 200 sales this month?
If so, it will leave the pendings drawer a little light – we’re down to 169 homes in escrow today. But there are 505 actives, and when the coming-soons are included, the count is up to 528 detached-homes for buyers to choose from!
The June median list and sales prices were outliers – the rest of the pricing data looks steady, though the buyers are looking for discounts now – and judging by the 96%, the sellers are obliging!
My new listing (below) went over list price though, and I have buyers in a 5-offer bidding war on a different home right now so there is plenty of hot action:
This house for sale is down the street from the one I sold in October, 2022 for $2,250,000 and I said then that I didn’t think another home would sell in this neighborhood for less than $2,000,000. None have closed under $2M since then, and the last two sales were both closed in July at $2,125,000 for a Centex, not Davidson home that backed to the power lines and $2,444,000 across the street from this one.
This is a terrific value for a Terramar beach bungalow! The original bungalow is very habitable now – it has a new roof, new furnace, real hardwood floors, and pool plus a studio with kitchen and bath was built in the back of the garage! There hasn’t been this good of a value on this street in years! 5249 Los Robles just closed for $1,750,000 on July 2nd for 979sf that was a teardown – this new offering is very habitable!
It was probably obvious that the contracts were drawn up by the realtor attorneys to protect realtors, but there were adequate protections for buyers and sellers too.
This commission lawsuit has changed everything, and now they only care about the realtor associations.
When Docusign pioneered the electronic signature, it was one of the best advancements in the history of real estate. But it causes clients to whip through the signing process without having to read anything! The attorneys make it worse by originating new forms every year, and currently a seller has to initial or sign 18 pages to list their home for sale, and a buyer who makes an offer to purchase has to sign or initial 28 pages!
The coming changes are going to add another half-dozen pages to each, and you better read them now!
BUYERS – You have to hire an agent to see homes for sale, which means signing a contract. It sounds ridiculous, which it is, but we are going to have to get used to it. The key part is how long the buyer is obligated to the agent.
If you don’t read the contract and just sign it real quick, you could be obligated to pay this agent a commission whether they represent you or not when buying a home. Buyers should only agree to sign any buyer-broker contract if it includes a cancellation clause so you can get out of it if things don’t work out.
SELLERS – The basic listing agreement won’t allow you to pay an incentive to a buyer’s agent. Your listing agent will have to include a optional form and have you agree to pay “concessions” which can go towards any buyer expense. I’m guessing that this form won’t be used much, and instead the listing agents will want to be heroes and tell their sellers that they get to save money now because they don’t have to pay buyer-agents any more – even though it’s going to kill the business as we’ve known it for 100+ years.
It may sound like a good idea to not pay buyer-agents in the beginning, but if your house hasn’t sold for weeks or months, you might reconsider. Paying incentives to get what you want is an American tradition.
AGENTS – You better be committed to getting paid, because everyone is going to be looking to screw you out of a paycheck – especially the other agents. The MLS used to protect buyer-agents because once a commission rate was entered onto a listing, the seller had to pay it. The rate was protected, and it became accepted as part of the package.
But it’s going to be different now, and the buyer-agents who include their commission in their offer to purchase will be under attack. If you make an offer that is less than the list price, the first thing the seller will want to do is pay you less, and I doubt that the listing agent will stand up for you. I can imagine it already from listing agents – “Ok, we accepted your buyer’s price but we’re not going to pay you anything!”
It means that any buyer-agent who wants to be paid will have to get it from their buyer. It will be another huge burden loaded onto the buyers, and only the most motivated will endure paying the same fees to which we have become accustomed.
So hey, maybe agents won’t get paid as much, but selling homes is going to be a mess – unless buyers can find a way to Get Good Help!
I was on a national sales call yesterday where agents from coast-to-coast were complaining about how bad their market is currently. I kept thinking, “It’s nothing price won’t fix!”
Instead, the common fallacy that ‘it just takes longer to sell a home‘ will prevail.
It’s been a belief among sellers and agents for decades. Could it be wrong? Yes.
Of the 21 NSDCC closings over the last 30 days that sold for $5,000,000+, the median time that it took to find the buyer was 34 days. Of the 17 homes in escrow today that are priced over $5 million, the median market time is 31 days.
Why does the belief keep lingering? It’s because it’s easier to digest than “Your price is wrong”.
How does the market really work? The house that sells today is the one that is the best deal for sale.
All a seller has to do is price their home to be the best deal on the market. They can do it from the beginning and get into escrow in the first week or two, or they can wait for weeks or months before getting their price right. Some get lucky when strong demand clears out all the better deals in a hurry, causing the over-priced-turkey to look competitive quickly. It’s just dumb luck though, rather than a deliberate strategy, because it can go the other way too when newer listings at lower prices leave the OPT high and dry.
This is the type of market where some listings will never sell. They price too high from the beginning, never adjust, and they just help to sell the better-priced listings down the street or around the corner. The market can just fade away, or like we will see in 2025, a flood of new inventory can set a new standard for pricing in the neighborhood.
Some days there is enough demand that the best few deals will all sell at once. A surge like that usually happens when there aren’t other distractions like 4-day weekends, Easter, graduations, vacations, etc. We’re due for a wave of demand here over the next 2-3 weeks. But will any of the current homes for sale be considered a good enough deal? it can happen that NONE of the active listings look like deals – especially this time of year when everything is so picked over.
All that a seller has to do is price the home so it is the best deal available, and it will be the next to sell.
We started with an aspirational price here (my recommended LP was $2,200,000). But we adjusted quickly, and once the price got down to $2,250,000, we found the buyer within two weeks (more on this one later):
