The new real estate model post NAR settlement agreement
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Brandon is a real estate broker in Michigan and is the CEO of Brookstone Realtors. Real estate coaching is Brandon’s passion. He teaches real estate agents at his company and around the country how to get listings using his reverse selling lead generation system. His mission is to teach real estate agents how to sell without being salesy, he calls it reverse selling.
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Great info Brandon…!
Never clicked a video so fast
Very well articulated! Thanks Brandon.
Problem is no agent ‘goes out and procures a buyer.’ There are always a finite small number of buyers in the market at any given time.
No, Buyer in their right mind is going to do that, Who is going to be represented by somebody who is not representing them, and not having their best interest in heart, and has a fiduciary duty to the seller. I think y’all have lost your minds.
@@lorrieraymond-realtor Ive already had buyers calling me directly on my listings now in the current market with the current rules. What makes you think they aren’t going to do this when you are asking them for 2.5% out of their pockets to pay our commission (exp. 2,5% on 500k home =$12,500)
I saw this alot when the market was really crazy and it was hard for buyers getting their offers accepted. They would call me directly as the listing agent and tell me they don’t mind if I was their representation because they know I would get double the commission, so it would be an incentive as the listing agent to make the deal work with that specific buyer.
The theory of asking for 3% or even 2.5% for your commission in credits representing the buyer is a huge disservice to them. Seeing on how a buyer can only get up to 3% in concessions that leaves no room for them to get any type of credits on repairs or closing costs of their own. It’s possible but in my opinion a disservice to the buyer you’re representing. Not to mention not even possible on a VA loan
Or what happens when you have agreed upfront with the buyer on 2.5% and the seller is only willing to pay let’s say 1% and the buyer can’t cover the other 1.5%. Do you just do the deal for the 1%?
This is going to be a big hurdle for buyer agents in which I see agents taking a pay cut in the end.
LOOK AT THIS QUOTE…….”The $418 million settlement calls for the Chicago-based National Association of Realtors (NAR) to eliminate decades-old rules on commissions, and make it easier for buyers to negotiate fees with their own agents or use no agents at all, Reuters reports.” end quote. WHO DISAGREES WITH THIS STATEMENT OF MAKING IT EASIER FOR BUYERS. Quite the opposite
Sure, we can “add a line” in the closing statement to the buyer, but most buyers can’t afford their down payment alone, so they just don’t get a house, right?
An important point that this lawsuit/ settlement reminds us of is that contracts are literally just the starting point for anyone that wants to litigate. Why are listing agents going to want to take on the extra risk of dual agency or even acting just as a “transaction coordinator” for a buyer when it just seems too easy to sue anyone for anything no matter what’s in writing. Maybe we will see an unrepresented buyer class action lawsuit in a couple years.
Actually there is one. Look up the Batton lawsuit.
Exactly. I’ll never conduct a dual agency ever again. I don’t care how much money is on the table. It’s a wide open door for either party to litigate, even if you have clearly stated your fiduciary responsibility is nullified.
Brandon is the best around.
Great vid, BUT everyone has lost sight of the fact that the whole purpose of the MLS listing is to advertise to the 10K+ Agents in your city that you are offering an “incentive” (the Commission) if you bring a successful buyer! There’s a reason New Home Builders pay Agents to bring clients! The new rules are going to create countless variations on the compensation model and confuse the consumer. Most of the negotiations will be focused on who pays the buyers agent vs. the actual price of the home.
I went on a listing pitch Tuesday where the seller doesn’t want to list until July, thus they’ll be in the very early weeks of this new model. I explained the options they had between listing at 3% on my side, and then knowing a buyers representative may request 2, 2.5, 3% etc making their total costs between 5-6%, or listing at 5% and I automatically cooperate half to an outside broker. The sellers still opted to want to list at 5% as they felt it created a fixed cost, and gave them the best potential for attracting a buyer with representation vs. a variable unknown cost. Give your sellers the options, thoroughly explain the pro’s and con’s of each commission structure, and let them decide.
Unfortunately I’ve seen the flipside on that. One of my fellow agents lost a listing opportunity when they charged 5% including a buyers agent commission. The other brokerage offered 2.5%. I knew an agent over there so I asked him what are they doing. My understanding is they cultivate thier own buyer leads which is a good selling point. The other big point I got out of it was that the seller doesn’t have to commit to a buyers agent commission. At least not upfront. Since the amount of commission is set between the buyer and thier agent, it makes more sense to wait for the buyer to make a request for the seller to pay their agent commission. So if the seller just offers 3% for a buyers agent commission, they are showing their hand from a negotiation standpoint. So buyers agents are encouraged to make offers but they have to request how much they want in compensation. So if a buyer request 2% but the seller was willing to offer 2.5% or 3%, that is a significant savings. I can understand why a seller might find that attractive. We are certainly going to be doing something similar moving forward.
Thats interesting, but it’s my understanding that under the proposed “new rules” by NAR, the listing broker will not be allowed to share any commissions? How would you execute a 5% split after ~July ?
@@JeepdudeFLthat’s not true… the rule is you can’t share the commission % on the MLS.
Sounds like they need a new agent.
@@atlhomeguide Right, but with the pending new rules, the Listing Agent commission will be paid to the their broker and the Buyers Agent commission (in the form of a sellers credit) will be paid to the buyer’s broker….effectively outlawing commission sharing.
My state(PA) already uses buyer agency forms…has for a long time
Fixed listing cost according to house value makes sense.
You are forgetting the big problem. Buyer agents are not going to be showing homes unless they absolutely know upfront that there is seller compensation, because most buyers cannot pay their own agent. How is that going to happen? Are they going to have to be a gazillion places that a buyer agent has to look to see if their seller compensation? And then how are they going to tell their buyer “I won’t show you this home because I can’t get paid “how is that going to go? The whole thing is so screwed up.
This is true, this really doesn’t benefit home sellers at all because everyone has to live somewhere, and sellers become buyers
2 main types of buyers. those who bring equity and those who don’t. buyers with equity can withhold some of it to pay their agent. they are basically increasing their mortgage. they are in the same place if seller increases their price to provide a concession.
I guess my question is what happens in all those instances?If the buyer don’t want to pay and the seller don’t want to pay and yet you have already submitted the contact with all of Names involved. Meaning the buyers wouldn’t have enough money to close. So at that point the only thing stopping this contract is your commission. What do you do back out and say?Sorry cell doesn’t go through, Or just chalk it up as non payment . To me there’s potential of getting to the finish line and the buyer’s agent still not getting paid.
In Washington State we saw this coming when the lawsuits started and given that our MLS is not owned by NAR we have already started doing some of these things you are talking about…not much has drastically changed the course of business sellers that are not offering compensation to buyers stay on the market longer then ultimately pay the buyers broker compensation. It comes down to communication, transparency, and as you said setting expectations!
Read the DOJ statement of interest in the Noselek vs MLS PIN lawsuit and proposed settlement. They site the exact scenario you explained about houses sitting on the market as a form of illegal steering . Trust me, it’s a problem.
if fees get cut, do you think a lot of agents are going to flat fee firms because of these changes?
$7500 is to much!
I have a gut feeling that sellers are going to pick up the ball and run with this. This is the First time in history, that sellers can sit back, and be adamite about staying firm with their decision, I’m only paying 3% period. I don’t care how long it takes to find a buyer, that can afford to pay his buyers agent 3%. 3% more cash in the sellers pocket, is all they will care about. It’s been a long time coming.
Thank you for information,
can you explain why do we need Real estate agents ? Why can a buyer go directly to buyer submit an offer to through an online portal submit offer and fill out all documents and submit. Similar like doing taxes or purchasing a Tesla online. Almost everything is done over through online data base have a notary confirm the purchase. Like buying a used car.
The thing with adding it to the cost of the home is the home as to apprise.. so as a listing agent I would want a waver of apprisal..