The August 17, 2024 milestone has come and gone, but the real estate industry is still struggling despite legally mandated changes to business practices. National Association of Realtors The (NAR) Commission’s litigation settlement agreements are now being implemented nationwide.
In the Greater Boston area, Cutting Edge Real Estatesaid the first few days of changing business practices were “eventless.” But even though Okoniewski and her representatives have been preparing for these changes for months, the day didn’t come without a sense of unease, she said.
“I won’t say there wasn’t some anxiety,” Okoniewski said. “At the end of the day on Friday, we were all waiting to see if this was going to be a big event, but it turned out not to be. I’m not saying that individual agents are struggling or running into anything, but I haven’t seen or heard any horror stories or anything scary yet.”
Real estate experts say the biggest adjustments they’ve had to make this week have been getting buyers to sign buyer representation agreements and explaining to sellers that while they don’t have to pay a buyer’s broker a fee, most prospective buyers will likely want some help paying their agent.
“The biggest difference is that sellers need to have the new format and fee structure fully and carefully explained to them,” said Rhode Island-based agent Rachel Dotson. Residential Property Co., Ltd. “Many people are interested in the potential savings that the new fee structure will create, but no one wants to jeopardise a sale by alienating buyers who are forced to forego an agent or who cannot afford to pay an agent’s fees out of their own pocket.
“Most sellers understand the value of ensuring a deal closes and are willing to discuss participating in the buyer’s agent’s commission.”
Buyer’s agents say they are pleased that buyer representation agreements are now mandatory.
“It’s a good thing that now you have to have a buyer’s representation contract to show every home because if you show a home without a contract, you get in trouble,” says Mandy Nichols, a Dallas-Fort Worth-based real estate agent. Brixstone Real Estate“Before, people would get a real estate agent to show them houses and then let someone else handle the paperwork and buy the house, and that was awful.
“I know a lot of agents have been hurt. It’s good to know that once you show them a property, they have to use you to buy the house. Unless you get them to sign, you’re just showing them a property and you’re not representing them.”
But for some real estate agents, getting buyers to sign these agreements isn’t always a smooth ride.
“By offering these contracts, it creates a dividing line between the good agents and the bad agents. It really levels the playing field.” Lamacchia Real Estate.
Posnick said one of his own agents met over the weekend with a buyer who had previously met with an agent from another firm, but was unhappy that the agent had asked him to sign a buyer representation agreement. LaMacchia Real Estate agents ultimately secured a meeting with the buyer by presenting two different contracts — a viewing agreement and a more formal buyer representation agreement — so the buyer knew he had options and could explain why he was being asked to sign the agreement.
Not only do agents deal with consumers, they also have to deal with other agents, some of whom may not be as prepared as others.
“One of my agents called me on Friday and said we’ve done so much preparation that the change doesn’t feel like a big deal to them, but in the short term it might put us at a bit of a disadvantage because it looks like everyone else in the market has no idea what they’re doing,” said Brad Twiss, a Portland, Oregon-based broker and owner. Neighbors Real Estate.
Another issue is that not all agents, brokers and sellers treat buyer broker compensation offers the same. eXp Real EstateLaMacchia Real Estate and Next Home — Real estate agents do not offer a collaborative commission plan when listing a property, but other agents, like Lindsay Pettinelli, will offer a collaborative commission plan if the seller agrees.
“The fact that you can’t disclose buyer’s agent compensation on the MLS doesn’t seem to be beneficial to buyers,” said Pettinelli, a Realtor agent based in Providence, Rhode Island. Churchill and Banks“Many buyers don’t have the funds to pay a down payment, fees and a real estate agent’s commission out of their own pocket, so they rely on the asking price to include the real estate agent’s fee.
“If the buyer’s agent’s compensation is not included in the list price of the home, I think it’s worth it for the buyer to know that up front. Why not make that information publicly available on the MLS? How does this protect buyers?”
Pettinelli said his contracts with sellers specify the total commission he will charge and how much he will pay to other agents who introduce qualified buyers to the deal, and that he plans to promote his collaborative fee offers in ads on his social media channels and on his agent’s website.
While Okoniewski acknowledges that some agents may take a similar approach to Pettinelli, he tells agents to consider seller concessions “totally irrelevant.”
“It doesn’t matter,” Okoniewski says, “If the buyer’s agent has a buyer’s contract for a certain amount, they need to get that amount. If the seller is generous, they can’t get more than that. So I don’t see why they’d ask how much the seller is offering. I think that’s the missing piece of the puzzle for a lot of agents right now.”
Complicating things for Okoniewski and her representatives: MLS Pinone of several real estate information services her company uses, still displays buyer broker commission offers on the MLS because it did not agree to a settlement with NAR.
“This is causing a lot of upset and I’ll admit our agents are a little disappointed that we’re not doing it, but I feel like putting fees on the MLS is like kryptonite to agents and brokers right now. It puts a target on their back and I think there are some big brokers here that are choosing to live dangerously,” Okoniewski said.
Twiss believes the reason real estate agents and brokers are concerned about buyer’s broker compensation offers being removed from the MLS is because they fear that sellers will be less willing to cooperate with buyer’s broker compensation if it is removed from the MLS.
“I don’t think so,” says Twiss. “Our agents have been in discussions with sellers with the expectation that buyers will ask for assistance with agent fees, but I don’t think it’s a big deal.”
Dotson also said that across the country, in Rhode Island, sellers so far seem to be willing to accept buyers’ offers to help with agent fees.
“The change is still very new and most sellers seem willing to participate to some degree because they understand the importance of buyers having guidance and representation to get to the closing table,” Dotson said.
While agents may differ in how they will handle the changes in business practices, they all agree on the fact that it is still too early to tell exactly how the business and the market will be affected.
“Just like with TRID, it’s going to take some time to see how it impacts the market and it’s just going to be disruptive for a few months,” said Brian Huskey, an associate broker with a Montana-based brokerage. ERA American Real Estate.
“We’re answering a lot of questions from consumers who saw it on the news this weekend and from agents who have received a ton of training but are still figuring out how to navigate these changes in real time. It seems like a lawless world again.”
