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National Association of Realtors Law Suits Settled, What's Next?

Last fall the National Association of Realtors lost a law suit for setting commissions. While as a practioner I can say NAR never "set commissions" there was plenty of peer pressure for sellers to comply. I July (ish) this could change substantially. The MLS will no longer have a "Compensation" field.

What is a "Compensation" field, the spot on the agent facing Multiple Listing Service (MLS) that indicates what the seller will pay the Buyers agent if they bring a buyer. So the 5-6% commission that sellers paid was split among agents. From a buyer persepective the agent was "free".

The lawsuit de-couples the commission making each party to the transaction pay their own agent. Which makes sense. Buyers agents have a fiduciary duty to represent the best interests of the buyer. To get the buyer a better deal financially (lower price, better terms), identify issues (title, property related), all of these are to the sellers detriment, why would a seller pay for someone to take value from their transaction?

This post is not to intended to discuss the value of a buyers agent, it is intended to discuss why would a seller pay 2.5% of the sales price (now almost $15,000.00 on average in Raleigh), which is tax free in most cases, to someone to make their life tougher? Shouldn't the beneficiary of the buyers agent work pay them? Depends.

Depends? Yes. There are intelligent ways to see the value of your home on the market. We use market velocity to identify hot properties. If you have a hot property pay your listing agent, let the buyer sort out their transaction, no incentive needed.

If you have a listing that may take a little more time and effort, it is a tool. A good listing agent will be able to determine what you should spend YOUR money on, advanced staging? Re-Painting? Buyers Commission? Buyers closing costs?

Now I have seen a lot of listings on the market lately where the seller is offering to pay the buyers agent, have reduced their price and are offering to pay buyers closing costs, while the home shows poorly or the photos are sub-par. My point is, build value in the listing, make sure the home is comparable or better than the competition and evaluate the tools available .

Now this change will happen on the MLS will happen in July-(ish) could happen in the same time frame as the a pre-election rate cut (which will further create a sellers market). It will be interesting, find a listing agent that provides tremendous value at a fair "listing agent rate" and can demonstrate knowledge in the value of adding a "buyer agent rate", or not.

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