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Look who’s freaking out now!

I saw a lot of realtors get very worked up this week. Almost on the verge of panicked. Not because of interest rates hitting 8%. Not because of the inventory crisis or even the affordability crisis. What spurred the outrage was the case against the National Association of Realtors regarding all of your commissions. The case prompted NAR to allow listing brokers to offer buyer brokers ZERO dollars in compensation when listing a home in the MLS. Now this video is going to get spicy, but before you slam your laptop screen shut – hear this:

The realtors I work with are good realtors. They are not who I’m talking about. They are the ones who have a solid value proposition – they act in the best interests of their clients and continue to invest in themselves and their skills to make sure they earn every dollar of that commission. They are the best of the best but if I could speak freely, I do not believe they are the majority. There are a lot of realtors out there whose commission breath could not have been stronger this week, the desperation in their voice was not hard to recognize. They couldn’t be less concerned about how these changes could negatively impact buyers, who are already discouraged.

Let’s look at the facts.

The trial for the lawsuit just began this week in Kansas City, Missouri and will be followed by another lawsuit in a different area. NAR is not actually the main defendant in either case. Keller Williams, RE/MAX and HomeServices of America are. It is a lawsuit filed on the grounds that the Participation rule, which states realtors must offer or accept compensation to and from other licensed realtors, forces sellers to pay both agents. That requirement of sellers violates the Sherman Antitrust Act. The current commission structure has of course been in place for a very long time – as in over 100 years. NAR argues that it helps consumers, both buyers and sellers.

But then, in a not so good look on the eve of this trial beginning, NAR announced they were changing the participation rule. They are allowing the buyers’ agent’s commission to be any amount, including ZERO. The Real Estate Board of New York then said they will prohibit listing brokers from paying the buyer’s agent. These moves have been interpreted as admissions of guilt. Because if the participation rule was designed to truly protect a free marketplace and MLS’s are not inherently designed to steer buyers away from listings that are not offering the best compensation to their agent….then why would changes need to be made?

It remains to be seen what the jury will decide but the disruption to our industry has already begun and could dramatically shift some power dynamics.

How might this play out?

NAR has a lot of money and a big presence in Congress and elsewhere. They claim to be very confident this lawsuit will end in their favor. Yet they’ve already made changes in response. The commission rule change may not be as impactful as the reaction to it was. Up until the change, the compensation to a buyer’s agent could be as little as one penny. Now it can be zero. The Northwest MLS in Seattle put this into effect four years ago and 99% of listings still offer buyers’ agents compensation. So maybe we won’t see any noticeable difference. Listing agents may continue to explain to their sellers that compensating a buyer’s agent is in their best interest to ensure buyers’ agents are motivated to bring their clients to this listing.


Buyers’ agents will buckle down on getting buyer broker agreements signed and those buyer broker agreements will state that commission will be paid one way or another. If buyers are forced to pay their agents directly, I’m not sure how that plays out but I can tell you this – buyers are already pretty squeezed by interest rates and prices and funds to close. Of course they were always the one paying for everything because the sum of their down payment and financing was what made up the seller proceeds which were used to pay both agents. So when you look at it like that, it’s always been the buyer who actually pays the agents. But, can you look at it like that? Because it wasn’t a hard expense to the buyer, it was a hard expense to the seller and impacted their net proceeds of the sale.

It is worth noting that other developed countries have very different commission models. The buyers’ agent commissions are more like 1-2%. Does our higher commission structure inflate the cost of housing?

Will this change bring down home prices? Will it push buyers to let the listing agent represent them too? Would that be good for them?

What should you do?

From time to time I will see an agent get on their pedestal and say, hey darling consumer, listen up because I’m deeply invested in what’s best for you. I want you to shop around until you bleed for the best interest rate because it’s truly negotiable.

*But don’t use an online bank because they are annoying for me, your agent, and no one will accept our offers.* Even though online banks will most definitely have the best interest rate – yes, you heard that here even from me. The only risk to using a shitty loan officer without any market knowledge is getting bad advice, getting placed in the wrong mortgage product (at least it’s only 30 years right), getting hit within hidden fees at closing or down the line, missing deadlines in your contract and risking your earnest money deposit and being beyond stressed out by the lack of clarity for months. But again, this is coming from your realtor who just wants you to know that you should shop around. Nevermind that the commissions paid to them are the largest line item on the whole settlement statement, they want you to focus on saving $13 a month by calling every lender and sharing your personal financial information across as many platforms as it takes to ensure identify theft and waste enough time and energy that you kind of start to hate mankind in general. But again, it is their duty to share you that interest rates are negotiable. Well as we found out this week, as it turns out, so are realtor commissions. So before you sign a buyer broker agreement, you want to make sure this is in fact the best realtor to represent you. Here are some important questions to ask:

  1. What training have you done in regard to negotiating?

  2. What type of outside information do you seek regarding the economy and the housing market? Where does your data come from?

  3. How will your network help me get into the right home quicker?

  4. If your commission comes up in negotiations, how will you be sure to offer me transparency while continuing to act in my best interest?

  5. What are the different possible ways your commission will be paid?


Why should I work with you over your competition?


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