A Team Florida Realtors Cindy Abraham Keller Williams. Starting on August 17, 2024, cooperative compensation (buyer agent commissions) will no longer be listed in the MLS. Sellers will have three options: 1) continue to offer compensation to the buyer’s agent, 2) entertain an offer that includes buyer agent compensation, or 3) refuse to offer any compensation. This will require buyers to be more proactive in understanding their agent’s compensation and potentially including it in their offer.

This is a good thing. I may have mentioned in previous articles that one very negative aspect of today’s market, is that suddenly we are being hit with an oddly high number of cancelled showings – or worse, no-shows. Some buyer agents would tell us that their “buyer” isn’t answering their calls!

Finally, Brian started asking the agents where they are finding their buyers. The answer was that they were buying buyer leads from Internet websites. Turns out that when people were perusing these websites to look at properties, their contact info was captured and sold to agents desperate for business. What really blew my mind was that oftentimes when the agent requested the showing, they had not even met the “buyers”! So essentially, they were showing a complete stranger multiple properties without knowing if they can even afford them.

We are even leery of “direct buyers”. These are folks who call us directly on our listings. I can tell you that historically, we ended up working with less than 10% of these people. Why would a qualified buyer not have their own agent to represent their interests? That made no sense unless you knew, like we did that they probably were not qualified and were hoping that the list agent would be blinded by $$$, and do what they could to make it work, thinking they would get both sides of the commission. Ugh.

I believe the new law regarding commissions will actually benefit the industry. Buyer agents now must have a consultation with buyers to qualify them before showing properties. This is to avoid wasted time and no-shows from unqualified buyers. Agents who don’t follow this rule risk violating ethics standards and not getting paid. Their buyers will be required to sign a Buyer Broker Agreement. In this agreement, commissions will be addressed. 

By no longer posting buyer commissions in the MLS, this will also eliminate the agents who screen out commissions lower than 3% which is a HUGE ethics violation. I am not going to say that we were thrilled when we are showing buyers properties with reduced commissions but that was not a consideration if the property fit our buyer’s needs and budgets. That is called integrity. (Plus, I believe in Karma…). 

HOWEVER, don’t be surprised if the BUYERS screen out properties where the seller is not contributing to the commission. This is NOT illegal or unethical.

So, for sellers, they have a choice. Commissions will become just another strategy. In the past, the seller paid the entire commission to their selling agent who split it with the buyer agent. Going forward, the seller will still pay their listing agent a commission, but it will be up to them if they want to offer anything to the buyer agent. The selling agent will receive a copy of the Buyer Broker Agreement WITH the offer. Here is where it gets interesting:

Suppose the buyer agent has a Buyer Broker agreement with their buyer for a portion or all of the standard 3% commission. Example: If the seller offers let’s say 2% to the buyer agent, and buyer agent also have a buyer broker agreement that says the buyer will pay the agent 2%, that agreement must be sent to the seller at the time of the offer. At that time, the seller has the option of changing the commission to the buyer agent by adding a clause in the offer reducing their contribution to 1%. 

Having to include the Buyer Broker agreement with the offer will also justify any mention of commission in the offer. In the case of the above, the offer may say, “Seller will contribute 1% toward buyer agent’s commission.” Buyer Broker agreements could also say: “Buyer will pay buyer agent the difference between what the seller is offering up to 3%.”  I am hoping that this will create a paradigm where successful, experienced buyer agents are the norm. If ever there was an industry in desperate need to “thin the herd”, it is real estate. Going forward, the buyer or seller with the worst agent will have a lot to lose.

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