This was a good episode. I continue to believe that the buyers agents who are against the new practice are worried about defending what they’re charging their clients in an offer situation. The only advice I can give them is make sure you are really worth what you were charging and be prepared to defend what you’re charging if push comes to shove. You may have to take a small haircut to get a deal closed. Just like officers have been operating for the past 15 years.
This is a great conversation. I hope the big box, old school brokerages catch onto this. It may be the only way to short circuit more commission lawsuits in the future.
Well done Chris. We've been doing the same since the first of the year (2024) on all listings. Only one seller after 30 DOM wanted to add a fixed comp as another agent from a very large big box company was chirping in their ear. I'm not really confident the majority will adapt to the likely hood of a DOJ sanction being added soon whereby no possible steering discussions at the time of the listing.
Such a great episode and my favorite sale was the last one where the sale price was lowered to cover the buyer broker compensation. Buyer paid his agent's commission and now has a lower property tax bill, too. The negotiation skills now required are pretty exciting to me as an agent. Scary, but exciting.
The agents who "freak out" or have problem with this completely lack confidence and knowledge. There's nothing wrong with the "new rules" or the "new way." I had almost literally prayed for the day this all starts because it is effectively removing the "bad agents" and the "part-timers" from the industry. The beauty behind this beast is that some greedy, dirty attorneys changed the real estate world out of their own greed, but that change resulted in how real estate should have been done in the first place. Now we talk about Clear Cooperation and how ABSOLUTELY CRITICAL it ABSOLUTELY IS.
Here's the analogy I've been using to explain this. To a room of Realtors: How many of you have not known that you needed a carpet allowance until you walk into the house and smell cat? A good chunk of the room usually raises their hand. I make a joke about not being able to smell the MLS..... yet. Then I say, at that point you know that your buyer doesn't want to move into a house that smells like cat. You don't know what the seller is willing to do about that. So when you submit the offer, you ask for the carpet allowance based on that knowledge. IT'S THE SAME THING. It's just another term to negotiate. IF you can have a conversation and glean some information to write a better offer when you know your buyer wants to write one, great! You're doing your job then. But calling to ask before you even show the home or know how serious your buyer is going to be is a waste of everyone's time and can potentially be seen as steering.
As a buyer, it makes more sense for me to shop around agents and different options for getting the help I need, as the buyer agent charge will affect the bottom line for buyer and seller.
You can try that depending on how hot the market is where you are shopping. If you're not looking for anything specific, this could work. If you are looking for a specific type of property or a specific location, you would benefit from a buyer broker who knows the area and will get a heads up before properties even come on the market.
It's easy enough to talk to sellers about this, so not sure I found this podcast helpful. What I really want to hear is someone who routinely talks to BUYERS about how buyers are going to have to come up with 2.5%-3% to pay the compensation when a seller refuses to pay. I want to understand how those conversations go and what is working and not working. In many of the examples Chris mentioned in the podcast, the agents who asked for compensation in their buyers' offers lost out to those not asking for any. In the deals where sellers did pay buyer brokers, it sounds like the compensation was negotiated down by quite a bit. So how are buyers' agents crafting their conversations with buyers to pay the difference?
Hi Yvonne. Thanks for your comment. Allow me to clarify some of the comments I made about the compensation paid out by sellers to buyer agents. We sort of sped through that section so I can understand why some might come away confused. There was only one instance (out of the six) in which a seller did not pay any buyer agent compensation at all. In that circumstance two offers received (out of 13) did not have a request from the buyer to pay buyer agent compensation. One of those two offers was also the highest priced offer, by quite a bit ($50,000 over the next closest offer). Had both of those offers not been competitive on price, meaning the net to the seller was not as high as the offers that had buyer agent compensation included, then the seller would have paid compensation to the buyer agent. In two out of the six scenarios the sellers did indeed negotiate down the requested amount. One was a 2.5% request negotiated down to 2% and the other was a 3% request negotiated down to 2%. I don’t find that to be an unusual amount of compensation for a buyer’s agent at least not in Southern California where I work. In the other three out of the six transactions the sellers paid the amount that was requested in the original offer, there was no negotiation of buyer agent compensation. The zero compensation scenario was in only one out of the six transactions and I don’t see it happening as frequently as some may think that it will and even if it does, those offers will still have to be high enough in price to net the seller the most money. This is assuming a multiple offer situation. I think in a single offer situation there is even more likelihood that a seller will pay buyer agent compensation if the buyer does not budge on that request during a counter offer situation. Also, if a seller does not want to budge then the buyer can always increase their offer price to account for their agent’s compensation. I think James’ point about a seller’s general desire to sell their home is a talking point you can use with buyers when it comes to having the compensation conversation. If buyers don’t back down if and when sellers refuse to pay compensation (something I really don’t see happening, I just don’t see sellers refusing outright to pay) then sellers will come to understand that they will need to continue to pay their buyers’ agent if they want to sell their house. And like I said above, a buyer can always increase their price to cover their agent’s compensation which when penciled out really does not change their bottom line by much as most of that additional amount will get wrapped into their mortgage. I don’t see many scenarios that will find buyers having to write a separate check to pay their agents. I would like to add to what I said at the end of the video when Keith asked me what my main take away is. I said we should not be afraid of the changes which frankly is not a very helpful comment. I would like to add to that by saying learn to be creative. There will always be ways to minimize the impact for buyers of having to ensure their agent is compensated without having to feel like they will have to pay us directly and I think being able to express those options when you’re interviewing to be their agent will make you stand out among your competition. Thanks again for your comment.
Hi Dixie. Yes, I did say that. I offer a service similar to what I believe both Compass and Redfin call Concierge service in which they fund upfront prep work and staging for their clients and get reimbursed at the close of escrow from the sellers’ proceeds. (I think I heard recently that Compass was discontinuing that in some or all markets but that may have just been rumor, perhaps someone can confirm that.)
Bottom line: listing broker who has every agent leave his office tried something risky for his clients and it didn’t backfire because the market was white hot. He risked his sellers property getting stale on the market, which all data has shown that days on market beyond average nets the seller less, compared to getting offers in and accepted quickly. Now he thinks he’s a soothsayer and trailblazer due to confirmation bias.
This was a good episode. I continue to believe that the buyers agents who are against the new practice are worried about defending what they’re charging their clients in an offer situation. The only advice I can give them is make sure you are really worth what you were charging and be prepared to defend what you’re charging if push comes to shove. You may have to take a small haircut to get a deal closed. Just like officers have been operating for the past 15 years.
This is a great conversation. I hope the big box, old school brokerages catch onto this. It may be the only way to short circuit more commission lawsuits in the future.
Well done Chris. We've been doing the same since the first of the year (2024) on all listings. Only one seller after 30 DOM wanted to add a fixed comp as another agent from a very large big box company was chirping in their ear. I'm not really confident the majority will adapt to the likely hood of a DOJ sanction being added soon whereby no possible steering discussions at the time of the listing.
I really loved your guest Chris Gragnotti.
He was so informative & charming. He is an excellent realtor.
Such a great episode and my favorite sale was the last one where the sale price was lowered to cover the buyer broker compensation. Buyer paid his agent's commission and now has a lower property tax bill, too. The negotiation skills now required are pretty exciting to me as an agent. Scary, but exciting.
Chris is an Excellent choice of guest, super refreshing to hear from a small, agile, Indie broker dedicated to his fiduciary duty. Wicked savvy guy.
Loved every minute of this podcast!
Excellent!
The agents who "freak out" or have problem with this completely lack confidence and knowledge. There's nothing wrong with the "new rules" or the "new way." I had almost literally prayed for the day this all starts because it is effectively removing the "bad agents" and the "part-timers" from the industry. The beauty behind this beast is that some greedy, dirty attorneys changed the real estate world out of their own greed, but that change resulted in how real estate should have been done in the first place.
Now we talk about Clear Cooperation and how ABSOLUTELY CRITICAL it ABSOLUTELY IS.
Perfecto. Agreed. Glad I'm part of this mindset! :)
Here's the analogy I've been using to explain this.
To a room of Realtors: How many of you have not known that you needed a carpet allowance until you walk into the house and smell cat?
A good chunk of the room usually raises their hand.
I make a joke about not being able to smell the MLS..... yet.
Then I say, at that point you know that your buyer doesn't want to move into a house that smells like cat. You don't know what the seller is willing to do about that. So when you submit the offer, you ask for the carpet allowance based on that knowledge.
IT'S THE SAME THING. It's just another term to negotiate. IF you can have a conversation and glean some information to write a better offer when you know your buyer wants to write one, great! You're doing your job then. But calling to ask before you even show the home or know how serious your buyer is going to be is a waste of everyone's time and can potentially be seen as steering.
As a buyer, it makes more sense for me to shop around agents and different options for getting the help I need, as the buyer agent charge will affect the bottom line for buyer and seller.
You can try that depending on how hot the market is where you are shopping. If you're not looking for anything specific, this could work. If you are looking for a specific type of property or a specific location, you would benefit from a buyer broker who knows the area and will get a heads up before properties even come on the market.
@@mommom3172 I'm thinking more of when I find a house myself that I want to look at.
It's easy enough to talk to sellers about this, so not sure I found this podcast helpful. What I really want to hear is someone who routinely talks to BUYERS about how buyers are going to have to come up with 2.5%-3% to pay the compensation when a seller refuses to pay. I want to understand how those conversations go and what is working and not working. In many of the examples Chris mentioned in the podcast, the agents who asked for compensation in their buyers' offers lost out to those not asking for any. In the deals where sellers did pay buyer brokers, it sounds like the compensation was negotiated down by quite a bit. So how are buyers' agents crafting their conversations with buyers to pay the difference?
Hi Yvonne. Thanks for your comment. Allow me to clarify some of the comments I made about the compensation paid out by sellers to buyer agents. We sort of sped through that section so I can understand why some might come away confused.
There was only one instance (out of the six) in which a seller did not pay any buyer agent compensation at all. In that circumstance two offers received (out of 13) did not have a request from the buyer to pay buyer agent compensation. One of those two offers was also the highest priced offer, by quite a bit ($50,000 over the next closest offer). Had both of those offers not been competitive on price, meaning the net to the seller was not as high as the offers that had buyer agent compensation included, then the seller would have paid compensation to the buyer agent.
In two out of the six scenarios the sellers did indeed negotiate down the requested amount. One was a 2.5% request negotiated down to 2% and the other was a 3% request negotiated down to 2%. I don’t find that to be an unusual amount of compensation for a buyer’s agent at least not in Southern California where I work.
In the other three out of the six transactions the sellers paid the amount that was requested in the original offer, there was no negotiation of buyer agent compensation.
The zero compensation scenario was in only one out of the six transactions and I don’t see it happening as frequently as some may think that it will and even if it does, those offers will still have to be high enough in price to net the seller the most money. This is assuming a multiple offer situation.
I think in a single offer situation there is even more likelihood that a seller will pay buyer agent compensation if the buyer does not budge on that request during a counter offer situation. Also, if a seller does not want to budge then the buyer can always increase their offer price to account for their agent’s compensation.
I think James’ point about a seller’s general desire to sell their home is a talking point you can use with buyers when it comes to having the compensation conversation. If buyers don’t back down if and when sellers refuse to pay compensation (something I really don’t see happening, I just don’t see sellers refusing outright to pay) then sellers will come to understand that they will need to continue to pay their buyers’ agent if they want to sell their house.
And like I said above, a buyer can always increase their price to cover their agent’s compensation which when penciled out really does not change their bottom line by much as most of that additional amount will get wrapped into their mortgage. I don’t see many scenarios that will find buyers having to write a separate check to pay their agents.
I would like to add to what I said at the end of the video when Keith asked me what my main take away is. I said we should not be afraid of the changes which frankly is not a very helpful comment. I would like to add to that by saying learn to be creative. There will always be ways to minimize the impact for buyers of having to ensure their agent is compensated without having to feel like they will have to pay us directly and I think being able to express those options when you’re interviewing to be their agent will make you stand out among your competition.
Thanks again for your comment.
Did I hear him say that he put up to $50,000-$125,000 of his own money before a house hit the market?
Hi Dixie. Yes, I did say that. I offer a service similar to what I believe both Compass and Redfin call Concierge service in which they fund upfront prep work and staging for their clients and get reimbursed at the close of escrow from the sellers’ proceeds.
(I think I heard recently that Compass was discontinuing that in some or all markets but that may have just been rumor, perhaps someone can confirm that.)
Bottom line: listing broker who has every agent leave his office tried something risky for his clients and it didn’t backfire because the market was white hot.
He risked his sellers property getting stale on the market, which all data has shown that days on market beyond average nets the seller less, compared to getting offers in and accepted quickly.
Now he thinks he’s a soothsayer and trailblazer due to confirmation bias.