WOULD YOU PAY SOMEONE $15,000 TO
HELP YOU BUY A HOUSE?
AS OF AUGUST 17, all REALTORS® must have a written agreement with their
buyer before they show them a home. This is a momentous change. Brokers must
show what they will do for their customers. It lays out what the consumer (buyer) is
expected to do and tells the compensation the broker can expect to receive if their efforts
result in a closing. This is a result of a recent settlement by NAR (National Association
of Realtors®).
If you say you wouldn’t pay that much, consider this. Until now, most real estate
buyer’s agents did not charge for their services to their buyer directly. The agent’s
brokerage received a commission at closing, but it was usually paid by the seller to the
buyer’s agent’s brokerage. The amount of compensation was sometimes unknown by the
buyer until it appeared on the closing statement. The buying agent’s brokerage then paid
the agent a percentage of that compensation as commission. The buyer received the
services of their agent at little direct cost to the buyer.
Let’s look at an example. The average sale price for a single-family home in Whiskey
Creek during the past 12 months was $592,000 (median price was $554,000). The
commission paid by the seller to their real estate brokerage might be five or six percent.
That commission was then typically shared with the buying agent’s brokerage, resulting
in a commission of about $15K for each side. The buyer’s agent got a share of
commission his brokerage earned.
Does an agent for a buyer earn or deserve that much commission? Consider that the
buyer’s agent may have worked for the buyer for months without pay. According to
surveys by the NAR 89% of buyers used the services of an agent or brokerage to buy
their home. Their satisfaction is shown in the fact that 90% of them say they would use
their agent again or recommend them to others. If this sounds like an easy way to make
money, consider this; NAR says that 75% of Realtors fail within the first year of being in
the industry and 87% after five years.
What will the future bring? Time will tell. Will some agents negotiate their
commission lower? Will this weed out part-time agents? Will sellers still be willing to
pay commission to an agent who brings the buyer? Will buyers still seek the help of an
agent if they have to pay for some or all of their fee on top of the price of a home? What
is the value of having a trusted, knowledgeable, caring, and skilled professional assist you
through a major purchase process?
Change is always a certainty. Things will be different. All must work to make things
better. I believe this change will end up being better for the consumer, the agent, and all
of us.
The Multiple Listing Service (MLS) is the most successful and valuable method of
marketing homes. It is owned, supported and trusted by Realtors who cooperate with
each other and operate their businesses according to a century old code of ethics based
on the Golden Rule. That cooperation and trust is invaluable.
The success of America is due in large part to the ownership of land and homes by a large
portion of its citizens. The American dream continues to be home ownership. This
writer is proud to be a real estate agent. As a profession, REALTORS® help make the
American dream possible!
If you have any questions or comments about this article or other real estate issues,
please contact Bob Oxnard at [email protected].
