To Pay, or Not to Pay. That Is the Question.

By now, many of you know (or have heard) that a class action lawsuit has changed the way real estate works, and it has something to do with commissions.

True and True

It also has fundamentally changed the way Buyers Agents get paid

Now, we’ve had Buyer Agency for some time here in SC, but in practice there were plenty of buyer’s agents that sometimes showed homes without an Agency Agreement in place. That is now officially prohibited.

In SC, as of August 17th, no agent can unlock a door even for their Mother without a signed Buyers Agency Agreement in place….true story!

Until recently, some buyers agents were willing to work “without a net”, simply because the seller, agreed what to pay the buyer’s agent when listing their property for sale. The amount being offered, which varied, was posted on the MLS and every buyer agent knew what he or she would earn if his customer purchased that particular house. Simply stated, the seller paid both sides, and the amount was determined in advance.

Guess what? Nation wide Class action lawsuit. MLS lost, and that practice is over, at least as far as advertising it on MLS is concerned. The intent, as described, is to decouple the buyer and seller commission.

According to the settlement, MLS can NEVER post anything about commissions again…PERIOD. Buyers agents can no longer depend on knowing what the seller is offering toward their commission based on a notice in the MLS. They must instead explain to their potential buyers that the buyer would be responsible for any part of their commission which is not paid by the seller.

Are some sellers still offering to pay buyers agents ahead of time, when listing the home for sale? Yes, but should they?

I’m advising my sellers against doing that, and here’s why.

Commissions are negotiable. So, as a seller, why would you offer to pay a buyer’s agent a set amount, when you haven’t even seen an offer yet? In other words, why give up your power to negotiate one of your biggest closing costs?

I’m not saying you couldn’t consider chipping in if the offer is strong. What I am saying is it makes no sense to commit to a percentage or amount in advance. This is exactly what negotiation is all about, and not being clear that commissions were negotiable is what got this Industry in hot water in the first place.

Does that make sense?

As a listing agent, I work exclusively for my seller client. My goal is always to help them get the most money NET at the closing table. This can be partly accomplished by the seller paying only a part, or maybe even none of the Buyer Agents commission.

Now you might say, “hey that means the buyer might have to pay his own agent”….Exactly! I mean, that was clearly stated in the Agency Agreement the buyer and agent signed, so there should be no surprise about that.

No matter what, sellers always have the option to pay some or all of the buyers agent commission in order to get a deal done at any time during a negotiation.

I know this seems complicated, and it is! A good listing agent will be able to explain the pros and cons of each method and guide you to the right decision for you. If he or she can’t, then you Better Call Sal

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