Recent changes in the real estate industry have introduced new ways of doing business for brokers and agents. These changes demand strong leadership, transparency and adaptability to navigate the evolving landscape successfully.
A fundamental change in the new NAR rules requires buyers to have a written agreement with a broker or agent to be able to tour homes. Some agents and brokers interpret this to mean that they must have a Buyer Representation Agreement in place to tour homes, but this is not the case. The NAR Settlement Agreement states, “all MLS participants working with a buyer enter into a written agreement before the buyer tours any listing.” When working with a buyer, a showing or touring agreement will meet the settlement agreement requirements. I know many agents who meet buyer prospects and show a limited number of homes with only a touring agreement in place. Some agents charge a fee for this service; some do not. After meeting the prospects and touring homes, they then set meetings with the buyers where they are presenting their value proposition. A well-thought-out and easy-to-understand Buyer Presentation is a must. After the presentation, the Buyer Representation Agreement is signed, which will state the rights and responsibilities of both the buyer and the agent and set compensation.
Sellers are being presented with the “decoupling” of compensation, where the seller only negotiates the compensation with their listing broker in the listing agreement. Some states and brokerages make this the only option for sellers in their listing agreements. This option allows the seller to negotiate a buyer agent compensation the same way they negotiate all other sales agreement terms “in the contract.” This may ultimately net a seller more funds since they are not held to a specific amount for buyer agent compensation. In this scenario, the seller pays the buyer’s agent directly at closing.
Other states and brokerages are offering the option of “coupling” compensation. In this example, a seller pays their listing broker their compensation, and then the listing broker pays the buyer broker their compensation. A new field, “Seller Concessions Y/N,” has been added in most MLSs, which cannot be tied specifically to buyer agent compensation.
Best practices and skills needed
- Transparent, upfront conversations with consumers about written agreements regarding commission terms and services provided.
- In-depth knowledge of contracts is more important than ever. The saying, “The answer is in the contract,” should guide every real estate professional.
- An agent’s fiduciary duty should be the driving force behind all decisions. Agents can differentiate themselves in an increasingly competitive market by keeping the client’s best interests at the forefront and not holding onto the old standards related to agency and compensation.
- Spend time role-playing with your coaches, mentors and colleagues to ensure you can convey your personal value proposition to prospects and clients.
- Study and become a master negotiator.
- Prospect, prospect, prospect.
It’s time to move past the anxiety of change and get back to building relationships and communicating consistently with our contacts and prospects. Happy selling!
For more information about joining JPAR, visit https://jparready.com/ for agents or https://grow.jpar.com/ for ownership.
