Time to Lower Real Estate Commissions
It has been a while since I’ve written. In that time Tina left the company, and I went on a sabbatical of sorts. I just needed a break from the crazy world that is real estate sales. But I am back! Not only am I back but ready to do what I do best…shake things up a little bit.
Most of my posts involve the legal side of real estate sales. As a broker and attorney, I find it more interesting. Also, there is no-one else writing about it in the Tampa Bay Area and someone has to. So, although I am a lawyer, I am not your lawyer, and everything written is simply my personal opinion and for fun.
I had previously written about the MLS system, realtor compensation, and how class action antitrust suits are underway, suits that will likely change the current real estate sales system. In October the verdict in one of those suits came down, and it came down against the National Association of Realtors and several large real estate brokerages. In a nut shell the jury agreed with the plaintiffs, and that the defendants had conspired to inflate realtor commissions.
The crux of the the matter involved buyer agent compensation, more specifically that the sellers were forced to offer compensation to the buyer agent if they wanted their property listed in the MLS. This mandate came from the National Association of Realtors and MLS policies. Commissions were inflated because if the seller did not offer a “standard” or “customary” commission to the buyer’s agent, realtors would steer their clients away from the property. Thus, commissions were stuck at 5%-6%, with half going to the listing agent and half going to the buyer’s agent.
Regarding steering. It is a practice not tolerated or practiced at KPG, but as a listing agent, I have experienced it. I have watched listings with lower buyer agent compensation sit, while similar priced properties sell quickly. So steering does in fact happen.
Recently, the National Association of Realtors and StellarMLS (the MLS that services our area) changed their policy to allow a property to be listed with 0 compensation to the buyer’s agent. Unfortunately, this still creates an expectation that sellers should compensate the buyer’s agent, which in turn will do little to lower commissions. I believe that there should be a prohibition on sellers paying the buyer’s agent, but KPG is going to work with what we have right now.
As a seller, if you list with KPG, you are free to offer the agent representing the buyer nothing. That is right, you are under no obligation and we do not expect you to pay the buyer’s representative anything. Our fee to sell your property is 2% of the sale price. Regarding what the buyer’s agent is paid by you, you are free to decide that for yourself. And no matter what you decide, KPG will work diligently to sell you property quickly and for the highest possible price.
I have always believed in innovation and leading from the front. When it comes to commissions, that starts now.
Until next time,
Zach