Diablo Gazette April 2024
The Right MOVE --- A little about The Elephant in the room “commission” lawsuit you may have heard about in the news.
In one aspect of the complex lawsuit, sellers and/or buyers felt that sale prices were higher because there was a buyer agent commission included in the MLS. In some states they felt that it was not disclosed, and so folks were unaware of them.
In California we have had the listing agent compensation and buyer agent compensation separated and disclosed in our listing agreements for quite some time. More than likely this will ADD to a formal contract with a buyer and their agent called a Buyer Broker Agreement, formalizing their fiduciary duty to the buyer, exclusivity, and payment for their services, much like the listing contract with the seller and listing agent.
Buyer compensation will be separated, no longer part of the MLS listing. You are going to think this is crazy, but this is not necessarily a bad thing. Is it best for each party in a transaction to have their own representation? There is a reason attorneys will not represent both parties in a negotiation. They cannot possibly aggressively protect opposing interests and it is a conflict of interest to do so. IF one wants the best advice, would you ask someone who has a conflict of interest?
As it has always been ALL COMMISSIONS are negotiable, some feel the sellers will not want to pay a commission to a buyer’s agent; thinking it through, maybe, maybe not. Commission will no longer be allowed to be advertised in the MLS, but it can be in social media, fliers, marketing and agent and broker websites.
IF listing agents and sellers are vying for the largest buyer pool, hoping for multiple offers, will they advertise their buyer agent compensation? You can bet they will. Will it cut down the number of buyers who can purchase if there is no offer of compensation to their agent, as they won’t have the resources to provide down payment, closing costs and buyer agent commissions? Will buyers move on to other properties, where sellers are offering compensation to buyer agents? Will they just drop out and decide not to buy? Buyers can ask the seller to pay compensation, will they be too afraid the seller will say no? Or will they ask their agent to only show them properties where there is an offer of compensation to their buyer agent?
No one knows how it will all play out, with buyers struggling to come up with down payments and closing costs, it might be more of an issue than the litigators even realized. Sellers, it is STILL your decision whether and how much to offer compensation to a buyer’s agent and how it will impact the marketing of your property and whether buyers will make an offer. It will all play out, and we’ll have more formal representation for all parties of the transaction. That’s a good thing to build upon.
