How we deal with commission negotiations in light of the NAR changes.

 

There’s a lot of confusion among agents about how to handle commissions with sellers in this market. Many agents want to disclose what commission their sellers have agreed to. This confusion extends to how to discuss commissions with buyer’s agents. Our brokerage taught us that it’s okay to share commission information if your seller wants you to. In the event that your seller doesn’t want you to share that information, we simply tell the buyer's agents that we are offering a commission. 

Nevertheless, the final commission amount will depend on the offer and negotiations. But there are considerations. For example, my seller is willing to offer any commission as long as they get their desired net proceeds from the sale and receive the amount that they want. If that condition is met, my sellers are willing to pay a 3% commission.

But what if the buyer’s agent isn’t very experienced or has negotiated a lower commission for themselves, say 1%? Is it in my seller’s best interest to insist on a 3% commission even if they’re willing to do it? Is it really beneficial to set that expectation if the buyer’s agent might only ask for 1%, 1.5%, or 2% commission? I’m inclined to think not. 

"The buyer’s agent needs to specify the amount of commission they want in the contract. " 

What we are doing now is asking our sellers if they want to negotiate the 3% commission that they’re willing to offer. However, if the seller explicitly states that they want us to tell all buyer’s agents that they are offering a 3% commission, then that’s what we are going to do. It’s really up to the seller what they want us to say, which is how it should always have been.

If the seller is paying commission for the buyer’s agent, the buyer’s agent needs to specify the amount of commission they want in the contract, which we weren’t able to do before. There might be other arrangements, like the buyer paying their agent directly. We can use the Seller Compensation form when submitting an offer to accommodate any arrangements.

I can talk more about this topic in detail in my next post to clear up any confusion. Buyers, sellers, and agents need to be patient and understanding of this new arrangement. If you have any questions, feel free to contact me at (928) 606-6749 or Kelly.Broaddus@EXPRealty.com. I’d be happy to talk with you.