National Association of REALTORS® & Buyer Commissions

In the upcoming weeks or months, I’ll likely say more pertaining to the national news revolving around the National Association of REALTORS®.  It’s honestly a little soon to say much because the proposed settlement, has only preliminary approval from the judge. We’re hearing it’ll probably be approved and go into effect in August.

With that said, let me say this. Real Estate commissions have ALWAYS been negotiable. There was not a mandate or requirement by any entity. Not the National Association of REALTORS®, a state association, local board or government Real Estate commission. Yes, it’s been customary for 6% to be the commission when listing a home. When a different REALTOR® brought the buyer to the table, the listing brokerage would in most cases, split that commission with the selling brokerage. Note: a brokerage is the company with whom the REALTOR® is affiliated, and the actual broker can make a decision pertaining to commission negotiations. The listing REALTOR® would input the property details into the Multiple Listing Service (MLS), market it on websites, social media, newspaper, magazines, etc. After all of that, more times than not, that listing REALTOR® wasn’t the one who directly brought the buyer to the table. In some states, dual representation isn’t even authorized, although it is allowed in West Virginia. The listing REALTOR’S® marketing however may have reached the potential buyers, but in many cases, the buyers were already working with their own REALTOR®. Listing REALTORS® always welcome other REALTORS® bringing buyers to the table. Their marketing led to this connection either directly or indirectly.

Now here’s what I haven’t seen reported in the media. When some say, buyers’ REALTORS® shouldn’t receive part of the commission paid by the seller, they’re missing something fundamental. The buyer is the one who funds the overall transaction! Of course, there’s room to get a little creative. Maybe the agreed purchase price can be a little higher to help accommodate the commission, so long as the appraisal requirement is still met. Some buyers might be able to pay their agent directly, but many struggle to come up with their down payment and closing costs!  Buyers still need their own professional advisor and we’ve had a really good system in place to cover that cost. I say again, buyers fund the overall transaction!

Now, some listings actually have lower commissions. For a couple of years or so on cable news, there was a national company advertising 2%! Those commercials alone, should prove the point that commissions were negotiable BUT here’s the thing. If you want a Lexus, you have to pay good money. If you don’t want to pay much, you might get a Pinto or Vega. Ok, that example is a little dated, but I think you get the point.

Seriously though, buyers need quality representation when making one of the biggest financial commitments of their lives and incorporating that cost into the transaction is an excellent system and it keeps the Real Estate industry, which makes up 20% of the US economy, functioning.