What Sellers Should Know About Changes To Real Estate Transaction Process
This article was written by Piper Hansen and originally appeared in Louisville Business First on August 21, 2024.
Most of this summer’s changes to real estate transactions are falling to buyers and agents. But there’s another side of the table missing from most of the discussion.
A Louisville real estate agent said sellers often see the value in the work of a Realtor more than buyers and in all of the changes is just another opportunity for negotiation.
“At the end of the day, if your ultimate goal … is to achieve your terms — highest price, whatever your timing is, if you want a faster or slower closing, if you want assurances, financing — you are by far going to have your best shot of achieving all those things … by properly compensating and motivating buyer’s brokers who are more likely going to be bringing the best buyers to the table, the most qualified buyers, the most sophisticated buyers,” said Jordan King.
Due to class-action lawsuits over the industry’s commissions, the National Association of Realtors and several brokerages have made big ticket settlements. Those settlements — that total more than $943 million — require the following:
- Buyers will need to sign agreements with agents before tours or purchase that specify their agent’s commission and other negotiated fees;
- Sellers can offer compensation to a buyer’s agent; and
- Multiple listing services can no longer display what level of compensation a seller’s agent is offering.
Previous Louisville Business First coverage of the settlement has quoted a number of Louisville Realtors and leadership from Kentucky Realtors. All of those professionals seemed positive about changes they had long wanted to see made anyway. The commission modifications initiate more negotiations of an agent’s payout and clarify the process for everyone involved, which is a welcome adaptation they’re making, some professionals have previously said.
King, who is a residential specialist with Louisville-based Pluris Real Estate, said she expects sellers will work to save in fees by offering less commission, but that’s a mistake.
“I think that it continues to be of the utmost importance to offer compensation to buyer’s brokers that motivate them to bring their clients to the table,” King said.
King called the new process for buyer-broker agreements “a mirror process” that’s similar to the kind of paperwork sellers already sign.
“I think it’s a really great opportunity to go have that conversation with your buyer, which you might not have otherwise,” King said. “… I honestly think that throughout this process, one of the effects that is maybe unexpected is that I think buyers are maybe going to realize that agents might even be worth more than the standard percentage.”
King said there aren’t many service industries where the fees have been talked about and dissected like they have been in real estate, even before the NAR ruling. Other commission-based pay scales in insurance, advertising and sales are set or considered non-negotiable.
“I think the community thing is a big deal,” King said. “We want to help you help yourself. People don’t know what they need. … You can go trade stocks on Gorilla if you want, but if you feel like you want to put your money in the hands of an expert who does this all day every day for a job, there’s a fee associated with that. And then it’s just a question of, is it worth it to you or not? And I think nine times out of 10, you’re going to find that the answer is yes.”