NAR Settlement - Direct to Listing Agent Lost Power?

Question

Before the settlement and after this settlement, buyers always had the option to approach the listing agent directly with an offer, a power they've held all along. It’s interesting to see how people are reacting like this is a newfound power for buyers.

Fundamentally, nothing in this respect has changed. However, the landscape could shift significantly for unrepresented buyers. The potential 2.5% commission that might have been directed to the buyer's side is now potentially off the table.

This change prompts a critical question for unrepresented buyers: how does this alter your strategic advantage when approaching a sale without an agent? Previously, that 2.5% could have served as a powerful negotiating chip, either to bolster your offer or to pocket as a credit. The pre-settlement era seemingly encouraged buyers to self-represent, lured by the possibility of claiming the buy-side commission for themselves.

Now, with this incentive structure altered, it will be interesting to see how the dynamics and strategies of unrepresented purchasing change in the current market.

Chris Seveney · Answer

@Trevor Richardson

I agree with Russell

You will see a la carte services from agents to write up offers and possibly even charge for showings. It’s going to go away from a commission based model (which to me never really made sense but not complaining about it).

25 years ago when there really wasn’t online listings and you would check the newspaper or call agents for listings times have changed and commissions made sense. Today Buyers will need to be more savvy which they should be making the biggest investment in their life.

They can source online information but realize now when they go shopping they are gonna have to pay for it out of pocket.

This will 100% reduce the number of agents out there which is not a bad thing, and it will be very good for those agents who are good at what they do.

Russell Brazil · Answer

I think there will be a lot of unrepresented buyers approaching me on my listings now. Due to the expected influx, which will be primarily people wasting my time wanting me to write up their weak offers, we will be charging fees to unrepresented buyers for services they want us to perform. Write offer: $695 is the first one. Ive got a fee schedule with about a half dozen services unrepresented buyers might ask for.

Trevor Richardson · Answer

Agreed on reducing agents, I think everyone likes that. I think good buyers agent fees will go up. I don’t think having a buyer,  have the sellers agent whip up an offer for a fee is going to be adopted in mass. The fraud and collusion with that… talk about forcing buyers and sellers into duel rep. I’m assuming you have seen seller agents with multiple offers. Now they will just write up extra buyers offers…. I could see in slow markets where there is time. But yea not adopted in mass. If that was adopted wait for the seller agent collusion lawsuits where the listing agent boosted the buyer’s offer to get a higher price. That’s what you are left with without buyer representation. Just sayin.This post was about listings that don’t have BB commissions losing value for unrepresented buyers because they no longer have that card to play “hey seller I’m unrepresented my offer doesn’t include commissions” won’t be there on those listings. Interesting.I could see fees for like $300 per showing, then that amount is applied to a 2.5% BB fee at closing. Something like that where you are paying a la cart fees that are applied at close under the buyer-broker agreement and commission agreement.

Its going to be fun to figure out this year and next, I’m building basically a subscription based brokerage right now anyways where they sign up for the “plan” that suits them which will require the mandated buyer-broker agreement and commission schedule.

Trevor Richardson · Answer

One of my many questions are. What has been preventing buyers from approaching listing agents like you said? There was no law or anything stopping that so why are buyers now going to write offers themselves? Personally I don’t think decoupling commissions makes it easier for a buyer, I think a side effect could be it makes (some) buyers agents more necessary. I own a brokerage, we do a lot of buyer broker and I’m really excited for these changes. It’s perfect timing for us. If the seller is not offering buyer broker commissions isn't there less incentive for a buyer to write their own offer? They could have gotten paid for that pre-settlement or figured that into their approach. That’s gone if the seller isn't offering commissions to the buy side.