In less than two weeks, offers of compensation for buyers’ brokers will no longer be permitted on any MLS in the U.S, per the terms of the National Association of Realtors’ (NAR) nationwide commission lawsuit settlement agreement.
While brokers across the country agree that they and their agents will no longer be advertising an offer of buyer broker compensation for any listing on the MLS, that is where the similarities end, as it seems each broker is taking a slightly different tack.
eXp Realty recently released forms that make it clear it is firmly up to the seller to decide whether or not they will offer buyer broker compensation. eXp listing agents are not splitting their fees with buyer brokers and agents are allowed to follow their seller’s marketing wishes as long as they are complying with the rules of their local MLS.
“The seller can absolutely instruct an agent to share what their concessions or offer of buyer broker compensation is, and we are telling them that they are completely allowed to do that, as long as they are following their local MLS rules, as some MLSs are saying off-MLS is perfectly OK,” said Leo Pareja, the CEO of eXp Realty.
“But this is day by day, so agents need to pay attention, but as a good rule of thumb is to never do it on the MLS and make sure you are following your local MLS rules.”
Steve Capezza said his firm, white-labeled brokerage Side, is taking a similar approach.
“There is nuance on a per-state basis,” the president of Side said. “At Side, we’ve invested millions into our brokerage platform, including in the quality of managers that run each market we are in. And many of them are part of the local associations and have a deep understanding of the rules and best practices being established in their market, and we really lean on them to find out what is best for our agents and clients in those markets.
“There is no sort of national mandate or national thing we are doing; it is really just market by market, and we lean on our managing brokers to guide things.”
Another national firm taking a similar route to Side is The Real Brokerage. Like eXp Realty, the firm’s leadership is advocating within their firm for a complete decoupling of sell-side and buy-side commissions, leaving sellers firmly in charge of whether or not they want to offer buyer broker compensation. In the spirit of this arrangement, Real President Sharran Srivatsaa said the firm is leaving it up to sellers as to how and if they advertise offers of buyer broker compensation.
“It needs to be seller directed,” Srivatsaa said of offers of buyer broker compensation. “All we are saying is that it actually puts a seller at a disadvantage if offers of compensation are actually advertised because it gives away the seller’s overall position, but if a seller wants the offer advertised, we are telling people they are free to do so as long as they comply with the settlement and local MLS rules.”
But Srivatsaa said one thing is for certain — the firm will not tolerate agents trying to sneak offers of buyer broker compensation into listings on the MLS.
“There will be no offers of compensation on the MLS either directly, indirectly, or hinting or shoving it in a random field — nothing whatsoever because that goes against the spirit of this entire settlement agreement,” Srivatsaa said.
NextHome CEO James Dwiggins makes a similar argument as Srivatsaa about advertising offers of compensation.
“If you’re in any other market than a strong buyer’s market, what would be the reason to put all your cards on the table and say, ‘We are going to provide cooperative compensation?’” Dwiggins said. “The way this needs to work in a true consumer-centric model is that there shouldn’t be any advertising of commissions or even concessions in advance of an offer, unless there is a really good reason to incentivize a buyer. You just have to say that your seller is willing to entertain any and all requests that are included in an offer.”
While Dwiggins is advocating for his agents to not share offers of buyer broker compensation with buyers ahead of an offer being submitted, Anthony Lamacchia, the broker-owner of Lamacchia Realty, has created a team within his firm to help listing agents handle the influx of inquiries he expects from buyer’s agents asking about the potential for compensation on a given listing.
“We have set up round-the-clock assistance for our agents, so when buyers’ agents inquire about what the commission is, they can inquire at a certain email address, and we have people around the clock that will respond and answer the agents’ questions,” Lamacchia said.
He also noted that like eXp Realty, his firm will not be engaging in cooperative compensation, allowing sellers to be in complete control of how much they offer in buyer broker compensation.
On the West Coast, this type of system is exactly what Gretchen Pearson, the broker-owner of Berkshire Hathaway Drysdale Properties, does not want to see.
“What we feel is the most egregious thing … is if you have an agent call me as the listing broker or agent and ask what the seller is offering, we believe that is even worse than what we had before, because that really creates a secret society and we believe that is far from the settlement,” Pearson said.
“There are some people today who are supporting that sharing of compensation offers via phone or email, and they are arguing that they want to find out if pursuing the listing is worth their clients’ time.”
Instead, what Pearson is instructing her agents to do is “what they’ve been doing for the past 30-plus years.”
“Just like today, when an agent calls and their buyer is qualified for $835,000, but the listing is priced at $850,000, they don’t use numbers, but they tell us that they are going to submit an offer that is a little bit below. And we typically tell them, ‘Write it up and submit.’ This allows our sellers to see all the offers and make a decision based on what works best for them,” Pearson said.
“We never tell them no or that they are wasting the seller’s time — 99.9% of the time, we always say we’ll see what our seller thinks about the offer. And sometimes it works out for the buyer and sometimes it doesn’t.”
With so many firms taking such different approaches to this issue, it is clear that as of early August, there is still no gold standard for sharing offers of buyer broker compensation outside of the MLS.
“I think the friction is going to happen because the entire industry won’t be aligned,” Srivatsaa said. “The hardest part of this is going to be getting all the players on the same page.”
