While this has to do with some recent decisions by the Greater Antelope Valley Association of Realtors(GAVAR) it seems to also in one form or another affect the other associations I deal with and maybe in your area as well.
Recently GAVAR, as well as the Victorville Association both made announcements that offering compensation based on the net sales price, "selling price minus concessions to the buyer from the seller", was a violation of the local MLS guidelines. Commissions listed on the MLS must be either (1) a percentage of the gross selling price or (2) a definite dollar amount. Or a combination. The argument for this was that.. "The purpose of this rule is to allow cooperating brokers to determine their compensation with reasonable certainty before finding a ready, willing, and able purchaser for the listed property. ......"
Ok so now let me get this straight a Broker/Agent with a buyer as a client is not smart enough to figure out that the commission that they will receive at the close of escrow is the sales price minus concessions such as seller paid closing costs times (place commission amount here)? Is that really the justification for this attempt to serve ourselves rather than our clients?
What about the fact that the sales price listed in the MLS often does not equal the actual price at the close of escrow? Is someone going to tell me that the buyer's agent really expects to be paid a commission based on the listing price and not the selling price? Come on. When are we going to get real here and start getting ahead of things instead of trying to control the market and only adapt when we absolutely positively have to.
Ok so some of you are saying "What the heck does this have to do with customer service? The MLS is for offering compensation and protecting our industry." Too true but what about when it gets in the way or even harms your ability to honestly represent your client.
Well if your client wants to offer 3% of the net sales price to the buyer's agent why would your local MLS not want you to share that with Realtors in your area? Now Joe Six-Pack may not pay attention to this detail but trust me the money men and women on Wall Street absolutely do. This group of clients is uber-focused on the bottom-line, as they should be. So that being the case they have no intention of paying a commission on money that does not come into their coffers.
Here is an example:
Bank XYZ has a property that they have acquired thru foreclosure. They want it sold and they want it sold NOW. These folks are smart enough to know that the best way to get this done quickly and for the best sales price is to hire a knowledgeable local Realtor to represent them and to offer a reasonable compensation for having that service provided. However, they also are not in the habit of just giving money away to anyone without receiving something of value in return. So far this is hardly an unreasonable expectation. So they list the home with the friendly, neighborhood, superstar Realtor. And they agree that selling this home quickly has a lot of value to them. So much so that the asset manager for Bank XYZ says: " We will pay you MR. Realtor 3% of the sales price and we will pay the Realtor representing the buyer another 3% as well. However we are only going to pay for the actual net sales price. If the buyer needs 10,000 in closing costs we are not going to pay a commission on that amount. We will co-operate with this buyer because we need the home sold but we are not going to pay $600.00 in commissions on money we never see."
$600 $600 what do you mean $600 Russ? Well at 3%/3% on $10,000 we are talking about $600. And Bank XYZ does not have just one home that has come back to them as a foreclosure they have dozens. So your darn tooten they are not going to pay $600 commission on money that literally did not go on their balance sheet as income/revenue. And why should they. Take that same $600 multiplied by all the bank-owned properties in your area and see how fast that adds up.
But they want and expect you, Mrs. Realtor to encourage an offer on this and all of their Properties and part of that is to place the home on the local MLS. And they want the home showing ALL of the relevant information including what the commission that they are willing to pay to the buyer's agent is. Completely, openly, with-out any ifs, ands, or buts.
So again my question is: "How does this serve my clients?"
If you have other opinions and/or possible solutions to this I would love to here from you.