As the mist clears!

There are mornings like this one, where the mist or fog is so heavy you can hardly see in front of your nose as we say in England. It has felt that way with the multiple lawsuits brought against brokers, NAR and the MLS's in the real estate industry. Then as the sun rises, it slowly clears and before you know it, it is a bright and sunny day.

After decades of homes being sold in a certain way, someone seems to have suddenly had the bright idea to bring a lawsuit and make some money. The people making the most will be the attorneys, who made a case and won. The firms and brokerages are settling faster than a set of ten pins falling. Without admitting any wrong doing they want to move on and put this behind them. 

BUT, there are other lawsuits, now being brought by the buyer side of the transaction. How long will this last, are these people for real with their stories of not knowing how their agents were getting paid?

So, let's begin at the beginning, homes were listed by an agent working for a broker, any other broker/agent who showed the listing was working for the seller as a sub agent of the listing broker, hence the listing broker shared his commission.

However, the buyers often misunderstood that their agent/broker was working for the seller, thinking that they were being represented. So, "BUYER AGENCY" was introduced. Now the buyer agent/broker represented the buyer, and has a fiduciary relationship with the buyer. However, because of history and how agents were compensated that side of the equation was not changed. Listing brokers still shared their compensation with the buyer agent/broker, even though they represented the buyer. Sellers when listing their homes were advised of this and negotiated how much they were willing to offer these buyer agents/brokers. Buyer agents/brokers explained to their clients they were getting paid from the proceeds of the sale by the listing broker.

Who actually pays the compensation is an interesting point. If there is no sale there is no compensation. So is it the buyer who pays the agreed price who pays all the compensation or the seller who gets a net price less the compensation to the agents/brokers.

Some brokerages decided individually to split the listing commission equally, others not. Everything was negotiable, and brokerages set their own rates, some higher, some lower. In some brokerages even some agents took less commission thanothers, so there was plenty of competition. 

To facilitate all this, MLS companies were set up which allowed agents/brokers to share their listings and how much compensation they were sharing.

When consumers listed their homes they were offered a rate of compensation and negotiated with the agent how much they were willing to pay. Some brokerages had higher rates and were inflexible, other brokerage forms were set up with lower rates. Some firms offered full service, others partial service, more like a do it yourself with our help scenario.

With the advent of the internet, all this moved from printed books that were published weekly to instant listings. Consumers always asked to negotiate their selling rate, and buyers as time went along began to ask for some of the commission as more buyers came from abroad where they were used to different models of buying and selling real estate.

All along sellers were looking for one certain thing, an agent/broker who could sell their home for the most money, in the period of time they preferred with the best terms available. They relied upon the skill of their agent to negotiate, understand the market, the rules and the processes as they varied from State to State.

Buyers also wanted someone who would represent them, who knew the areas, the homes that were coming on the market, and could guide them to find a home in an area that met their needs. Some wanted to walk to a place of worship, others wanted  good schools, a safe environment. Much of this over time was regulated what an agent/broker could say due to the rules and laws of the state and country so that no one was excluded. Also some things are subjective, what is safe/good for one may not be so for another. But a good agent could direct their client to places where they could find the facts and make up their own minds. 

So, now post the lawsuits what is the situation. As a listing agent not much has really changed, sellers still want the same thing, they will still want to negotiate the compensation and agents can still ask for what they consider they are worth. Some may value themselves higher than others. Like a surgeon, some will have better reputations than others and gain more business. Others may simply have a different motivation and be willing to do the work for a lower rate. But, the agent/broker will still need to explain what they are going to do and how much they will charge, and give advice to the seller about offering anything to the buyer towards their closing costs.

Often in the past, buyer agents/brokers would work with buyers without any contract, often because consumers were wary of signing and committing to any specific agent. However, now as the mist clears we see that buyer agents will be required to have a written agreement before showing any property. Whilst there was a buyer agency agreement it often got signed with all the paperwork when making an offer. Now, it has to be done in advance with a negotiation of compensation and how that compensation is going to get paid. Will it be as a concession from the seller, or like an attorney will the buyer pay a retainer fee at the start?

But buyers still want the same things from their agent, representation, knowledge of the market, listings, schools, guidance on homes, what is good and bad about them, where to find information, negotiation skills, advance knowledge of new listings, access to legal advice if needed, and finally they want personalized service.

I can offer both sellers my experience from 20+ years of real estate, and 40+ years of negotiation. Having served on multiple committees at the state and local level I know the rules and the way things are done. I also know most of the agents/brokers in the market and have built up good relationships over the years doing business with many of them.

So, now you understand the history and the mist has cleared, don't hesitate call me today and let's begin working together to make your real estate goal a reality. Call Nick Vandekar, Selling the Main Line and Chester County with RealtyONEGroup Advocates, office 484-237-2055, cell or text 610-203-4543, Nick@VandekarTeam.com.