Buyer Broker Compensation under the new NAR rules - Can We Talk?
One of the biggest changes we as licensed real estate professionals have had to pivot quickly with is the change to cooperating buyer broker compensation - most notably the solicitation of such.
I have attended just about every webinar possible in my Realtor board areas to make sure I have the information straight.
And as it turns out, it's perhaps just a little crooked on the edges. So to speak.
The specific stipulation, from my attendance of these webinars with real estate attorneys in attendance for affirmation, is that compensation for a buyer's broker (and tenant for that matter), is now a negotiation point between SELLER TO BUYER, or SELLER TO BUYER'S BROKER, but cannot be set between LISTING BROKER to SELLING BROKER.
Oh, the drama [cue eery organ music here].
The biggest element of this change is that there can no longer be an amount solicited on the multiple listing services, or in any publication for that matter, that stipulates BROKER TO BROKER compensation. That is why the data field in all MLS platform has either been removed or disabled for data entry.
Now comes the fun part [cue confetti poppers here]
So I've had some lovely conversations, mostly via text but some telephone, with other agents/brokers on some of my listings. During those conversations, I've been flat out asked "What is the commission on this?"
My first instinct was to ask them to confirm the address of the rock they are living under. But kindness begets kindness, so instead I state that due to the recent NAR changes, I can no longer discuss broker-to-broker compensation, but that the seller is open to concessions toward such, depending on the offer. To me, that is the best answer I can provide given the logistics of both compliance with the NAR rules and the fiduciary I have to my seller.
My second instinct is to ask them if they have a buyer-broker agreement signed. Honestly, I ask this out of genuine concern that they do not end up spinning their wheels and chasing the buyer all over town showing properties without getting paid since buyer broker commissions are now negotiable and not pre-stipulated on the MLS.
It was surprising to me that about 50% of the time, I get push-back on that response or what seems to be an invitation to debate the subject matter. Some of the responses I've gotten include "You can't put it on the MLS or talk about it on caravan, but it's OK just one-on-one" or "Oh, that's only for sales. Leases are OK to state the commission"
I then in my mind start picturing what it would be like to wear a space suit and a bubble helmet because apparently I am from Mars.
Rather than get into a heated debate, the focus is to get the listing sold or leased, so I just focus on getting the showing appointment set up and re-affirm that the seller is open to concessions. And leave it at the river.
Here is the rationale behind my thoughts, as well as the apparent growing ulcer in my abdomen:
1. You're attempting to tell me that you acknowledge that there can no longer be any solicitation of broker-to-broker compensation on the MLS or on caravan, but that it's OK "in secret"? Really? Seriously? How much sense does that make and which continuing education courses have you taken given it must of been missing the code of ethics section?
2. How can I POSSIBLY tell you what the commission is when it is clearly negotiable on the part of the seller at this point and me not knowing what your offer will look like and what the disposition the seller will have towards it? What if your buyer asks for every single credit in the world AND Uncle Gooch's rocking chair that he left the seller on his death bed? (That he hand carved and walked 20 miles in the snow to get just the right color paint that matches my seller's eyes). What do you think my seller's disposition will be towards additional concession towards paying the buyer's agent?
This is why the buyer-broker agreement has taken on a whole new life in our industry. Y'all betta git one, cuz there are no longer any guarantees on the buyer side (upcoming post on that subject matter, so keep your eye on my blog - oooh, wasn't that a great segway?)
So, in my ever-constant quest for the truth in a world full of mis-information (don't go there), I decided to contact the legal department of our state's realtor association. Out of that consultation came this: Confirmed - you cannot put into public any solicitation of compensation, broker-to-broker. However, seemingly with your seller's permission, you can state whether or not your seller is willing to make a concession towards the buyer's broker commission. And with their permission, you can state whether or not they would be WILLING to consider an amount up to a certain point.
NOW, with that being said, I am going to stick to my guns and continue stating (when asked), that my seller is willing to consider concessions towards the buyer's broker compensation, depending on the offer. Unless my seller has flat-out stated they will not (which I haven't come across yet).
Why will I continue to take that approach?
1. Because as an experienced broker, I have seen too many times a transaction ending up in mediation because the buyer's broker makes a claim that the listing broker stated what the commission will be and for whatever reason there is a mis-understanding between the two parties. So I will stay clear of any kind of confirmation of compensation before a contract is signed.
2. I have no idea what your offer will look like, nor what my seller's disposition will be towards it until they are presented with the offer. And even then, as the transaction progresses through inspections, appraisal, possible lender requirements, etc. what additional concessions will be requested.
Don't like my decision? Oh, grow up!
Ralph Gorgoglione - Broker / Realtor
Metro Life Homes / BRE #02009317
(310) 497-9407 / (800) 591-6121
Web: metrolifehomes.net
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