Want to get paid? Start studying up on how U.S. commercial commissions are negotiated. That’s where the residential side of real estate is headed, four experts argued at Inman Connect New York.

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Four experts at the Inman Connect New York real estate conference laid out a detailed path for how buyer’s agents may soon negotiate and earn their commissions as a series of ongoing commission lawsuits continue to work their way through the courts.

The contractual offer of compensation — a mandatory stated offer by the listing agent that they will pay a buyer’s agent fee — is going to cease to exist in the MLS ecosystem, NextHome cofounder and CEO James Dwiggins told the audience of real estate professionals Thursday in New York.

“I want to let all that sink in for a second,” Dwiggins said. “The way that we currently conduct business is likely to change from the outcome of these lawsuits.”

This was a belief shared by all four of the panelists on stage. However, in practice, they added, the vast majority of buyers are likely to continue using buyer’s agents — and sellers would ultimately foot the bill for the buyer-side commission.

Redfin Director of Industry Relations Joe Rath said that agents surveyed by his company — both within and outside the Redfin brokerage — mostly expect fewer buyers to work with agents in the future and that a buyer’s agent fee that becomes negotiable will lead to buyer’s fees going down.

But even if a few buyers opt to skip buyer agency altogether and go straight to the listing agent, Rath expects that won’t become common practice.

“Time and time again, we’ve learned that buyers love their buyer’s agent,” Rath said. “They’re going to work with them, and that’s going to be the majority of cases still going forward. But buyers will be in the driver’s seat, so agents will start competing on things like price, level of service, certainly their experience level.”

Collabra Technology CEO Russ Cofano believes that a shift toward the new model will actually help solve one of the main issues of the current system: the fact that less-competent buyer’s agents are often due the same share of the purchase price as a more experienced agent who brings more value to the table for their buyer clients. If the compensation is negotiated upfront with the buyer, it gives high-value agents a chance to make their case for appropriate compensation, he said.

What’s unlikely to change, Cofano believes, is who will ultimately pay the buyer agent’s fee.

“I believe that the money still is going to come from the seller,” Cofano said. “It’s not about where the money comes from; it’s about the relationship and the value that that relationship provides.”

Ed Zorn, vice president and general counsel for California Regional MLS, said there’s already a clear model for how this process might work: the U.S. commercial real estate deal.

In commercial deals, the client signs a buyer’s representation agreement detailing what the agent will be paid at closing. That compensation amount is then included in the offer to the seller, and becomes a part of the broader negotiation alongside the other terms of the deal.

Zorn said he himself has closed hundreds of commercial deals over the years. In each case, he got paid without the need for a contractual offer of compensation.

“It’s actually a simple change: a little bit of tweaking of how contracts are going to work, and a slight difference in how you speak to your client,” Zorn said. “But super easy; I’ve always gotten paid.”

Email Daniel Houston

buyer's agent
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