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Commission changes are here. In a nutshell, the changes ended the practice of homesellers automatically covering the fees for agents on both sides of the transaction and began a requirement to have buyer’s agreements in place before working with buyers.
In the days following the announcement of the NAR settlement, social media was filled with posts from real estate agents predicting doom, gloom and loss of income, convincing themselves and others that buyer’s agents will become a thing of the past. This is an issue. However, the real issue comes when we start believing those agents who believe this.
Because guess who else was listening to this rhetoric and reading these posts? Consumers. Our buyers. What did they think and feel when they read and heard these things — sometimes from their own agent?
We need to stop being negative and embrace the opportunities the National Association of Realtors changes present.
Reframing the narrative around commissions
What if we shifted the negative viewpoint and talked about the positive changes that come about for buyers and agents from these new rules?
Have we pointed out to the buyers that they will have a dedicated buyer’s agent to recommend and show homes that fit their specific needs? No more calling up a random agent and getting an inexperienced newbie who can’t answer the questions about the market or the home they are showing.
Have we recommended to buyers that they actually interview buyer’s agents and make us compete for their business? Have we educated them that we can often get sellers to compensate the buyer’s agents out of the proceeds of their sale? Have we had a conversation with their lender to make sure that a buyer agent fee can be added into the loan if the seller is unwilling to cooperate?
Have buyer’s agents considered that this is an opportunity to increase our commissions?
On your buyer-broker agreement, why not ask for a higher commission — what do you feel you are worth? Everything is negotiable.
The seller’s agent, if they have chosen wisely, should want to negotiate. What if the seller refuses to provide compensation and your buyer cannot afford premium compensation? You can always renegotiate your buyer’s agent commission with your buyer and ask them for referrals in return for your concession.
New rules
Keep in mind that under the new rules, we cannot earn our commissions from more than one source. For instance, the seller cannot pay you half of your commission and your buyer pay you the remainder. (Talk to your broker about creative ways around this.)
I am primarily a listing agent in Northern California. Sellers ask me about the rule changes, and after I thoroughly explain their options, they ask me to advise them on how to proceed. I advise them to offer a buyer agent commission. And so far, 100 percent of my sellers have done so.
And for those of us who represent buyers, what have we done to sell ourselves to command a great commission and stand out from other agents that offer a low commission for inferior service? We offer photos, video and staging for our sellers. Why not invest in our buyers this same way?
Be selective about the buyers you choose to represent. And yes, the choice to work with a buyer is just as important as a buyer choosing to work with you. What if we offered a chauffeured limousine or executive car service to our buyers for the first two tours? My cost is approximately $350 per tour. I easily spend this with a seller. No other agent in my market does this.
Let’s talk about prospecting for the friends of your buyers after close of escrow? If you like your buyers, chances are that you will like their friends.
You know your clients are going to give you a rave review. Throw a dinner party for them at a local restaurant for 12 or more of their closest friends. Don’t let the cost stand in your way. This is the same type of investment you would make in a seller for their listing.
Last call
I used to cold call only for listings. Now I cold call for sellers and buyers. The response from people I ask, “Do you have any friends or family that are looking to purchase a home?” is surprising. I’m getting more leads from this question than I am for listings.
I treat these leads with the same care and respect as I do seller leads. I confess, this is something I never did prior to Aug. 17. What changed? The rules. And my attitude.
The ancient Greek philosopher Heraclitus once said that “nothing is constant but change.” We can either suffer through these changes, as some agents like to say, or we can lead these changes and prosper. The choice is ours.
I choose change. I choose prosperity. What do you choose?
Cindi Hagley is a real estate broker, speaker and trainer. Connect with her on LinkedIn and Facebook.
