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Home sellers hoping to take advantage of recent settlements and simply pocket their share of sales that once went to buyer’s committee will face significant resistance from their listing agents, according to an Intel analysis of brokerage guidelines and agent intentions.
Many brokerages have developed policies to address this new need from sellers, and agents are already deploying these policies as the industry moves toward a new landscape.
What are the main reasons for this resistance? There is widespread agreement in the industry that sales can be seriously harmed by pushy sellers not paying buyer’s commissions.
“In the short term, I think this strategy will have a negative impact on the marketability of the property, but once things stabilize, I believe this will no longer be an issue,” wrote a brokerage principal in Madeira Beach, Florida. “Lower tier price points may have a more difficult time since there are no buyer fees to pay, but negotiations can overcome the hurdles. “
Intel launched a project in April to document how brokers are preparing for this moment.
By asking 620 real estate professionals detailed questions about their seller and buyer clients, Intel aimed to paint a picture of the guidelines brokerages have adopted, how troublesome the issue has been so far, and how brokerages are coping in the early days of the transition. What a few months might look like.
The survey found that the industry’s resistance to these seller demands is widespread, but it comes in many subtle forms and styles — some passed down from senior leadership at brokerages, others borrowed from what agents have learned in the past. Many years of experience in this field.
Find out how your brokerage performs against today’s most widely used policies and guidelines in the full report below.
The stakes keep rising
There is no escaping it—not today, nor in the coming months.
A majority of agents surveyed in late April said at least some recent seller clients had asked whether they were obligated to pay buyers’ agent commissions.
- twenty three% of agency respondents told Intel more than one tenth A recent seller client asked if they needed buyer’s insurance. Nearly half of this group said more than half of seller customers had asked about it.
- for another 32% Among agencies, at least some customers have made similar inquiries, but the proportion is small, less than 10%.
- for 45% However, currently this number is still zero.
Clearly, even in the early months of 2024, a large number of agents are now handling at least some of these requests.
When sellers choose to do this in the mid-term, brokers believe the impact can lead to a deal falling through – shrinking the buyer pool for the seller’s home, wasting valuable broker time on both sides of the transaction, and increasing broker nervousness – clients relation.
Agents say this is a particularly worrying situation when it comes to first-time buyers.
- 38% of agency respondents told Intel that their typical situation is first time buyer possible Withdraw from consideration If they learn that the seller refuses to pay the buyer’s agent commission, they will be entitled to purchase the home.only 29% of agents say their typical practices are the same repeat customer client.
- only twenty two% of agents say their typical first time buyer would be willing Pay all fees of its agents directly In this case, to ensure the safety of the house, when closed.In comparison 32% of agents said the same thing about their typical practices repeat customer.
- Agents are less likely to say they are typical first time buyer will be open to Increase offer In exchange for the seller paying a buyer’s premium.Finished 43% of agency respondents told Intel that their first-time buyers are willing to increase their prices, while 47% Indicates that their repeat customers will consider it.
The picture that emerged from this?
Ultimately, agents anticipate that every time a seller pursues a strategy of not paying a buyer’s commission, more potential deals will be at risk of falling through as some buyers drop out. This is especially true when first-time buyers are involved, but even large offers from repeat buyers can be at risk.
That stubborn seller may expect some counteroffers, but most will depend on the seller changing course and paying a buyer’s premium in exchange for better terms elsewhere.
Agents believe that relatively few buyers will ultimately choose to pay the agent directly at closing, at least initially. Renters looking for their first home may simply not be able to afford it, while repeat buyers may simply shop elsewhere.
Guidelines and Intuition
about 1 minute 3 Agents who responded to Intel in April said their brokerage firms have recommended a specific approach to sell-side clients who insist on not paying buyer’s commissions.
Intel dug deeper and asked these agents what they were told to say to customers.
The results correlate closely with responses from brokerage leaders, painting the clearest picture Intel has gathered to date of how brokerages are advising their agents to respond.
If a selling client insists on not paying a buyer’s agent commission, how does your brokerage recommend you respond?
- 48% — Encourage sellers to use this only as the start of negotiations, but ultimately be willing to pay the buyer’s commission
- 17% — If the client is unwilling to pay the buyer’s premium, suggest they may need to lower their list price
- 11% — Rebut and recommend that the seller pay the full amount that the buyer agreed to pay to its agent
- 4% — Agree without trying to convince the client
- twenty one% – other
It didn’t take long for us to discover that agents were being advised not to take extreme positions with clients.
Brokerages with policies seem to strongly recommend that agents advise sellers not to take a hard line on buyer’s commissions while not rejecting the client’s wishes outright.
Of the many respondents who selected “other” in response to this question, most responded very much in line with the idea that customers may need to lower their list prices if they insist on not paying seller fees.
One agent in St. Louis, Missouri, explained that generally, brokerages want their agents to help sellers understand that they are only attracting buyers who can pay the agent’s fees directly, thereby hurting the marketability of the listing.
“I don’t believe there is a single strategy,” the agent wrote to Intel, “but if sellers do not provide agent compensation to buyers, they will clearly lose competitive advantage and remove buyers from the buyer pool. Eliminate. Showing them why and figuring out the options is the best way to go.
For agents whose brokerage firms have not yet established policies in this area, Intel asked them what their preferred response would be in such a situation.
The agents flying alone gave very similar reactions – with a few exceptions.
- 15% Brokers with no brokerage policy say they will fight back and simply advise sellers to pay the full amount the buyer agreed to pay their broker.That’s almost it 5 percentage points Above and beyond the pool of agents the brokerage firm gives them guidance.
- This stronger negative reaction comes almost entirely at the expense of Brokerage leaders prefer to make more nuanced recommendations that could harm the listing.
To a large extent, these results suggest that agents’ instincts have aligned with the policies of the brokerage firms that provided these results.
But when brokerages don’t have guidelines for dealing with these types of sellers, some of their agents may end up resisting clients more harshly than the brokerage would like.
Still, leaders of brokerage firms that have yet to reach a policy say there are good reasons to wait — from a lack of clarity on what the policy changes mean to a desire for their policies to come under greater legal scrutiny.
“We conducted training on this issue but felt that having a set of policies would leave us open to litigation,” one North Carolina brokerage executive wrote. “Our job is to educate people, and to do that we must [knowledgeable]”.
Methodological Notes: Inman of the month Intel index poll The survey was conducted from April 19 to May 1, 2024, and 620 responses were received.The website invites the entire Inman reader community to participate, and prompts rotating, randomly selected community members via email to participate..Users answered a series of questions related to their self-identified real estate industry—including real estate agents, brokerage leaders, lenders, and proptech entrepreneurs. Results reflect the opinions of the participating Inman community, which may not always align with the opinions of the broader real estate industry.this poll Do this once a month.
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