In light of the impending changes to business practices outlined in Business Practices, many brokerage firms are cautiously moving toward a model without collaborative compensation. national association of realtors (NAR) National Council Litigation Settlement Agreement. Peter Voss at 3% listed companies. Wonder what took them so long to make the switch.
Vos founded the Iowa-based 3% public company in 2023. And his agents only charge clients a service fee.
“We let the buyer negotiate with their agent, and then the buyer can ask the seller for a fee or other concession if they want,” Voss said. “We think that’s a big benefit to the seller because they’re able to negotiate There can be significant costs to negotiate, and this can make sellers more focused on their bottom line and allow them to be more accountable than they might have been in the past.
Voss said the idea for his company and its model came from his struggles with the idea that sellers would have to pay someone to represent others trying to negotiate with the seller.
“I’m really confused, as a seller, why would I give money to someone who is actively trying to get me less money?” Voss said. “I looked into that and then tried to see if there was a way for us to split commissions like we did with agents a few years ago.”
While 3% Public Company’s model apparently gives sellers more representation in the transaction, allowing them to negotiate buyer’s agent fees with buyers, the company has been criticized because some people mistakenly believe that due to their Model, 3% of public companies refuse to work with buyer’s agents.
“Our model is sometimes misinterpreted or described as a refusal to work with buyer’s agents, which is incorrect,” Voss said. “I think the misconception that a lot of agents have is that they still think their salary comes only from the listing agent. I think we as an industry really need to separate that; we need to say, ‘As a buyer’s agent, you need to discuss your How much you’re getting paid, and then once you figure out what that number is – if your buyer wants you to do that – you can at least negotiate for some of that to be included in the contract for the property they’re buying. But the agent claims to be with the buyer. Long gone are the days when there was no fee to work with an agent.
While many real estate professionals believe this is a model the industry is moving toward, and while NAR’s settlement agreement still allows for the practice of cooperative compensation, there is concern that sellers will flatly refuse to accept offers that require concessions or help resolving issues. Voss, who works at 3% of public companies, said this is generally not his experience.
“We have conversations with sellers explaining why buyer representation is beneficial because they will help find buyers for the home and help organize the transaction,” Voss said. “It’s always a very helpful conversation because a lot of sellers will understand Why having an agent on the other side of the transaction is helpful makes some of them more willing to consider helping the buyer get the agent’s commission.”
Voss said he also works with listed clients to ensure they are focused on the overall financial goals of the transaction.
“We’re trying to minimize costs and maximize profits for each client, but ultimately it depends on what their overall goal is, which is to sell the house, and what they want to get out of the transaction, so we focus on that amount, not Confronted with how much they might be asked to pay a buyer’s agent,” Voss said. “If they get at least the amount they want, then there’s not much to worry about.”
Voss said negotiating with the buyer for concessions or help paying for the buyer’s agent fees often results in the buyer agreeing to increase the purchase price of the home so that the seller still gets what they want.
“It’s about the dollars you take away from the transaction, so if the buyer is willing to increase the purchase price to offset their asking price, it doesn’t cost the seller anything,” Voss said. “I think that’s where a lot of agents are struggling or will struggle.”
But when using this strategy, consumers run the risk of properties not appraising the price on offer, which Voss said was “a very real concern”.
His brokerage hasn’t had an issue with it yet, but he said he and his agents make it clear to listing clients that it’s a possibility and, as they’ve always done, they need to make sure sellers are committed to the property. price.
Transitioning to such a model can be challenging for some agents, but Vos believes decoupled commissions, as well as buyer representation agreements, offer many benefits to buyer agents as well. Voss said he learned this lesson early in his career, when he took a buyer client to see a property, only to discover after they submitted an offer on the property that the listing agent’s compensation for cooperation was far less. lower than his offer.
“I remember asking my agent if there was a way to negotiate more compensation by raising the offer, and to this day I still hear the response: ‘You get what you get and you don’t lose your temper.’ So, as a buyer As an agent, I have zero control over how much I get compensated for representing my buy-side clients, and that feels very wrong,” Voss said.
After that experience, Voss said he began taking advantage of buyer representation agreements. While he’s received some pushback from clients, he expects that to disappear in the near future as agency agreements become mandatory in Iowa on July 1.
Looking ahead, Vos believes that moving to a model like his is the next logical step for the real estate industry, even if the settlement doesn’t mandate changes.
“When buyer’s agents first enter the market, it’s very interesting to see the changes,” Voss said. “For years, everyone worked for the seller, and then all of a sudden the buyer had someone working for them, which was a great thing for the consumer and the market, the only downside was they weren’t compensated separately at the time of sale. With that At the same time, they separated the agency and left it to the seller to provide the financing. So, now I feel like that’s where we start to get that ship out. I do feel like there’s a way to build out what works best for everyone.
