In a recent episode of the Real Estate Insider’s Unfiltered podcast, the host takes a deep dive into agents’ commission-sharing practices, the associated risks, and what to do when national association of realtors(NAR) Business practice changes will take effect on August 17th.
Co-hosts James Dwiggins and Keith Robinson urge agents to stop sharing commissions and discuss how listing agents can put sellers’ needs first while avoiding legal trouble, and create exceptional experiences for customers in an uncertain market. They believe agents should focus on building their business the right way rather than looking for workarounds.
First, Dwiggins shared his overall thoughts on commission sharing and discussed buyer compensation following an offer. To illustrate his point, Dwiggins uses the analogy of a car dealer.
He explains that when car dealers sell cars for a profit, you won’t see any special offers or deals until you express interest in the vehicle. Dwiggins explained that dealers who understand their value proposition don’t need to cut prices through special products before making an offer. Instead, struggling dealers offer price cuts to attract customers.
Dwiggins tied his example to real estate in a pointed statement.
“If you’re advertising compensation before making an offer, I don’t think you’re serving the seller properly,” Dwiggins said. “You should only offer potential compensation and/or concessions if it’s a buyer’s market.”
Instead, he advises the listing broker to express in the purchase contract that the seller is willing to accept any and all claims for compensation to avoid unnecessarily reaching out to the seller. The seller may not understand the emotion behind this approach, at which point the agent should emphasize that expressing a willingness to accept all requests in the purchase contract will open up the opportunity for a higher net profit.
“We put their interests before our own and advise them,” Robinson added. “Sometimes that means we have to kindly say, ‘Hey, idiot, you don’t actually care. What you care about most is the network, which gives us our best chance.
Draw from their shared experience as senior executives Next home pageDwiggins and Robinson shared another important piece of advice: Don’t engage in collaborative compensation. Using a standardized form outlining buyer’s agent compensation will be viewed by attorneys as a “potential conspiracy” because you will be prioritizing compensation over the seller’s needs and using the MLS as a vehicle for these transactions.
Dwiggins reiterates that the seller’s agent can remove himself from the equation by advertising the compensation on the MLS and release himself from liability by telling the buyer’s agent to include any compensation offered by the seller into the closing offer, which will allow the seller to offer the buyer’s agent Pay direct compensation.
Dwiggins and Robinson also discuss commission-sharing sites and the legal implications of using them. After the NAR lawsuit, Ministry of Justice Its lawyers said they disapproved of platforms where agents could steer clients based on compensation. The pair urged agents to avoid commission-sharing sites and the risk of legal trouble.
To wrap up the conversation, Robinson discussed how agents can benefit from the new compensation rules by understanding their top-line revenue. Agents can create a better buyer experience by providing certain services that require additional compensation. These services can include hiring movers or covering the storage unit, and they can be included in a written agreement.
Before signing, Dwiggins and Robinson urged agents to make smart business decisions based on the NAR Settlement Agreement and use the changes to their benefit rather than trying to find solutions.
