The Real Estate Commissions Saga Continues

Let’s talk about some updates regarding the topic of real estate commissions. Yesterday was the day that the administrators here in California set to start using the new forms that address the changes in commissions.

Apparently, the Department of Justice has contacted California asking the state to hold off before memorializing the changes in these forms. Even though one settlement has already happened, it turns out that there are other lawsuits that are still going on in other states. And now The Feds are saying that they want to have a say in the situation as well.

My Opinion About Seller’s Agent Commissions

I continue to have the opinion that:

• This is the way real estate commissions have been paid in the US for decades. It seems to make really good sense to the general public. Why fix something that isn’t broken?
• As a seller, doesn’t it make good sense to incentivize people who bring good buyers to the deal? In the absence of that… if there is no buyer’s agent, it’s a situation where buyers will struggle to represent themselves since they don’t understand the industry processes.

Today, I was talking to my buddy, Cale Thomas, and he made the best parallel you could possibly draw. If you are getting a divorce and your soon-to-be ex has an attorney and you don’t have an attorney, it’s an act of insanity. It’s not a fair negotiation. To me, the real estate process is the same. As a buyer, you need to be represented in the deal.

Why It Makes Sense for Sellers to Pay a Buyer’s Agent

This raises the question: so does the seller pay for it? As a seller, it’s a win to be working with a buyer’s agent who has already made sure that the buyer is fully pre-approved and the agent will coach them on this process. So, sellers are connecting with actual, legitimate buyers who are prepared to pay the price for the home.

This feels like we are fixing a problem that didn’t exist. I’m the first to acknowledge that it costs a lot of money to sell a house or buy a house. There are a lot of things that are involved – and I think all of these things are integral to the process. I think that buyer’s agents are essential.

How Will This Play Out?

The DOJ will certainly have their take, but who knows when it will happen. Whatever decisions they make will have unintended consequences. Real estate is going to survive. Realtors are going to survive. And everything will work itself out.

Stay tuned, and I will definitely keep you updated when new information comes out. If anyone asks me, I am voting for the status quo. And most of the people that I am talking to are expecting that it’s likely things will stay similar to how it’s been working in the past. We’ll see how it plays out.