How the recent change in commissions will change how they get paid... or not. 

As a buyer I used a broker to represent me when buying in the Catskills even though I could have represented myself and collected commission. Why?  I don't know anything about septic tanks, crawl spaces and the nuances between town values.  Essentially, I knew enough to know I didn't know enough and a little money in commission isn't worth buying the wrong house. 

I also knew enough about the role of buyer's brokers that I was extremely picky and had a challenging time finding an agent with whom I felt comfortable representing me.

I felt like the role was very important and I needed a moment to get to know the agent prior to seeing properties with them.  Because once you go out with them for a day, it's a bit awkward to say "hey, thanks for your time, but I'm not positive you're for me."  

To me, it felt similar to dating, after how many dates are you a couple?  After how many showings does the agent become your agent?

In the end, sometimes the agent that represents you is just the one that happens to be there when you find the house you like. 

This isn't the way it should be.

As a contrast, hiring a seller's agent is a formalized and serious process, which typically involves a 60-90 minutes meeting where we provide detailed information about ourselves as agents and our knowledge of the home and market. It's typical that a seller interviews 1-3 agents and chooses who is best for them. Now the choice of buyer’s agent will be made with the same scrutiny and intentionality.

If you keep up with real estate news, you have probably been reading about the new guidelines around buyer’s brokers.

Here’s how it works: Buyers will now need to sign an agreement with their buyer's agent, and by doing so, it makes it a formalized relationship. Now agents and buyers aren't just "seeing each other," it allows for buyer's agent to be vetted and chosen.  The good news is there are a number of different agreements which can be signed some which cover a certain area, some cover a singular property, however the end goal is the same: finding an agent who you feel comfortable with, and an agreement which suits the search. 

Sellers historically paid 5-6% which was automatically split with the buyer's agent.  The court determined that this was collusion because the seller did not have the choice of whether or not to compensate the buyer's broker. As a result, sellers now have a choice about how much, or if they will compensate buyers' brokers at all.  We think it's important for sellers to be able to choose. However, we recommend compensating the buyer's broker because it's important to give your listing as much exposure as possible.  Certainly, buyers could compensate their brokers separately, however there's a reason that the industry was set up this way. Buying a home is nerve wracking experience and a buyer’s broker plays the role of advocate for the buyer and is a steady hand for them through the process. The simple fact is that more deals get signed when brokers are on both sides (~90% of deals have buyers agents on them), which is why it's to the seller's benefit that the buyer has a broker.

As a buyer, it's also a lot of money to pay up-front, where for the seller the cost can be baked into the sale price. On that note, even if the seller is paying the commission, it can be argued that the buyer is actually paying for it since the commission is taken from the proceeds of the sale of the home they are buying. 

Okay, so what happens now? 

If you're interested in buying, please give us a call and vet us. Let's have a formal interview and ask us about the market you're looking in, our negotiation styles and what we bring to the table. Feel free to call two other agents as well. Learn about the agreements and make an intentional decision about who you'd like to represent you.  

If you're selling, feel free to challenge us on why buyer's agents are an asset to your transaction.  At the end of the day, commission should be chosen intentionally, and we believe that it's a positive change for our industry that both parties are able to choose. 

Feel free to email us for a buyers’ guide to start a conversation.

Yours truly,

Cory & the Team