by Jim the Realtor | Oct 18, 2024 | Commission Lawsuit, Realtor, Thinking of Selling? |
Reader Jim G. made a couple of friendly comments on how Compass is handling our objection to the Clear Cooperation Policy. It followed what a big-mouth in L.A. said this week when he called the Compass explanation, ‘disingenuous’.
We’re all struggling to describe the new world of home sales.
It’s mostly because we liked the old way and it sure seemed to work just fine – at least until an attorney in Missouri made our life miserable. It’s a new world now because attorneys will keep suing us until we run out of money.
The main reason that the Clear Cooperation Policy needs to end is because it’s a mandatory requirement. The government is the only entity who can make things mandatory. If we force sellers and agents to put their home on the MLS, then it is inevitable that one of them won’t like it and they will file another class-action lawsuit.
Let’s replace the CCP with a simple description of the choices, and have the seller pick one:
The Three Ways To Sell Your Home
Open-Market Sales – This is how to reach the maximum number of buyers. If a home has the ideal combination of selling features (good condition, preferred location, attractive list price, and sold by a competent salesperson), then it should sell quickly – probably in the first ten days on the market. The tradeoff is if the home doesn’t sell right away, then buyers assume something is wrong with the price, and they expect the home to sell for less.
Will waiting longer will improve the chances of selling? Yes, but only when prices/values are appreciating, and they eventually reach and exceed your price – making the home the best deal in the marketplace. In a flat or depreciating market, time is the enemy. The longer it takes, the bigger the discount expected. This buyer sentiment happens in all markets and price points. The pricing trend in your market, and the current market conditions, should play a vital role in your decision here.
Off-Market Sales – The seller’s advantage here is that a buyer is pressured to pay your price, otherwise the home goes on the open market. There isn’t the full exposure to all buyers, but you only need one. Sellers with no time constraints and a preference for privacy can empower their listing agent to explore their off-market resources, and if a buyer isn’t found and/or the anxiety mounts, then the home can always be put on the open market later.
Auction – Homeowners willing to sell their home for what the market will bear on a specific date may want to consider an auction of their home. There is full market exposure, and the animal spirits can take over and drive the price above market value. In many cases, the commissions and closing costs get paid by the buyer too.
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The key advantage of selling on the open market or by auction? It instills urgency in the buyers. They know that if they love the home, they need to step up now and buy it before they lose another one!
This urgency isn’t required to sell a home, and it is regularly wasted when sellers and their listing agent don’t use it wisely.
But it is invaluable to the listing agents who know how to exploit it.
Before making your choice, know that the hassle factor is real – especially if you are living in the home. Getting the home ready to sell costs time and money, and then having strangers roaming through your home with little or no notice is inconvenient, to say the least. Going on vacation for a month, or moving out altogether, is worth considering.
End of sellers-choices form
Until, and unless, the industry is willing to educate the masses on the fine details about selling homes, we will keep having results all over the map. Have you noticed how some homes sell right away for retail or retail-plus, and others don’t sell at all? It’s because we allow the marketplace to be a perfect mess with little or no education, guidance or understanding. There are no rules or standards about selling a home and making a bad/wrong choice can be costly.
Let’s start with a basic description of the choices available to sellers.
by Jim the Realtor | Oct 16, 2024 | Commission Lawsuit, Jim's Take on the Market, Realtors Talking Shop, Why You Should List With Jim |
For two months we’ve been settling in with the new arrangements for paying the buyer-agents.
I haven’t heard of any buyers yet who got stuck having to pay their buyer-agent because the seller refused to pay. Undoubtably, there are buyer-agents who were paid a partial fee by the seller and then the buyer made up the difference – that’s the intent of the buyer-broker agreement being required now.
Some buyers (especially cash buyers) may prefer to pay for their own agent and take a lower purchase price instead, but that has always been the case.
Strangely, the CRMLS – which provides the MLS for the North SD County Association of Realtors – cannot allow any mention in the active listings of seller-paid commissions being offered to buyer-agents. But now when marking the escrow as closed, they REQUIRE the listing agent to disclose the commission amount the seller paid to the buyer-agent.
Agents who are members of the competing San Diego Association of Realtors are exempt.
I culled this data from the NSDCC sales closed between August 17 and September 18, and between September 18 and October 15 from those that did mention the specific commission amount:
There has been erosion this year. It’s because some agents are weak and desperate, as I mentioned in April.
Is that who you want in your corner?
It is much more important to sell your house for retail, or retail-plus, than save a point on the commission.
Same on the buyer side. If your agent can make a strong case why they are worth it to the seller and listing agent, they are also making a good case for them to take your offer too.
This isn’t the world we wanted. This isn’t the world we asked for. This is what 12 jurors in Missouri thought you deserved (as did the attorneys who charged $100,000,000+ for prep work and a week in court).
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Of the 139 recent sales, nine were marked with zero days-on-market (6%), which are the off-market sales typically. They aren’t as widespread as everyone wants you to think, at least not yet. In 17% of the sales, the listing agent also represented the buyer too, though there isn’t a box to check for unrepresented buyers (the listing agent must input a buyer-agent). I predict that both of these percentages will increasing.
by Jim the Realtor | Oct 14, 2024 | Commission Lawsuit, Pocket Listings, Realtor, Why You Should List With Jim |
I was in Orange County yesterday and saw this in a local publication:
The off-market craze is just getting started.
We’ve already been hearing the hucksters at open houses who lead with their only pitch:
“I operate in the off-market space.”
“Does your agent offer you off-market deals?”
“Would you like me to alert you to our off-market listings?”
“Ok, great – sign my buyer-broker agreement right here.”
When the inventory of superior homes being so tight, it is inevitable that buyers will be lured into thinking that there might be something they’re missing.
But the real benefit to the off-market action is that realtors regain control of the market.
The industry loved it during the frenzy when the MLS/search portals were publishing sales that closed several hundred thousand dollars over the list price in the first few days on the market.
But now, the MLS/search portals are the enemy.
They publish the number of days-on-market, and the price reductions….ouch. If you are a listing agent of one of those listings, you are begging for ways to hide those facts. The agents who ‘refresh’ their listings have been thwarted now because the MLS also publishes the CDOM, or combined-days-on-market to highlight when a listing was just cancelled and re-inputted:
This is one of the main reasons why the Clear Cooperation Policy will be attacked by the brokerages.
Operating in the off-market space avoids racking up days on the market, and public changes in price. Think about the commercial brokers – you have no idea how long they have been sitting on that listing, or what the price was an hour ago, let alone tomorrow.
When the market is great, then the truth is our friend.
Nowadays? Not so much.
Potential home buyers must think that the real estate gods have it out for them. Rates and prices went through the roof and never came back (yet), the bidding process is a disaster, and now they are forced to pay for their own agent (maybe). In spite of the internet, the real truth about the market has never been so well disguised. They can’t get a break!
Sellers just want their money.
Compass needs a partner. If we split from the pack over the CCP then we will be labeled the sole renegade. But if eXp, Realogy, KW, or Berkshire joins us then the rest will fall in line (the eXp CEO said so). We can quit the MLS, and make Zillow/Homes.com publish our listings the way we want them published.
In the meantime, we can expect the off-market craze to thrive.
by Jim the Realtor | Oct 11, 2024 | Commission Lawsuit, Compass, Realtor, The Future |
Robert the big boss was in town yesterday.
He is committed to changing or ending the Clear Cooperation Policy, which is a controversial stance.
The CCP makes in mandatory that every agent upload a listing onto the MLS within one business day after any public marketing of the property. Robert (and other brokerage leaders) say that nobody should have the right to dictate how a home is sold, and sellers should have the right to market their property however they choose.
Skeptics think that is a thinly-veiled excuse to hold more listings off the market, and sell them in-house instead – which would benefit the bigger brokerages, and possibly squeeze out the little guys.
But Robert said that the real problem is that we are sitting ducks waiting for another class-action lawsuit.
The last lawsuit was about the mandatory requirement that the listing agent include a buyer-agent’s commission rate in every MLS listing. NAR tried to hide behind the fact that the rate was negotiable, but got their clocks cleaned when the jury found otherwise. Even though Compass had never sold a home in Missouri, the forced NAR settlement cost Robert and Compass $52 million.
Because the submission of a listing to the MLS within 24 hours is also a mandatory requirement, it’s only a matter of time before the class-action attorneys start lining up for another big pay day. He is literally hoping to change the CCP before we get sued again!
NAR doesn’t get it. Their chief legal counsel quit last week after 17 years, which leaves them adrift, and they are sure to bungle the next wave of lawsuits which should be arriving any day now.
Robert is taking the high road and trying to negotiate a peaceful change, but I don’t get the feeling that the people in power are listening. This is where the biggest brokerages will probably have to sue NAR to get their attention before another class-action lawsuit is filed.
Why doesn’t NAR stand up for realtors? The main reason is because they have $750 million in the bank, and they are very comfortable. They had two presidents quit, the executive director retire just in the nick of time to avoid responsibility for the last lawsuit, and now the chief legal counsel quit too. They aren’t equipped to handle any controversy, let alone one that could put them out of business.
But that day is coming, it’s just a matter of when.
Abolishing the CCP is just the start.
Eventually, the biggest brokerages will quit NAR and the MLS, and go it alone, just like the commercial brokers. Zillow and Homes.com will scramble to make deals with us to keep our listings coming, because if they don’t, they will be out of business too.
I guarantee that this is the future of home sales.
It’s just a matter of when.
by Jim the Realtor | Sep 27, 2024 | Commission Lawsuit, Jim's Take on the Market, Realtor |
The NAR Clear Cooperation Policy states that every listing must be inputted into the MLS within one business day after it is advertised publicly. The idea is to ensure that every agent has a chance to sell it.
Our boss is leading the effort to end the CCP (see above).
Anywhere (Coldwell Banker, Sotheby’s, etc.) also agrees that the CCP has its flaws, and that it needs to be revised or ended.
Asked Thursday about Anywhere’s proposal to modify Clear Cooperation, Reffkin said that “although I would prefer a policy that replaces the one-day listing requirement with 60 days as the DOJ has publicly asked NAR to do, I support Anywhere’s recommendation to move it to ‘at least a few weeks.’”
Reffkin’s mention of the DOJ refers to a July 29, 2020, letter from a U.S. Department of Justice attorney to a lawyer representing NAR. In the letter, the DOJ attorney proposes two modifications to the Clear Cooperation rule: extending “from one business day to sixty days the time by which listing brokers must submit listings to the MLS”; and eliminating “the exception to the Clear Cooperation Policy for ‘office exclusives.’”
Reffkin said that he applauds “Anywhere for advocating for homeowner rights.”
A survey was sent to agents on the topic. My response:
I think the CCP should end. No matter what the rules are, agents will game the system. For example, agents input their listings onto the MLS to reach the waiting buyers but then don’t allow other realtors to show. Then a few days later, they are marked pending. It has always been like this – no matter what the rules are, agents will game the system in their favor to maximize their own profits.
The San Diego region has always had agents who cheat the system – it’s been like this since I started. Let’s just be honest with consumers and with each other – it is the WILD, WILD WEST!
There isn’t a real threat of physical harm, but the environment will rough you up mentally and emotionally. Hire an agent who recognizes the pitfalls, and can help manage the experience as best they can.
by Jim the Realtor | Sep 19, 2024 | Commission Lawsuit, Realtor
Rick has some of the best insights on the real estate market – follow him at Twitter
by Jim the Realtor | Sep 18, 2024 | Commission Lawsuit, Why You Should Hire Jim as your Buyer's Agent |
The new rules don’t allow the MLS to publish on active listings how much buyer-agent commission is being offered by the seller and listing agent. But in a strange quirk, the CRMLS – the biggest MLS in California covering about half of the state – now requires that when marking a listing sold, the listing agents have to publish how much compensation was paid to the buyer-agent.
Since August 17th, there have been 173 NSDCC closed sales, and 54 of them published the buyer-agent compensation paid (CRMLS and SDAR are the competing associations/MLS companies in the county, and SDAR doesn’t require these stats from listing agents).
Of the 54 sales who published the amount paid, here is the breakdown:
2.5%: 25 (46%)
2.25%: 4 (7%)
2.0%: 20 (37%)
1.5%: 2 (4%)
1.0%: 1 (2%)
Zero: 1 (2%)
This is roughly the same mix that we’ve seen since April when I first started logging the commission rates being offered by the listing agents. We will follow this trend because buyers deserve to know the chances of them having to pay some or all of the commission to their buyer-agent.
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I have every intention of persuading the seller and listing agent to pay my buyer-agent fee.
In the event that we get stuck with an unreasonable seller/listing agent who insists on paying little or nothing – and the buyer doesn’t want to pay either – then I’m not going to hold you to it. I’m going to turn you over to the listing agent and bow out gracefully, if you don’t mind, because Donna doesn’t work for free (she plugs in once we have an accepted offer).
Why would I be willing to work for free for weeks or months? Because that risk has always been part of the buyer-agent environment – historically, we have always risked spending our time without any promise of getting paid. It’s the main reason why we deserve good compensation – it is risky. I will take my chances that I can get the seller and listing agent to come around, and/or have the buyer recognize and appreciate our services enough that I’ll get paid. If not, then fine.
Fair?
by Jim the Realtor | Sep 17, 2024 | Commission Lawsuit |
It was a month ago that the NAR Settlement kicked in, and one new rule in particular was expected to turn the business upside down. From now on, buyers have to sign a contract with their agent before seeing homes in person, which hasn’t been required over the last 100+ years.
I’ve had four parties sign, and nobody has had a problem with it. Two knew me from before, and two had just met me – I was sure to bring it up early on, instead of surprising them later.
What we’ve learned:
- Yes, it is a binding contract, but not really. If you are dissatisfied with your buyer-agent, the contract can be terminated with 30 days notice. If you told your agent that you wanted to cancel, I doubt they will be giving you much attention during the 30 days and most would be honorable enough to cancel right away so you could move on.
- Having a written agreement should empower both buyer and agent to get down to it – it’s serious now!
- The general public are finding out that commissions aren’t negotiable, especially with the best agents. Some agents may offer to work for less, so the rate shoppers need to look around to find a deal. They will find that what we called a commission is now a fee for professional services, and they should examine what services they will get for their money.
- The new rule should cleanse the realtor population of the agents that need to go.
- You still have to find the right house at the right price, which is the biggest challenge of all.
If you can’t find the right house at the right price, none of the above matters.
The new rules, more paperwork, and the confusion & chaos only serve as distractions to those who choose to be distracted. The highly motivated buyers and sellers will keep transacting with the assistance from the agents who have adapted to the new era and still have plenty to contribute to their clients’ successes.
During the frenzy, any mistakes were erased quickly with the rising prices. But those who have bought in the last couple of years have found out that mistakes are not only possible, they are a lot harder to fix today. Their stories will cast a more-cautious tone over the marketplace.
I think clamor over the new rules has already blown over, and now it’s all about Getting Good Help!
by Jim the Realtor | Sep 10, 2024 | Commission Lawsuit |
When a property is listed for sale, the seller and their agent work together to create a strategy that positions the property to its best advantage when it goes to market.
The considerations are many and include but are not limited to marketing campaigns/strategies, preparing the property to show in its best light through repairs, refreshes, or staging, thorough evaluation of comparable listings and sales, how to engage with buyers and their agents, and so much more.
One new consideration is whether or not to pay buyer concessions.
If sellers are willing to pay buyer concessions, should they disclose a specific amount?
It’s not required. They can just say that they will consider an offer that includes buyer concessions, and leave it open-ended. Let the buyer and their agent submit their request with their offer to purchase, and maybe it will be less than expected or zero!
What are the benefits of publicly advertising and/or telling buyer-agents that the seller will pay a specific amount for buyer concessions?
- It clears the buyer’s mind of having to pay their agent’s compensation – green light to buy!
- It buys favor with the buyer-agent, causing them to push harder for this deal to go.
The seller and listing agent have the ability to influence the outcome. They already spruce up the home and pick an attractive price to impress the buyers and their agents, wouldn’t it make sense to use the buyer concessions as another way to help cause a sale? Yes! By telling the buyer-agent the specific amount of seller-paid buyer concessions is one more way to influence the outcome.
Sure…..if it feels like you are giving money away then don’t disclose an amount.
But do everything you can to make it easy for the buyer to buy!
(see the opposing opinion in the comment section)
by Jim the Realtor | Sep 4, 2024 | Commission Lawsuit, Realtor
Lance asked how the new realtor rules were affecting agents – here are responses from around the country that I clipped from two different email threads. Thanks Lance!
