How to structure your listings post NAR settlement changes

Summary

In this video, the host addresses the new real estate listing structure post-August 17th, emphasizing the decoupling of commissions and the role of listing agents as fiduciaries. They clarify misconceptions around offering buyer agent commissions upfront, asserting it's a myth that affects sale speed or price. Instead, listing agents should focus on maximizing seller net proceeds and be prepared to negotiate buyer agent compensation as part of the offer, reflecting a shift already happening in some markets.

Takeaways

• 📝 The new listing structure requires listing agents to collect only their own compensation at the time of listing, not the buyer agent's commission.
• 🤝 As a listing agent, the primary fiduciary duty is to the seller, which includes helping them net as much as possible from the sale of their home.
• 🔄 Commissions have been 'decoupled', meaning there are now two separate negotiations for buyer broker commissions and listing broker commissions.
• 🚫 Listing agents should not reveal their sellers' lowest acceptable price to the market before receiving an offer, as it could undermine the seller's position.
• 🔑 Understanding the new changes is crucial as they are already in effect in some markets, and agents need to adapt their strategies accordingly.
• 🏠 The traditional belief that offering a buyer agent commission upfront helps homes sell faster and for more money has been debunked in markets where the changes are already implemented.
• 🤔 Agents should be prepared to answer questions from buyer agents about seller compensation by stating that all offers will be presented to the seller for consideration.
• 💼 The role of the listing agent is to set expectations with sellers that offers are likely to include requests for buyer agent compensation, which will be part of the negotiation process.
• 📉 The fear that not offering a buyer agent commission will reduce showings and offers has not materialized in markets where the changes are live.
• 🛑 The idea that buyers choose homes based on agent compensation is considered a myth; buyers prioritize their family's needs over agent commission.
• 📈 The new model is expected to streamline the process, with the listing agent focusing on their commission and the buyer agent's compensation being negotiated as part of the offer.

Q & A

What is the main topic of discussion in the video script?

The main topic of discussion is the changes in the real estate market concerning the National Association of Realtors (NAR) settlement changes that went into effect post-August 17th, and how these changes affect the structuring of property listings.

What is the role of a listing agent in the context of the video?

The listing agent acts as a fiduciary for the seller, responsible for helping the seller net as much money as possible for their home and structuring the listing in the best interest of the seller.

Why is it not advisable for a listing agent to reveal the seller's lowest acceptable price to the market before receiving an offer?

Revealing the seller's lowest acceptable price before receiving an offer would not be in the seller's best interest, as it could potentially reduce the final sale price and is against the fiduciary duty of the listing agent to the seller.

What does 'decoupled commissions' mean in the context of the NAR settlement changes?

'Decoupled commissions' refers to the separation of buyer broker commissions and listing broker commissions, meaning they are now subject to two separate negotiations rather than being negotiated together as a single entity.

How does the new listing structure work post-NAR settlement changes?

In the new listing structure, the listing agent collects compensation only for their services, not for the buyer's agent. The buyer's agent compensation is now part of the offer negotiation process and is determined when an offer is made on behalf of a buyer.

Why is the belief that offering a buyer agent commission upfront helps homes sell faster and for more money considered incorrect according to the video?

The belief is considered incorrect because in markets where the new NAR settlement changes are already in effect, showing activity and sale outcomes have remained the same despite listings not offering any upfront compensation to buyer agents.

What is the recommended response when a buyer's agent asks if the seller is offering a buyer agent commission?

The recommended response is to say that the seller is open to reviewing any and all offers, and to request that the buyer's agent put their offer in writing, including any requested commission, for presentation to the seller.

How should listing agents handle the situation where a seller does not want to offer a buyer agent commission?

Listing agents should set clear expectations with the seller upfront about how offers are likely to come in and that most will include some type of compensation for the buyer's agent. If a seller remains rigid in their stance, it's unlikely they will sell their home for less money just to avoid paying a commission.

What is the impact of the new NAR settlement changes on the likelihood of buyers going directly to the listing agent?

The new changes are expected to increase the likelihood of buyers going directly to the listing agent, as the listing agent may now have a different compensation structure for unrepresented buyers compared to when they represent a buyer brought by another agent.

What is the key takeaway from the video for real estate professionals trying to understand the new NAR settlement changes?

The key takeaway is that despite the changes, the end result for sellers in terms of total real estate compensation paid is likely to remain similar. The main difference lies in the process, with the buyer's agent commission now being part of the offer negotiation rather than being set upfront.