Transparency in Commissions
Fact: Real estate brokers’ commission rates are not regulated in any state and are ALWAYS 100% negotiable.
When you decide to sell your house, if you are like most people, you will want to hire — or at least consider hiring — a real estate agent to handle the process.
Surprisingly, many people think that real estate brokerage commission rates are “set” in their area and they have to pay a specific percentage of the sales price to the agent in order to get their services. This is absolutely not the case. In fact, you can pay whatever you and the agent have agreed upon.
What is a “Fair” amount to pay for real estate commission?
Many people hear the word “discount” company instead of a “traditional” company but (actually, since commissions are not regulated, there really is no such thing as a discount company).
“Fair” is whatever you and the agent decide is fair, and just as you are not under any obligation to pay more than you want to, the agent is not under any obligation to do business with you if they are not going to earn what they expect.
Public Display of Agent Commissions Begins October 1st
In an attempt to get ahead of looming outside forces, broker-owned multiple listing service Northwest MLS is changing its rules to allow the public display of buyer broker commissions, starting October 1.
The rule changes will allow the NWMLS’s 30,000 agent and broker members to publish the amount of commission the seller is offering a buyer’s broker on the subscribers’ websites along with other listing details.
“Making this information readily available to consumers will allow for complete transparency with regard to buyers’ broker’s compensation and provide consumers with additional information at the outset of the transaction,”
“Consumers want greater transparency and flexibility in the home buying and selling process,” said NWMLS CEO Tom Hurdelbrink in a statement.
“We believe these changes encourage member real estate firms to continue to innovate and evolve their business models to better serve consumers.”
NWMLS has also removed a requirement that a seller offer a buyer broker commission when listing a property for sale.
“Letting brokerage websites publish the commission that a homeowner is offering the buyer’s agent will show everyone all the incentives at work in a home sale and make it easy for agents to explain the costs of our services,” Redfin CEO Glenn Kelman said in a statement.
“And being explicit that a listing can offer buyers’ agents any commission or now even no commission will assure consumers and agents alike that Seattle’s real estate market is wide open for competition.”
This represents a sharp break from current practices among the 600 or so MLSs nationwide, some of whom have threatened to cut off brokerages who have attempted to publicly display commissions.
Most MLSs, unlike NWMLS, are owned by Realtor associations and National Association of Realtors’ policy allows, but does not require, association-owned MLSs to prohibit display of compensation offered to buyer brokers. Most, if not all, do.
Other MLSs could follow NWMLS’s lead. Real estate commissions have been under increasing scrutiny in the past year. First, they attracted an unexpected amount of attention at a real estate competition workshop held in June 2018 by the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ).
Then earlier this year multiple class-action lawsuits accused NAR and several real estate franchisors of antitrust over the sharing of real estate commissions between listing brokers and buyer brokers.
And the DOJ has launched an investigation into real estate commissions, prompting a demand that MLS system vendor CoreLogic turn over a bevy of information on MLS data, including all documents relating to any MLS members’ ability to search based on the amount or type of compensation offered by listing brokers to buyer brokers.
NWMLS, which uses CoreLogic’s Matrix system, told Inman it allows its subscribers to create and filter searches by any field in the MLS, including commissions, and this includes searches made on behalf of buyers in which they send search results to buyers or set up listing alerts for them.
Your Home is your greatest investment! Know these questions and answers before you interview! The difference can cost you thousands!