We know that NAR lost the lawsuit, totaling $5 billion. It's actually $1.8 billion, but it was tripled during the court process. Additionally, some major franchises in America are also involved in this lawsuit.
You might think that it doesn't affect us because it will get appealed, but that's wrong. The major news outlets have been covering this story since the trial, and now, after the verdict, they're going to continue. Your clients, both buyers and sellers, will be talking about it.
A situation might arise when you or another agent in your market is taking a listing, and the seller asks, "I read in the newspaper that I don't have to pay a buyer agent commission. Is that true?"
How do you respond to that?
Well, here's how your conversation should go:
“You have the option not to offer a buyer agent commission. It's entirely optional. But let me frame this for you as it's a competitive and buyer-related issue. If we choose not to offer a buyer agent commission, it means that buyers looking at your listing will have to write a substantial check to their agent, while they can choose from other listings that don't require this. This will likely make them look at those other properties first, and estimates suggest it could reduce your buyer pool by 40 to 50%.
So I wouldn't recommend it. The transaction is what pays the commissions when the buyer pays your price. As long as you have a price that you're comfortable with, and it nets you the amount you need, that's what we should be focusing on. However, the final decision is yours.”
This is one way to handle the conversation. Here's another approach:
“You can choose not to pay a buyer agent; it's your call. But let me show you the competitive market dynamics. I've analyzed every listing in your vicinity that sold in the last six months. These sellers had the same choice, and here's what they offered buyer agents: two and a half percent, three percent, three and a half percent, and there are a couple that offered nothing and they're still on the market or took a long time to sell.
That's the competitive landscape, and the decision is yours. But I'm noticing that properties where the buyer commission was a bit higher tend to sell faster, possibly because they got more showings. This could be a motivating factor for agents. Of course, it's your decision whether to offer a commission or not, or you can leave it to the buyer.”
These are the kinds of conversations you need to have with sellers. We often focus on this issue from the buyer's perspective, but it's crucial to address it from the seller's viewpoint as well.
So think about how you'll incorporate this conversation into your listing presentation today, rather than waiting for the appeals. It should be a significant part of your listing conversation.
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