What The Realtor Lawsuit Means For Sellers...

This has been the talk of the real estate world over the last 90 days. Speculation on what this means and who it affects has run rampant across social media and in all honesty not for the better. A lot of agents talking to each other and few talking to you the consumer. Unfortunately it has been painted as a monumental change in the industry when it really is not. My goal is to talk about the facts in this article, not my personal opinion.

Let's set the record straight as to what this does and doesn't mean for you as a home seller...

Using A Realtor

If you sell your home you are not obligated to use a Realtor. You never have been. There are for sale by owner websites and resources that you can use to sell any property without paying an agent. Selling a home on your own means doing a few easy things and a few potentially not so easy things. You'll need to take your own listing photos, have those edited if needed, uploaded to for sale by owner portals or social media platforms. You'll need to understand and interpret the Real Estate Purchase Contract with all of its addendums and clauses. If you live in an HOA you will need to gather all relevant HOA documentation for your buyer. You must fill out a Seller Disclosure questionnaire. Vetting your buyer is also very important. Making sure the contract is written properly to protect you. These are a few of the things that go into selling a home. You can do this on your own.

No big change here...

Paying Your Realtor

In the same way, if you elect to use a Realtor to sell your home there is no rule on earth that says you must pay 6% in commissions. I know some agents make it seem that way, hence the lawsuit. Everything is negotiable when it comes to fees. I owned a 1% list agency for years, the discount option has always been available.

When choosing an agent it's important to not only focus on the fee but the skillset and resources that the agent brings. The reality is it's not 2021 anymore. The market has changed and homes are not flying off the shelves the way they used to. It takes more skill these days to navigate a transaction. So when it comes to vetting agents, are they actually good at this? If they sold 1 home in the last 18 months odds are 3% is a steep price tag. Just like a CPA, an attorney or a chiropractor experience matters.

No big change here either...

Paying The Buyers Realtor

Here is the rub. This seems to be the entire problem. Here is where the smokescreen begins. You see many would have you believe that you have been legally obligated as a seller to pay a 3% commission to the buyers agent. This is false. Remember, everything is negotiable. The confusion lies in that while you are not obligated to pay a buyers agent it is in most cases in your best interest as a seller to do so. Why? The "no buyer agent commission" experiment has already been done and those properties sat on the market. While everyone else around them were selling they sat largely ignored. Whether we like it or not most buyers simply cannot afford to pay for an agent on top of their downpayment, closing costs, and other fees. This is why the system was set up this way in the first place.

This leads to the age old question in real estate. Who is actually paying commissions? Is it the seller from their sale proceeds? Or is it the buyer from their loan/cash to close proceeds? I'll leave that answer to you... Nobody in the real estate world knows the answer.

Buyer agents actively market homes on the market, yours included, to their buyer pools. If your home is not in that pool you simply will not get exposure. You might ask "well that's not fair that they don't show my home even if I don't offer a commission!" To which I say, would you work for free?

Probably not. You see real estate is a game of cooperation more so than competition. You as a seller need a buyer. That buyer usually needs a bank. That bank usually needs down payments and fees to be paid. Everyone brings something to the table in order to make the deal work. Agents, consumers, lenders, inspectors, underwriters, title reps and more come together to get the deal closed.

There is no change here...

If you do not want to offer a buyer agent compensation you do not have to. Like anything there are pros and cons to that decision. The point is most people think it's mandatory. It never was.

So the next time you go to sell a home ask yourself the following questions

How much you are willing and capable of doing yourself? How much you are willing to pay for a professional? Is that person actually a professional? Do you want buyer agents actively working to sell your home to their buyers? If the answer is yes then the traditional model works incredibly well already.