|
higher commissions. I personally think a buyer would catch on pretty quickly if their agent was doing that to them, and I would like to think that most agents have a moral compass that would prevent them from doing that, but alas, it only takes one. So now when I have a client who is interested in a property, I would ask the listing agent if their seller is paying a buyers agent commission when I call to schedule the showing. As you can see, this change really does nothing to stop the potential steering of a client, as an agent could still steer them towards the higher commission listings after making a few phone calls.
The headlines severely misconstrued this change, with some saying that X% commissions are a thing of the past, and that going forward buyers will have to pay their agents commissions directly to them instead of the seller paying them. First of all, commission amounts have always been, and will always be negotiable, and yes that even means who pays (buyer vs seller) the commission, which is already misconstrued because the commissions are typically paid from the sellers proceeds once the sale closes, but the seller only has those proceeds because of the payment from the buyer. Secondly, as I'm sure you can imagine, a buyer being responsible for paying their own agents' commissions directly, would really throw a wrench in the mix for just about all buyers within our market. As of 2021 (most recently updated records) Humboldt County had the 8th lowest household income in our state, when you pair that with a property value increase of nearly $100,000 that we experienced during COVIDs housing market madness, the already difficult task of becoming a Humboldt County home owner, became nearly impossible for a large swath of our community. Now, in theory, you have to add on an extra $10,000 - $15,000 in commission fees to directly pay your own agent, the math simply does not add up. But don't let good ol' logic get in your way, as we've already seen a few listings hit the market this month that are offering zero compensation to a buyer's agent. I personally think these properties will have a hard time selling because I imagine a prospective buyer would rather find another comparable property to buy where they are not required to pay an extra 10k.
I have heard some argue that these changes would be the first domino to fall creating the extinction of a buyer's agent, but that would leave us with two options: buyers working directly with the sellers agent, or buyers representing themselves, both of which come with a giant heaping pile of liability, and the obvious poor quality of representation the buyer would receive (it's a very common myth that a buyer benefits from working directly with a listing agent (dual agency), when in reality, that seller was the listing agents client first, and then you as the buyer come second. It would be argued that the agent gives each client equal representation, but how in the world do you sell your clients home for the most money possible, while also getting the buyer the best deal possible?!)
The other change our industry will experience stemming from this judgment, is the mandatory use of a Buyer's Representation Agreement. This document clearly lays out who is representing the buyer, and what the compensation will be for the agent who is repping said buyer, whether that's derived from the listing agent's proceeds, or directly from the buyer themselves. Luckily for me, this document has been a requirement within my brokerage way before I became an agent, so it's business as usual for me. It is important to remember that this lawsuit originated in Missouri, where they're not necessarily on the forefront of ethical real estate practices, whereas here in California, we are on the cutting edge and we regularly see other states adopt practices that are originated by CAR, California Association of Realtors. So while everything being said has a nice undertone of doom and gloom, I think this lawsuit will serve as a good shake up for the industry and will help to oust the agents who are doing this job for the wrong reasons. Additionally, I think this will help the general public to demand more transparency and better representation from their agents which is a great thing!
| 
