The Future of Real Estate Commissions

If you’ve been following real estate industry news, you are undoubtedly aware of the National Association of Realtors settlement regarding real estate commissions and the concern over the practice of home sellers paying buyer broker commissions. This decision may raise questions about how both a buyer agent and a listing agent work in concert to come to a successful property sale going forward.

At ERA Martin Associates, we understand that our Realtors perform hundreds of tasks throughout the real estate transaction to ensure our clients get to the closing table with the best sales situation possible. Our sales professionals provide much more in value than they receive in compensation and are available to provide detailed buyer and seller consultations outlining their services.

Here is an overview of just some of the many things a seller’s agent and a buyer’s agent are tasked with accomplishing to ensure a smooth transaction:

• Pre-listing:  Comprehensive research on competing properties, sold and actively on the market, listing and sale pricing, days on market, property differentiation, tax information, legal descriptions, subdivision plats, ownership deeds and more to prepare an all-inclusive report for the seller’s consideration.
• Listing presentation: Provide an overview to seller of current market conditions and predictions, offer pricing strategy and discuss marketing goals, gather square footage and measurements, discuss potential buyer pools and financing options, gather utility costs and a complete list of repairs and maintenance, review interior décor and suggest changes to shorten time on market…just to name a few functions.
• Initial buyer presentation: Just as the listing agent is preparing a seller on the market and how to properly prepare their property, the buyer agent must educate the buyer about current market conditions, review their goals, wants and needs, assist them in understanding closing and future ownership maintenance costs, as well as helping them through the mortgage qualification process and reviewing contract offer paperwork and the offer negotiation process so they are fully educated.
• Listing property: The seller’s agent needs to load the listing into MLS and multiple online sites, arrange for lockbox and sign installation, prepare with administrative staff for photography and development of offer sheets, advertising, just listed notifications and online presence, promote and provide strong presence at all broker and public open houses, coordinate showings, review market conditions and showing feedback on a regular basis with seller, promote property to buyer and broker networks, and so much more.
• Property Showing: During this time, a buyer’s agent is gathering all the information on potential properties for their buyer and educating them on each property’s neighborhood and town facilities, showing the property, discussing with the listing agent all property particulars and gathering a property conditions report, to name a few things that ensure full disclosure.
• Offers: The buyer’s agent will work with the buyer to understand all the variables that may be important to a seller, and prepare a well thought out and thorough offer, ensuring not only price, but closing time, financial information, items included, inspections and more are spelled out for seller review. The listing agent will then review all offers and prepare a net sheet for sellers to compare, gain documentation to ensure the buyer is qualified to complete purchase, discuss the merits and weaknesses of each offer and provide options for further negotiation, and then prepare any counter offers.In the market we have been navigating for the past year, the offer process requires  more due diligence on both the buyer and seller side than even before.  Buyer agents may prepare numerous offers as properties experience multiple bids.  They may be helping their buyers start their search over many times…each time going through the process of developing a thorough offer.  Seller agents need to navigate through several offers, providing all the pertinent information, creating spreadsheets that summarize all the bids and guiding the seller through the onerous task of determining the best situation for them, all the while following up with multiple buyer agents on the particular process that the sellers have determined to follow to ensure everyone is treated fairly.
• Contract:  Contract negotiation is an important function and requires both a skilled listing and buyer agent. The time between contract and closing is also crucial for both professionals to ensure a successful transaction including working with attorneys to ensuring delivery of deposits, working with mortgage professionals to ensure on time completion of the financing process, and not only attending inspections but re-negotiating the contract if required based on inspection results, working with appraisers, processing paperwork for closing and so much more.
• Follow-up after closing: Our sales experts do not consider the day of closing as the day their job is done. We ensure you are welcomed into your new community, follow up on any home warranty paperwork and claims, clarify any concerns regarding home repairs and maintenance and make sure all MLS and online portals have closed out the property as sold, signage and lockboxes are removed and more.

We strongly believe that the Realtor is essential to ensuring a successful real estate transaction for both the buyer and the seller. Today, the seller negotiates the total real estate broker commission in the listing contract and the listing brokerage agrees to split that fee with the cooperating buyer brokerage. While the logistics of how a buyer agent may be compensated will change, we expect that buyers and sellers will continue to want the support and guidance that real estate professionals have delivered so well for decades. Even with all the tools available to modern buyers, buyers are generally reluctant to “go it alone” when negotiating what’s most likely the greatest economic transaction of their lives and will continue to seek the help of a buyer’s agent.

We believe that, while commissions are negotiable, being open to negotiating cooperative commissions at some point in the transaction ensures that sellers can expose their properties to the greatest number of buyers and earn the highest price for their homes; and buyers have access to more properties while affording representation.