Why would a brokerage NOT provide you all your options as a home seller?
It's a serious question you should be asking! As a seller, are you being shoved into a lane of compromise, possibly at your own expense? It will sound like a great idea until it's NOT.
The majority of all real estate sales have two parties involved in transacting with their own representation. That means you typically have 4 parties involved (seller, seller's agent, buyer, and buyer's agent), and to be successful, all 4 have to work well together. Transparency and trust become essential in a long-term transaction like real estate. These purchases can take weeks or months to complete, and the more transparency and certainty the seller and buyer have greatly increases the chance of closing the transaction. So what's most important to each of them? Keep in mind the goals and priorities are certainly different from person to person, and it can be situational as well. Let's take a look.
First, the seller has a few concerns, like what they'll net, how long it will take, and the amount of work and time needed from prep to show to close. The seller has the ultimate power to say yes or no to any and all offers they receive, provided the overall terms and net. The seller has a roof over their head and, most of the time, time is their friend, and they can be patient. Sellers continue to have many options available, and they always have. They can sell on their own, they can work with an agent and negotiate services and compensation, and they can decide whether they want other agents to bring clients and represent that side of the fence while compensating that representation.
Wait, what? The seller can pay a buyer's agent to bring a buyer and represent the buyer? Well, yes, they can. But why would the seller pay them or contribute to what they, the buyers, agreed to pay their own representation? Because it makes good sense, really. Closing means success, and that has a value. Having two agents involved has the highest success rate because managing the transaction details as well as decisions and emotions takes skill. Also, don't forget who's bringing the money to the table to make it all happen. That's right—the buyer, and many times the combination of buyer and lender, brings the money. They bring the funds, and you, the seller, distribute the funds with an eye on a satisfactory net.
What about the buyers? Most of the time, it's a combination of value, future value, and how much out of pocket they'll need, along with monthly holding costs. As of this time, the buying audience is well below the demand. In other words, many people would enjoy owning their own place to call home, but affordability is a stretch, especially given the prices that rose recently and then more than doubling of the interest rates. That combination is currently a strain on the housing market.
Wait, how can we make housing even less affordable for those who do want to buy? Just add in the Department of Justice, as they have added another potential line item of uncertainty at the closing table. The DOJ is doing everything they can to make compensating the buyer's agent, which a smart buyer would want to have working for their best interests, solely at buyer's cost. Yes, even though the buyer is bringing all the money to the table to begin with, now the DOJ says they should pay more?
Let's also make it even more complicated: IF a seller wants to offer any compensation to a buyer's agent, then they can't advertise or offer that incentive in the most transparent way—the Multiple Listing Service. Now combine that with the new rule forcing buyers and agents to have a clear written agreement addressing the agreed buyer agent compensation prior to even looking at a single home with their agent. How much more pressure can the homebuying public take? Having an agreement makes sense, as a buyer should be fully aware of what services they should receive for a specific price or rate. However, combining that with a shell game to hide the compensation is clearly not a comfortable place for a buyer.
Meanwhile, many companies and brokerages are trying to win sellers over by selling their seller clients on a reduced offering or no offering at all to those representing the buying public. That's clearly within their rights, and I understand that, yet the buyers will also have a say and a material cost to contend with. In my experience, a buyer wants to know what they'll need in order to complete their purchase, and that includes the compensation to their own agent. How often do you think a buyer has the money they're agreeing to on paper with their agent? I'm going to tell you it's less often than you think.
You have to ask yourself, what's really changed? I can tell you what hasn't changed: people. People have the same concerns and same strategies as they did even 40 years ago, and you have to work well with each other, or it just doesn't start well, let alone end well. When you alienate the population you need as a seller or as a seller's agent, then where do you expect to find success? Today is inching more and more toward a buyer's market, and it's definitely a level playing field already. Don't you think it makes sense to demonstrate the will and capacity to work well with others?
Why are some brokerages completely disregarding basically everything I've written here and eliminating a seller's ability to be upfront about their will to compensate at a certain level or amount? Because they're fearful of being part of the next class action lawsuit? Don't you think maybe it's possible they're actually creating the issue by taking away a client's options? Harmful advice creates harmful outcomes, and you simply cannot hide from that. It's called malpractice.
Meanwhile, these same people are claiming the higher mountain of 'fiduciary duty' as their self-justified stance. At the same time, their agents are compromising their policy when they represent buyers. They're making the phone calls and discussing compensation prior to showings. If you understand the value of buyer agent compensation to a buyer, then why do you magically forget about that when you're in the living room with a seller client? Actually, they don't even discuss all their options in the living room with their own clients because their own theories cloud their messaging depending upon whom they're speaking with. Does this sound like integrity to you?
The bottom line is this: people matter, and buyers are people. If you want to succeed in the sale of your property, then use your resources to do so and always keep an eye on the net you want to achieve. Sellers need to listen to agents who provide all the options they have available and not just the ones the agent in front of them is able to offer due to self-imposed restrictions. Yes, everything is and can be negotiable, and it always has been. The number one thing that's not negotiable is being reasonable, and that's not going to change. Nobody has to look at your home. Nobody has to buy your home. Like any product, you have to market what you're willing to sell and get people to want to buy it. It's called attention and attraction. If your attention is solely on yourself, then it will be difficult to transact with another party to reach a favorable outcome. If a seller isn't provided all the tools available, then start asking questions and take back control of your rights to provide an environment conducive for success.
