Many agents are going to make less

One of the things that used to piss me off the most over the last couple of years: when inferior agents offered a sub-par commission for the buyer’s agent, and I was representing a buyer.

Yes, I could have had my clients make up the difference. Aside from that though, what I really wanted to do: was offer less to those agents when they brought a buyer to my listing(s). However, there was no way to do that before.

Now there is.

What’s going to happen in a post-August 17th environment? Commissions will almost certainly go down. Consider this article on fees across the country.

My guess: in the big, competitive markets the rate being offered/paid to buyers’ agents will continue to go down - maybe even significantly.

Why?

Many agents have a (significant) gap in skill, knowledge, and experience. Why should they be paid the same as a trained, experienced, and professional agent? Up til now, inferior agents could still get paid a pretty good fee on the buy side. Probably not so much anymore.

Many agents simply have no skill in getting a full fee.

But that’s not quite the whole picture. What's probably also true is that: Agents are not clear about their real value What “the industry” and their brokers tell them is their real value is not their real value And...agents don’t have the right skills in articulating what their fee is and why that is the fee they charge

Then you have many brokerages that are simply body shops - the number of bodies is what drives their income - not the volume produced nor the fees received. What is their incentive to help agents be better?

Let’s also not forget that the “discount” brokerages have a discount mentality. Their pitch is the discount! So why would a highly qualified agent work at a discount firm? By definition, the quality of representation is almost certainly going to be sub-par.

I heard - very second hand - that one national brokerage is instructing their agents to tell their sellers to offer 0% to buyers’ agents. While I cannot vouch for the validity of this statement for now, in my market this particular company has historically demonstrated an offering compensation well below what I consider acceptable when I am representing a buyer. Think about this for a minute - these agents are going to tell their sellers “No, you don’t need to offer a fee at all.”

What is going to happen when they go on the market? We are going into a slower season, with increasing inventory and decreasing prices. That seller is likely going to be disappointed with the market dynamics and they will not have been prepared ahead of time for this scenario. THEN...when they finally get an offer - likely the “buyer” will be asking for their agents’ compensation to be paid out of the seller’s net sheet (so the compensation can be rolled into the loan). Boy is that seller going to be surprised - and upset!

Now flip the script. How is that agent ever going to get paid as a buyer’s agent?

“Oh, but I will just be a listing agent.”

Good luck with that. No skill = no listings. In order to get listings going forward, there are two options:

1. Discount your fee - and work with the 10%-20% of the people who will work with you because it’s cheaper. By the way, these are often the most difficult and unappreciative toxic people one could have in their life.
2. Be a professional who knows how to guide people to where they want to go.

No one knows what’s ahead. The settlement isn’t even approved yet - that is slated for November. There are so many things that are unknown, unclear, and/or likely to change.

Having said that, I am sticking with the “amateurs are going to get washed out”. One cannot survive on reduced fees - there simply isn’t enough money there to make it viable.

Sure, there will be a percentage of buyers who are able to find ways to buy through listing agents or use discount agents for next to nothing in compensation. But that will not be most of the market.

Most people will want - and need - a professional representative.

• Would you go to court unrepresented?
• Do you diagnose your own medical conditions and prescribe your own treatments? Do you provide surgery on...yourself?
• Why do wealthy people have business managers, accountants, financial planners, and other professionals on retainer?

I’ve said this before - in the last 10+ years, we have seen a 50% increase in the realtor population combined with a seemingly corresponding decrease in skill and professionalism. Much of the industry seems to have been focused on marketing, i.e. social media skills, video, etc. Are you going to hire the surgeon with the best track record or the one with the best TikTok feed? Yes, I know some people get their news and medical advice from TikTok - that’s kind of my point!

When it comes down to it: we really have no idea what’s ahead. We could get blindsided by something totally different. However, it seems unlikely that qualified, skilled, professionals will be un-needed or un-paid.

To me there is a simple, clear path forward: be really good at what you do, and be better at demonstrating it to your clients. By the way, neither of those things is exciting. They are boring, arduous tasks that many are likely unwilling to do.