Realtor Commission Settlement One Year Later

It’s been a year since the Realtor commission settlement was announced and 7 months since it went into effect. So, what’s changed?

From a buyer standpoint, buyers and their agent should have some type of written agreement prior to viewing homes. It’s important to note that buyers can always visit our Open Houses or contact us about any of our listings without signing any agreement.

One intention of the settlement was for buyers and their agent to have a compensation agreement regardless of who is going to pay for that compensation. In my opinion that makes sense. From there the only question is who is going to pay, buyer or seller.

From a seller or listing agent side things get more complicated because in Texas we still have two ways to handle compensation. To be clear, I am open to either of these options and we just have to decide what is better for you.

Some states, such as California, have eliminated one way that is still available to us. In my opinion that is a better way to do things and my expectation is at some point Texas will make that change as well. That means anything I have to say may be obsolete in the near future and my opinions may change as time goes by.

In Texas we still have what’s called “Broker to Broker” or what I call the “Old School Way.” To make things easier to explain let’s call that the “A” way. In this situation the seller pays me and then I pay the buyer agent compensation out of those funds. The upside of this is buyers and their agent know their transaction costs upfront. The downside is once I have committed the amount of money to the buyer agent that is in the listing paperwork it isn’t negotiable and most people when I ask them what they’ve heard about the settlement use the word negotiable.

Any specific compensation being offered to the buyer agent can’t be listed in the Board of Realtors MLS listing. The intention of the settlement was buyers would view a home and then negotiate an offer. What we find is many agents are still calling us to find out what the sellers are paying prior to showing a home. I’ve seen social media posts from agents saying they aren’t going to show a home or the buyer doesn’t want to see a home if the sellers are not committing a specific amount of money upfront.

That’s not how things were supposed to work! My opinion is many buyer agents are not explaining how things work correctly. If you are planning to buy a home you need to be working with an agent who will show you all the homes.

The new compensation method, let’s call it the “B” way is for the seller to only commit to paying a specific amount to the listing agent. A buyer is responsible for the compensation of their agent. The buyer may try to negotiate for the seller to pay that cost but the seller isn’t specifically committing anything upfront.

A seller can instruct me as your listing agent to offer compensation or to let anyone know to bring their best offer and we will negotiate it all at the same time. Effective January 1, 2025 there is now a specific place in our contracts for a buyer to negotiate the seller paying the buyer agent compensation.

Who decides? The seller decides which route they want to go. Of course, everyone asks me what I would do. I am open to either scenario and have sold many homes either way. I would say 50% of my clients choose A and 50% choose B.

My concern is always about what nets the seller the most amount of money. I would have to know more about your situation to recommend a strategy for you.

If you plan to sell your home, now is the best time to attend our Free Home Selling Seminars. If you want to attend a seminar, contact us, and we will notify you when they are scheduled. As always, you can check KopaSeminar.com to see the dates and times of our in-person and online Free Home Selling Seminars. For years, home sellers have told me they benefited from attending our events. Sign up at KopaSeminar.com.