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So if you’re thinking about selling your house in the spring and of 2024, should you pay the buyer’s agents commission? Because that is the big talk right now in the real estate industry. With the recent settlement and the big changes that are going to possibly come in the spring of 2024, what is the right thing to do?
How to optimize the most exposure and make the most money when you sell your property.
Welcome back to Shawn Realty Show. This is Shawn Yu in Portland, Oregon, selling since 2008. So should you offer buyers agents commission April of 2024? My quick answer is yes, because the traditional selling system until now, there’s no big changes yet happened. Also, the settlement that needs to be approved by the DOJ and judge, and there’s no clear system better way to do it without using the traditional selling system. But you should know that any agents commission can be negotiated. You as a home seller offering buyers agents commission. What it does is it’s inclusive of most of the buyers.
Now, most of the buyers work with the buyer’s agent because they see the value, especially first time home buyers. They really need hand-holding. For example, the new couple who contacted me about two months ago, we wrote an offer two nights ago, and the day were two other competing offers and in that process showing homes. It took me about two hours. We had two phone calls each. Phone calls took about an hour. So the first one was explaining or talking about the offer, what we should make. The second our call was about going through the offer contract form, because in Oregon we have about 15 pages of legal that buyers need to understand what they signed before they sign. They really have a lot of questions. If you remember when you bought your first home or second home or third home, imagine buying that house without an agent. It would be very difficult because many different situations can happen. Real estate sales process can be pretty complex, so understanding that most buyers want their own agent, let’s say hypothetically, if you don’t offer the buyer’s agents commission starting today, what’s going to happen is buyers are going to lose more affordability. What I mean by that is offer price that they can make will be lower. So in the current system, if this buyer can make $600,000 offer based on their monthly payment of affordability calculation, when you decide that you’re not going to pay their agent’s fee, they have to somehow pay out of their pocket. That means they can offer less homes, less home price, which means that to you, when they make an offer to your home, they have to make a lower offer.
And at the same time, your listing agent may have to deal with the buyers directly. Now it creates really interesting dynamics because you hired your listing agent to represent you, the seller. But now they have to. The agents have to deal with the buyers at the same time.
So buyers have two options at that point.
1. Have your agent just represent you. The seller and buyers are going to self represent. And there’s a lot of things that could go wrong here because buyers don’t know what they’re doing most of the times unless they’re seasoned investor type of buyers, they don’t know much about the rules, their rights. And so that increases legal liability to your agent, the selling agent, seller’s agent, and you the seller. Do you want this situation? Most of the lawsuits happen when the sellers don’t disclose the material facts. That affects the home value that the buyer should know. In Oregon, we use property disclosure form. The seller has to fill out and share what they know about the house. Now, if the buyers don’t get the information the right way, or well, explain gained by their buyer’s agent because they don’t have a buyer’s agent, there’s a higher chance that they could misunderstand your information. Higher chance of getting lawsuit if they’re not happy after buying the property. That alone has a lot of value in buyer’s agent. Like I mentioned, it took me almost an hour to go line by line to this young first time buyers explaining the and different options on each paragraphs, what their rights are, what options they have, and if somebody is not representing them, protecting their buyer’s interests and explaining the legal process of home buying process, there’s so many things that can go wrong.
2. The second option at that point is that your listing agents becoming the dual agent, meaning potentially representing both or becoming a third party entity that just delivers the message between the seller and the buyer And at that point, the workload becomes a little bit more because the the agent has to explain things to the buyers and the sellers, and you have to be really careful so you don’t favor one side or the other. It creates it’s legal in Oregon with the disclosed limited agency For it to work well, everybody has to be very clear. Everybody has to be very ethical, including the agent. So that will be the second option for the buyer and that can be done. But it makes fine balance walking the fine line quite often with that situation.
To make a long story short, until they come up with a new brand new system that can mitigate this issue. It’s good thing to offer buyers agents commission in the current system. That way you are including all the buyers out there who are represented unrepresented. Self represented, no matter what that might be, you’re going to get most exposure. The biggest buyer pool. More buyers can look at your home and feel comfortable making an offer to your house. That’s the goal, right? The more buyers eyeballs give the attention to your listing higher chance that some of them will make an offer. Hopefully multiple offer situation for you. And when that happens, there’s a higher chance that you’re going to gain more profit when you sell your house. But if you say, hey Sean, but I want to save money, I’d rather even not hire the listing agent and I want to sell it as a for sale by owner just listed myself. You can certainly do that. about 10% of the homes in the United States are sold directly by home sellers. They don’t hire an agent. So in that case, traditionally looking at the data for sell by owners make less money because these buyers know that they don’t have the listing agent, so they end up making a lower price offer. That’s up to you. It’s definitely an option, but 90% of the home sellers and the transactions that happen are through the seller’s agent connecting with the buyer’s agent. They negotiate between representing sellers and buyers. When two agents are working together to fight for their client’s best interest, that really makes healthy balance and creates this true free market competition. Sellers want more money. Buyers want to pay less. However, there’s a multiple offer situation. Somebody wants to get that house. So that agent’s communication and the protection, the explanation of legality and home buying and selling process everything combined will get you the highest potential net profit when you sell a property. So that’s why I think you as a seller until this until they come up with some brand new system, go ahead and offer some buyers compensation. Talk to your listing agent and see what they recommend and trusting your seller’s agent. Your listing agent will get you the most successful transaction.
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Shawn Realty 