by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
“I just showed three houses this week, out in L******, and all of them had 2% co-brokerage fees. Learn to sell, listing agents”
I read this post (paraphrased), from a former car salesman with a Florida real estate license, in a Facebook group the other day. The irony of it was too delicious to pass up so I responded with something like this:
“It is laughable to watch an agent, who can’t sell a buyer on the value of his services, complain about the fact that his compensation is set by another real estate agent. Sell your value to your buyer, charge a fee for the services you will provide, disclose how that buyer brokerage fee will be paid, and negotiate a contract which pays you that fee in a manner which benefits your client”.
I may have taken a snarky swipe at the original poster but I don’t remember because he deleted the thread. Good. I am sure the guy was just airing his frustrations but that sort of weak sauce is the last thing I would want on the internet if I were him.
Let’s talk about the REALITY of real estate brokerage in 2021:
1- While price appreciation may have slowed, the real estate market still has a supply/demand imbalance. This means that homeowners can negotiate lower commissions to sell their homes.
2- Listing agents, with the right property, have little to no need for buyer agents today. If it is priced at fair market value, entered properly in the MLS, and aggregated across all of the realty bots, buyers will line up to tour the home. Thus, paying a co-brokerage fee of more than $1 seems like a giant waste of money.
3- The US Department of Justice doesn’t like this at all and the National Association of Realtors has lost any power to perpetuate the existing compensation model. Expect buyer brokerage compensation to change.
Every time this subject comes up, buyer agents wail and grind their teeth. The most common comments I read are “It’s so hard to work with buyers nowadays, I DESERVE to get paid more; I practically work for minimum wage”. I offer three pieces of advice to them:
a- Get out of this line of work.
b- Learn how to build your value, negotiate your fee with a written agreement, and get paid what you think you are worth.
c- Shut up. Nobody cares that your buyer clients expect you to work for “free” (which is probably what you told them it would cost to use your services).
Obviously, “B” is the best choice and that is what I hope to discuss over the next few weeks here. If you want to follow along, I might suggest that you start by reading “A Consumer’s Guide to Divorced Real Estate Commissions” by Greg Swann. The link to the e-book is here:
Introduction to “A consumer’s guide to the divorced real estate commission” — the eBook
