Long Time Greenwich, CT Real Estate Guy Weighs in on 1st Realtors Commission Shakeup in 100 Years

On August 17th, new rules rolled out that overhaul the way Realtors get paid to help people buy and sell their homes.

 

The changes are part of a $418 million settlement announced in March by the National Association of Realtors.

 

The changes end the ‘informal’ rules of a typical agent commission payout.

 

Now real estate agents across the country must sign upfront with prospective homebuyers what they’re willing to pay.

 

Historically the ‘sellers’ paid commission fees for both their own agent and the home ‘buyer’s’ agent. The typical commission has been 5 to 6 percent split between the two brokers.

 

That structure was pretty much enforced by The National Association of Realtors which has roughly 1.5 million members who pay dues.  If a seller didn’t agree to those terms their listing wasn’t shown ion the multiple listing services that drive most home sales.

 

This latest decision basically makes commission sharing optional so that sellers’ agents who don’t want to pay buyers’ fees can still list on databases.

 

Real Estate agents across the country have been attending trainings and learning the details of new contracts they must sign with prospective homebuyers.

 

Gideon Fountain is one of those agents and he’s also one of the owners of WGCH Radio in Greenwich, CT where I broadcast my weekday radio show. He grew up in Greenwich and has been selling real estate in the Greenwich CT area since 1986. He’s now an agent for Houlihan Lawrence.

 

I asked Gideon Fountain to join me in the studio to give me his take on the new real estate broker commission laws that just went into effect. He said;

 

 

“With these new rules if you’re a Real Estate Broker or Agent you have to tell your home buyers ‘up front’ that that they have to decide on the amount they're going to pay in commission whether you bring on somebody else to help you or not."

"There are two places on this new contract, and it says, here's our service fee. And we might say our service fee is 2.5%. Let's just say we write that. Two and a half percent. Then we also have another paragraph that says, you authorize us to accept compensation from the seller."

"If a buyer wants to look at a property and the seller is offering nothing, and that would be a very foolish move by the seller, I would say, then yes, you would say to the buyer, look, I'm happy to help you with this transaction, but I got to make money. I'm not, this is not charity. So here's my contract."

"Pay me two and a half percent. For some buyers, that's entirely possible. They might think, well, what do I need you for? You know, I don't, but they have no idea."

"But the buyer agent, it's amazing. You should hear the conversations between the soliciting agent and the buyer agent when the listing agent says my client won't go down one more penny. Can you make your guys go up a little bit and the buyer broker says? All right, I'll try whatever we're at a million five. What's it? What's your guy want? He wants a million 550 not a penny less So then the buyer broker goes back to the buyer says come on you guys are gonna lose this I mean we have there's very few choices right now You really believe you've lost out on six bidding words. You really want to hold out for $50,000, and the buyer says yes. So, then you go back to the listing agent. Sorry, they're not budging either. And then, you know, everybody sits still for a while. But this is the kind of give and take that exists and should not be interfered with by government action."

"It's negotiation. “

 

Gideon believes real estate agents have remained viable because they accumulate an array of local market knowledge that is hard to duplicate.

 

“Going out each day and seeing properties noting their eventual selling prices and hearing customer reactions to those properties is an invaluable experience that a Zillow search will never match.”

 

For Home Buyers and Home Sellers there’s good recap of these new rules and what it means for them on Bankrate.com in an article called;

 

“Realtors commissions changes are here: What they mean for homebuyers and sellers.”

 

Meanwhile enjoy this podcast of the rest of my live conversation with long time realtor Gideon Fountain on The Debbie Nigro Show.