Wanted – A Buyer for My House
As of this Saturday, August 17th. all Multiple Listing Services (MLS) in the USA will no longer contain an offering of compensation to an agent who brings a seller an Offer to Purchase their house.
The reason for this change is that earlier this year, a number of sellers in Missouri sued the National Association of Realtors (NAR), along with several of the country’s biggest brokers, saying that they, the sellers, had been forced into offering a reward or compensation to a buyer’s agent for bringing them, the sellers, an offer to buy their house. Further, they said that offering was pretty much fixed at 3% of the purchase price and that was an anti-trust violation. The judgement was for $1.8 Billion and that’s when the Department of Justice (DOJ) got involved.
The DOJ mandated that the practice of publishing a reward on the MLS led to price fixing, that all compensation must be negotiated, and that agents representing buyers must explain their services and be paid by the buyer.
However, and there is always a however, the DOJ said it was fine for the seller to offer a reward and that reward can go towards what the buyer’s agent is getting paid.
Sound confusing? It is, because like an endless loop, this whole thing has changed nothing, except for where the sellers offering of a reward can be published. It is no longer on the MLS, and several other platforms are now reluctant to publish an offering of buyer’s agent compensation. Who wants to get sued for $1.8 billion, right?
The solution, and there always is one, is that agents representing the buyer must enter the amount of reward they want on Page 3 of the contract, which makes it negotiable. This means that if an offer comes in asking for seller concessions on Page 3, the seller can now decide whether or not they pay a reward as a part of the negotiation.
Now sellers are still free to offer a reward up-front, like on a flyer or a sign rider, and that may sound like a good idea, but if they do, they are stuck with their reward and will be expected to pay it.
So, what’s a seller to do? Offer a reward or wait to see the ask on the contract and negotiate? I like the idea of negotiating, but then I love negotiating. If an offer comes in at full price, a seller may be inclined to pay a reward, but if the offer comes in low, then why pay a reward? Maybe this will get better offers.
In a competitive market, a seller may try to stand out by offering a higher reward, but that is a judgement to be made when you sell.
If you are thinking of buying or selling in this market, we would love to guide you through these turbulent times. You can call me any time on my 24/7 cell 602-796-5751.
Next week – Something Exciting!
-Joseph Callaway