As you’ve likely heard, the Sitzer-Burnett verdict and the copycat cases filed across the country have raised questions about the way real estate professionals do their jobs and how consumers hire and compensate agents. As of March 15, The National Association of REALTORS®️ (NAR) and plaintiffs have reached a proposed settlement which is subject to court approval.
One key component of the settlement is that NAR has agreed to put in place a new rule prohibiting offers of compensation to buyer’s agents on the Multiple Listing Service (MLS.) Offers of compensation could continue to be an option off-MLS. Offers of compensation to the buyer's agent were not required before the proposed settlement; however because sellers see the value in offering buyer's agent compensation, it has been the norm. I do not expect this to change.
A second key component of the settlement is that buyers will be required to have a written agreement with their agent. I think that this is a good thing as it will avoid any confusion as to the who is representing you, the responsibilities of your agent and how they will be compensated. These changes would go into effect in mid-July 2024. Many questions remain about the proposed settlement and how exactly this will play out.
One question that many would-be buyers will be asking themselves is “Do I really need a buyers agent in the age of the internet?”
As an agent with Compass, the largest broker in the US, and has represented buyers and sellers for the past 7 years in Marin County, California, I’m concerned that many buyers do not truly understand what an experienced, dedicated buyer’s agent does for them. A few too many believe there is “reality” in “reality real estate TV” and that perhaps representing a client has something to do with fancy cars, interoffice romances, and spiky heels.
Not fully understanding the complexity of buying a home and how agent compensation works, some buyers may try to "save money" by 1) forgoing their own representation, 2) working with a discounter with little local knowledge or experience, or 3) electing to be represented by the same agent representing the seller in states where that is allowed. Perhaps other options that we have not yet seen will also emerge. I fear that too many buyers are going to learn some very expensive lessons the hard way. Legal fees, homes that are not what the buyer expected, failed transactions, losing large earnest money deposits, and having difficulty getting offers accepted are just a few of the challenges that immediately come to mind without excellent buyer representation. Exploring each of these potential pitfalls will have to be a blogpost for another day. (But if you’d like my thoughts, please reach out as I'm happy to share!)
I thought that the best way to demonstrate what value an experienced and dedicated buyer’s agent can provide is to offer you a few recent examples of how I have helped my buyer clients. There are many, many more examples, but this limited selection should give you some solid insight.
- A client wanted to put an offer on a home with a water view. I noticed that there was an adjacent undeveloped parcel located between the home for sale and the water. I alerted my buyer to the vacant parcel and shared that if the water view was an important reason why he would like to purchase this home, we should do some further exploration. There was nothing regarding the vacant parcel included in the seller's disclosure package. Fortunately, I knew how to get a quick answer to our question. We learned that the owner of the vacant parcel intended to build a home there, and was in Design Review with the local planning department on a home that would have obstructed my client’s water view. My client was relieved that he had not gone ahead with the purchase.
- My client wanted to purchase a luxury home which had multiple offers. A full set of inspection reports were completed by the seller, but there were some key questions that remained. I knew the listing agent on the property and took the time to truly understand the seller’s relationship with the home and what was most important to them. We were able to craft an offer that won over the competition. Moreover, I was able to get my client's offer accepted with an inspection contingency (not an easy feat when a property is competitive). Once we were in contract, I was able to negotiate an additional $150,000 off the price for some foundation work that we uncovered that the seller’s inspector had missed. My clients are now happily living in the home.
- A client was considering putting an offer on a home located in a beautiful wooded area. Because I take the time to get to know my clients and understand what’s important to them well beyond preferred neighborhoods and a number of bedrooms, I knew that keeping their high-limit liability policy was important to them to protect their hard-earned assets. I alerted the buyers that the home that they were interested in was in a Very High Fire Hazard Zone and that this fact might limit their insurance options. My client would have had to go with a specialized insurance company rather than their current provider and would have been unable to obtain a new liability policy at their desired level of coverage. With this knowledge, the clients passed on the home.
- Buyer clients were keenly interested in a home that had some issues noted in disclosures regarding the foundation. I recommended a professional who took a closer look and uncovered significant and expensive work. My clients moved on and are now enjoying living in the perfect home for them nearby. Unfortunately, the new buyers of the home with the foundation issues are now involved in a lawsuit.
- My client had a very specific area where they wanted to purchase a home. This particular area of luxury homes was very popular, and often homes were sold before they hit the market. Because I knew exactly what they were looking for, for many months I reached out to current owners in the community to see if they would be willing to sell and also networked with agents who I knew often had listings in the community. I located a home that my clients were able to tour before it hit the market. They are now living in the home and loving it.
- A busy working couple wanted to move from DC to Marin. Since we were in a fast-moving market, and they could not take much time from their jobs still in DC, this brave couple decided to take an entirely virtual approach to home buying. I was humbled that they put this level of trust in me. After many video home tours, we zeroed in on a home that seemed perfect for them. I pointed out virtually every feature and imperfection, toured them through the neighborhood, and provided them with comparative sales so they could determine the right offering price. Their first visit to the property was after the contract was signed. Once they closed, I recommended a contractor who made some desired improvements. I recently met up with the happy couple to see the new improvements and how they had settled into the home.
Nearly every transaction has some obstacle to overcome. Investing in the right advisor to guide you is critical. I continue to support my clients in their homeownership journey long after the close: I answer ongoing real estate questions, provide clients with service providers, make introductions to exceptional agents in other markets where clients may be buying or selling, and help their parents, children, and friends with their real estate needs.
If you’d like to learn more about the buying or selling process and what I can do for you, please reach out to schedule a consultation by emailing me at
[email protected].
Robin Corey, MBA | Real Estate Advisor
