For officers in New Hampshire, this week marks two months PrimeMLSthe state’s multiple listing service, implemented the business practice changes outlined in the National Association of Real Estate Agents settlement agreement for a national retainer case.
In these two months, one overwhelming trend has emerged: everyone is dealing with the changes a little differently. Real estate agents from across the state delved into these differences during a panel discussion at the New Hampshire Association of Realtors (NHAR) conference on Tuesday in Concord.
“Everyone is adapting, coming up with business models and trying to get settled, and I think a year from now we’ll know a lot more about how this is actually going to work,” said Matt Johnson, general counsel for NHAR. “So for now, I would caution patience.”
According to the panelists, the biggest discrepancies are in how agents and brokers handle buy-side broker commissions now that compensation offers are no longer allowed to be disclosed on the MLS.
“What we’re seeing is kind of two buckets,” said Adam Dean, the broker-owner of Duston Leddy Real Estate. “One category includes agents and listings that don’t share what they’re offering for buy-side compensation and instruct buyers to write all their questions in their offer. In the other, there are sellers who choose to advertise the buyer agent compensation they offer through all permitted channels.
Although brokers said they are happy to work with sellers who do not disclose offers of buyer agent compensation, Dean noted that if the listing agreement specifies that a certain amount of buyer agent compensation will be offered, the listing agent must disclose that information if requested.
“If you tell buyer agents that they can request buyer agent compensation in their buyer’s offer, your listing agreement will better reflect that,” Dean said. “If there is a number in your listing agreement and you don’t disclose it even though your seller said you can, then we have an ethical problem.”
Susan Cole, the broker-owner of Susan Cole Real Estate GroupUltimately, it’s important for agents and brokers to remember that the seller is in the driver’s seat when it comes to how compensation is handled.
“I think a lot of people used to look at it because this is our compensation and we share it, but now we have to remember that this is not the way this class action lawsuit handled itself,” Cole said. “If we are real estate agents, we cannot share our compensation unless the seller directs us to do so. It is a seller’s decision, not an agent’s decision.”
Regardless of how agents and their clients handle compensation in a given transaction, brokers agree that to make everything clear to all parties involved, it is best to include how buyer agent fees are handled in both the buying and selling sales contracts. submitted with a bid.
“As a listing agent, if I don’t see a demand for buyer’s agent compensation for purchases and sales, I’m going to assume you guys have it covered and my seller doesn’t have to pay or even consider that compensation,” said NHAR President Joanie McIntire.
“Maybe you’re trying to make your offer more attractive to the seller so that your buyer doesn’t ask for it, just as he chooses to forego an inspection. But I think it’s a lot cleaner to indicate what you and your buyer are doing about your compensation, especially if it’s an overbid situation. Because you don’t want to end up at the closing table realizing that you and your buyer haven’t figured out how you’re going to get paid.”
Challenges and triumphs
Real estate agents at the NHAR conference also spoke out about the newly mandated buyer representation agreements. New Hampshire was one of a few states that had already required these agreements, but brokers said most agents were not in the habit of having these forms signed until a client was ready to make an offer.
For the most part, brokers said buyers are willing to sign these agreements. But Andy Smith, the broker-owner of Das Peabody & Smithsaid about 20% to 25% of potential buyers are hesitant. That’s why his company has created a one-time showing agreement that agents can use to show one home to a buyer.
“We have created a viewing form for those one-off occasions where someone just wants to see one home, and one of our agents will show someone that one home and not expect a fee for the showing,” Smith said. “If you want to go further, we will have to sign a contract.”
Despite the reluctance of some buyers, Smith believes this change has been great for his agents.
“I think I might want to send a lawyer at some point [Michael] Ketchmark a thank you note because my agents receive much higher compensation than if they were compensated by whatever the listing party decided was fair compensation,” Smith said.
“The agents had also not previously spoken to buyers about what they are worth. I see higher costs coming in for buyers across the board, and buyers are happy to pay these because they see and understand the work their agent does for them.”
Dean shares a similar view
“Agents are getting better at communicating their value proposition,” he says. “It used to be that they just took what was given to them, but now they have the opportunity to really describe what they do and what their value is. And we’re forced to have this conversation much earlier in the transaction and agents can really use it to their advantage.”
Looking beyond the settlement
Brokers also believe that these changes will help increase the overall level of professionalism in the industry.
“I think some of the things that have come out of this are good,” said Maggie Verani, the broker-owner of Berkshire Hathaway HomeServices Verani Realty. “We’ve been working around the problems for a long time, and now you’re either going to be a professional or you’re going to get out of this business.”
While it’s too early to tell what the exact impact of the changes in business practices will be and what best practices will emerge, New Hampshire real estate professionals believe things are going fairly smoothly so far.
“I would like to compliment everyone,” said Chad Jacobson, CEO of PrimeMLS. “This was a major rule change, and there have certainly been some outliers, but for the most part we have been compliant with these new rules very quickly in a great way.”
While it’s clear there will be some growing pains as industry players explore different models and ways of doing business, brokers are optimistic about the future.
“I’m grateful that we’re past the July 15 and August 17 dates,” Cole said. “And now we’re at the point where the rubber hits the road and everyone is implementing all the things we’ve talked about. And now we can discover what the real questions are.”
