Robert Reffkin, CEO of Compass Inc. (NYSE: COMP), is predicting the recent settlement by the National Association of Realtors (NAR) will have a minimal impact on the real estate industry.
“I think the headlines have been much more dramatic than the details of the actual requirements,” said Reffkin in a weekend interview with Yahoo Finance, noting there were two significant changes that would impact how agents operate. “One is that the MLS website – just a website – will no longer be able to hold the commission that is paid to the buyer agent. And the second is that buyers will have to sign a buyer representation agreement with their buyer agent. I think it’s not as dramatic as the headlines have described. I don’t think things will change as much.”
Reffkin also predicted that some people considering real estate careers might consider other career options based on the recent news coverage of the settlements, but he believed real estate professionals who are the top of their game will not see a disruption.
“Commissions have always been negotiable, and so from that perspective they’ll be able to negotiate in the same way they have in the past,” he said, noting that “if you’re an agent and you think that your services are worth more than others, yeah, I think this gives you an opportunity to say, I think I’m worth more and my services costs three-plus percent. And I do see that in the market … you may see some truly great agents, just like truly great lawyers, truly great doctors, command a higher commission than others.”
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He’s kind of out of touch with how sellers think.
If a seller net sheet can be $285K or $310K, based on different choices sellers can make regarding commission negotiations, which net amount do you think sellers would choose?
Now the seller could select the higher net, have a poor transaction experience, and need to modify contract and end up with $285K.
But what’s the most logical net choice?
Buyers are already paying for their buyers agent plus the sellers agent. Think about it, the seller says I want to walk away from closing with say, 300,000. The agent figures out the closing costs. The seller doesn’t accept any offer less than that amount figure to obtain thier $300,000, In this situation, most common btw, the buyer is paying for everything from transfer tax, title, commissions, rod….etc. Make no mistake, The buyer is paying for everything and still will be paying for everything. This settlement won’t fix that for a buyer.
“I think I’m worth more and my services costs three-plus percent. And I do see that in the market” is just an example.
I agree with him, “Commissions have always been negotiable” and I believe, every sale, every market and every clients needs & wants are different or unique. The long lasting truly professional Realtor advisors are service oriented and not chasing the dollar, however we earn our compensation.
The level of communication and connectivity with clients is more important than ever.
Upon a recent market analysis I did in North East Los Angeles, CA, 68% of homes sold in last 12 months were splitting (Buyer & Seller Realtors) at 5%, and 4 – 4.5% for 23% of the total sales. Less than 3% of Sales were at 5.5 or 6%. With Buyer Agency Agreements and Listing Offices sharing Buyer Agent Compensation on company websites, the process will be consistent and transparent