Over the course of my 10 year career as a realtor, I have sold luxury homes and starter condos, spanning the price points and areas of the Greater Phoenix Metro. 

In case you missed it, on Friday, March 15th, 2024, the National Association of Realtors came to a settlement in a landmark case that eliminated commission sharing on the MLS services, which will roll out by mid-July 2024. Clear cooperation is a practice that was commonplace for decades, and made clear how the buyers agent compensation was paid- by the sellers as negotiated by the selling agent.  This arrangement made it possible for buyers to select buyer agent representation without a direct cost to them, since the selling agent offered a portion of their commission to the buyer agent.

The new norm will be that a buyer comes to an agreement with their buyer agent to represent them, and authorizes the agent to negotiate a commission on their behalf with the seller, or the buyer is prepared to pay the buyer agent a commission if the seller is unwilling.

If a buyer doesn’t have the funds to compensate an experienced Realtor/Broker, they will likely forego buyer representation altogether, which could land them in a difficult situation later without expert guidance on one of the most important purchases of their lifetime.

Remember- when a buyer chooses to go directly to the listing agent for the given property, they are waiving specific representation by a buyer broker, and that buyer no longer has the same representation as they would with their own buyer agent. 

When a selling agent represents both buyer and seller in a transaction it is called LIMITED REPRESENTATION.

Limited representation is riddled with issues as the agent becomes the conduit between the buyer and seller, only representing each party in a limited capacity. It is LESS representation than if you had your own agent – on your team – working for you.  I can liken it to hiring an attorney to mediate between two parties, versus having your own bulldog in your corner. 

The next wave of lawsuits, after this new norm is adapted during the course of a few years, will be buyers who were represented in a limited capacity and who are unhappy with the outcome of their purchase. 

Whether that be lack of proper inspections, lack of guidance through all aspects of due diligence, and misrepresentation by an agent who is doing their best in a limited capacity.

Examples of problems you’ll hear about over the next few years;

  • Agent doesn’t share with the buyer to get a sewer scope inspection, on a home built in 1960. Sewer lines back up during month 6 of home ownership, costing the buyer $30,000 in repairs.
  • Buyer interested in short or long term rentals doesn’t have assistance reviewing the CC & Rs, and purchases a property which prohibits the use of their preference. 
  • Buyer doesn’t understand the square footage advertised may not be the actual square footage, and doesn’t catch the discrepancy on the appraisal. Buying a home significantly smaller than they thought.
  • Buyer doesn’t look at the HOA demand statement, and the agent doesn’t mention it to them, closing on the property with an outstanding violation. 
  • Buyer loves the remodel of a home but doesn’t have anyone vetting comparable sales to ascertain value, then overpays for a property.   
  • Buyer pays for home inspections only to find out the property cannot be traditionally financed, wasting thousands of dollar. 

The list is much longer… and the problems will be more complex.  

I am hopeful that our intelligent industry will create workarounds for a new symbiotic environment, where we can continue ethical representation of buyers.

It is no secret that buyer’s in today’s market are facing costly financing, and higher prices. The person who lost on March 15th in the NAR settlement are the buyers and the public.

Sellers are already in control of a market with too few homes available to buyers, I am not sure why we gave them another leg up, but change is typically a good thing and the new norm will evolve. We will find a positive outcome for all of our clients moving forward.

What this looks like for us at Hamilton Luxury Group

Over the past year we have been instituting the buyer broker agreement with all new clients. Moving forward, there may be a small retainer or negotiated fee paid by the buyer IF we cannot negotiate with the seller to pay us a commission. Remember, we’re expert negotiators, so we’re not too worried about it!

Ironically, I have never worried about the commission a seller offered in my entire career. Some sellers offer much less than others, and this has never been an issue for me. We will create a system that is a win-win for our client.

SERVICE ABOVE SELF INTEREST is our guiding principle, and will continue to be, as we help our clients find the best properties and terms for their individual housing needs.

Thank you for choosing to work with us!