When Should Sellers Play the Concessions Card? 

With new rules in place, listing agents need to consider several factors when helping sellers determine their approach to buy-side compensation.

Key Points:

• Agents are finding it relatively easy to talk to sellers about compensation following the practice changes that went into effect on Aug. 17.
• On the buy side, however, some agents are finding it difficult to secure buyer agreements.
• A decision to offer buyer concessions upfront should be based on multiple factors, including whether it’s a buyers or sellers market.

As the dust begins to settle following the August 17 deadline to implement settlement-related practice changes, brokerages and agents are trying out new strategies to get deals done.

It will take some time, and experimentation, to determine what is most effective. One of the big open questions: How should home sellers think about offers of compensation for buyer agents? 

If sellers are upfront about their willingness to pay buy-side compensation, will that hurt their leverage — or will it attract more buyers and bring in better offers?

It’s a topic that was discussed this week during a webinar called “Winning Strategies in a Post-Settlement World,” hosted by T3 Sixty’s CEO Jack Miller and Paul Hagey, editor-in-chief for the company’s publications. (Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.)

Seller Conversations are Easy; Buyer Agreements a Sticking Point

The hosts kicked off the session with an informal poll of the viewers. When asked how they’ve been handling compensation since Aug. 17, the largest share of respondents (44%) said they were still doing broker-to-broker compensation, something Miller said was not surprising given how recently the practice changes took effect. 

Roughly two-thirds of the audience reported that conversations with sellers about commissions were about the same as they’d always been, while 23% said those discussions were more difficult. An area that’s proving to be trickier for many agents, however, is securing buyer agreements, with 71% of respondents reporting that they’ve secured them “with some difficulty.” 

5 Considerations When Working With Sellers

While it’s too soon to provide a definitive answer to questions about compensation, the company has identified five factors listing agents should keep in mind when creating strategies for sellers. 

First, is your seller in a buyers or sellers market? 

In a market where buyers have an advantage, it might make sense to advertise that concessions are on the table. Even though listing agents can no longer include offers of compensation on the MLS, they can use other marketing strategies to communicate compensation or other incentives.

“As a seller, if I’m in a buyers market I know I’ve got to attract buyers, and so I say hey, there are some additional concessions in this transaction,” Miller said.

But in a market where the seller has leverage, it might be more prudent to simply tell buyers to write up an offer and see what they are asking for, Miller said.

Four other things to consider:

• The state of rates: When mortgage rates are high, homebuyers will be focused on putting down larger down payments, so a concession to pay the buyer agent will make a listing more attractive.
• Demographics: If a seller has an entry-level property for sale or is in an area where Veterans Affairs financing is popular, potential buyers are likely to have less cash available — and more likely to ask sellers to cover their agent’s fee.
• Motivation: If the seller is looking for a quick sale, concessions can help.
• Geography: In some regions or local markets, concessions may be the norm.

Miller and Hagey noted that more details about listing strategies will be published in the next Swanepoel Trends Report, which is scheduled to come out later this year. Other topics that will be tackled in the report are the climate’s impact on real estate and what the “new normal” looks like for the industry.

Source: Real Estate News

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