NEW FEES AFOOT FOR SEATTLE HOMEBUYERS! Could your area be next?

I just came across an interesting article in the Seattle Times published today explaining new guidelines set forth in their area Multiple Listing Service  (MLS) and how they are handling compensation for agent representation. This is something worthy of keeping an eye on, whether you sell real estate, own real estate or plan to own real estate!

You see, it's been a long practiced standard for a listing agent to contract with a seller a fee or percentage of the sale price for the successful sale of a home. This has been greatly beneficial in that the listing agent or sellers agent is able to split that fee with a buyers agent for bringing a sale. The listing agent advertises the property in the MLS and offers a set commission to bring a buyer, buyers agent writes an offer for buyer, seller gets home sold. Voila! It's actually been this way since 1992 and for the most part has worked well as previous systems all had their pitfalls.

In the very beginning of real estate we saw "optioneers" (think of them almost as the original wholesalers.) They would get an option to purchase a home, find a buyer for significantly more than their option price and pocket the difference.) Really, this was problematic to everyone but the optioneer who was only looking out for their own pockets. 

Next we saw open listings, where anyone was invited to advertise listings for sale with the seller agreeing to pay a fee only to the one who brought a buyer. This was a bit better as it introduced a broker/seller relationship where the sellers interests were starting to be looked out for, however this wasn't very motivational for many agents as only one would earn the fee, and if the seller found a buyer then nobody got paid. This evolved into a scenario where only one broker exclusively represented the seller, however again if the seller procured a buyer there was no payment.

A solution came about called the exclusive right to sell listing and it eventually replaced the exclusive agency listing in most cases. Under this agreement, the listing broker earns a commission no matter who brings the buyer. With payment of a commission guaranteed, the listing broker was able to afford to market the property and bring a buyer. But still, if you wanted to purchase a home you would need to go directly through the sellers agent. 

Fast-forward to the 50's and 60's buyers agents were becoming a thing as technology better evolved and agents were starting to be able to show each other's listings.Buyers agents were paid for by the seller....but to work as sub-agents for the seller (in other words........there was nobody really looking out for the interests of the buyers.) This was also problematic as many held onto the old way of doing things and didn't cooperate with buyer agents in order to collect the entire fee themselves. 

With the introduction of the MLS we finally saw the cooperation of listing agents and buyers agents. We also saw buyers agency form, that is, buyers now have someone exclusively representing them and their interests. The one thing that has remained a constant despite many changes, has been the seller offering to pay a buyers agent.
   
In the past year or so, anti-trust lawsuits have been made that may be changing the face of real estate once again as we know it. Proponents of this change now taking place in Seattle cite better consumer transparency as the fee offered to a buyers agent now is no longer hidden on just the agent side of the MLS. In fact, sellers are no longer required to offer buyer agents anything at all.  Buyers are able to see for themselves what, if anything is offered to pay for this service and are able to decide for themselves if they'd like to proceed with seeing the home and possibly having to pay out of pocket for their own agent. 

We are now seeing it with this thing in Seattle, and it might very well continue to spread. Regardless, nobody works for free........and it seems that should sellers no longer foot the bill, those wishing to purchase a home will need to figure out their own way of covering these costs or go unrepresented.  In an industry where home ownership has recently been more affordable than ever, it might just get a little more expensive for buyers. 
The one thing that hasn't changed is that in real estate since the beginning of time is that everything is negotiable. I wonder what will be negotiated to cover the fee? 


Until next time,
Jennifer Williams