8 May 16 - 22, 2024 dallasobserver.com DALLAS OBSERVER Classified | MusiC | dish | Culture | unfair Park | Contents settlement, if someone puts a house up for sale, they’ll negotiate with the listing agent to decide the size of the commission and how much of it will go to the seller’s agent. That commission will come out of the sell- er’s proceeds from the sale. “That’s how it’s always been,” Jack said. “It’s a system that has generally worked, and what they’re doing now [with the settle- ment], I think they are doing some meddling that’s going to have very wide-ranging con- sequences.” Some are saying the settlement will make the market more competitive and poten- tially save homebuyers money. But those savings would most likely come out of real estate agents’ pockets, and Jack and others like him are worried about what this means for their future income. “So, it’s really taking the buyer’s agent commission and really alter- ing how that’s going to be paid, how that’s going to be negotiated in a very substantial way,” Jack said. But he and others say these com- missions have always been negotia- ble. “That’s a bedrock foundational aspect here,” he said, though the common rate for commissions to buyers’ agents is generally 2%–3% of the sale price. “I have no doubt that that rate gets presented as maybe some kind of unspoken stan- dard where it might feel or could be interpreted as some kind of non-op- tional price,” Jack said. In practice, trying to get a buyer’s agent to negotiate a lower commis- sion can be tough. An NPR Planet Money podcast with a segment covering the trial be- hind the NAR lawsuit included a snippet from a previous interview with Allan Dalton, head of Real Liv- ing Real Estate. In the clip, Dalton explains his best practices for keep- ing a big commission, a technique he learned from one of his top Realtors. The Realtor had a client ask to re- duce her commission by $10,000. The technique is profanity- based, Dalton warns, but he decided to bleep out the swear words. “Here’s the technique,” Dalton says. “There’s no bleeping, bleeping way I’m going to cut my bleeping, bleep- ing commission. What do you think, I’m a bleeping, bleeping hooker standing outside the Lincoln Tunnel at 3 o’clock in the morning giving bleeping, bleepings to sailors? If you think I’m going to cut my bleeping, bleeping commission, you can take this home and shove it up your bleeping, bleeping, and I know that it will fit.” Try negotiating with that. But Jack insists the size of the buyer’s commission is, in fact, negotiable. Every seller signs what’s called a listing agreement that lets the selling agent represent the seller. On this contract, the lines for the buyer and seller agents’ commission are blank, Jack said. “They’re blank for a rea- son,” he said. “You have to fill them in. You can fill them in with any number you want that you and your client agree on.” He said he has routinely negotiated his commission, and he knows others do too. And he isn’t offended if someone wants to try to negotiate with him on commission. He considers it an open conversation. Whether he goes for a lower commission depends on the level of work involved in the property. “I’ve been willing to take a lower per- centage due to the overall factors,” he said. “Other times I have been less willing to go below the industry standard and have given them the option like ‘Hey, we’re going to stick to the 3%, and if that’s something you want to move forward with, great. If not, I understand.’” He said the settlement has affected his outlook on the industry pretty negatively. “I’m not a clutch-my-pearls reactionary,” Jack said. “I very much believe in innovation and competition and finding a way to get better, whether it’s better income or better service for our clients. So, I believe in the market force in that way.” So, when he first heard about the settle- ment and the pending changes he was open- minded, mainly, he said, because he didn’t know enough about it yet. “Honestly, we’re still not 100% exactly sure what the changes are going to actually be,” he said. And he has no idea how it will all shake out in the end. “The more I hear, the more concern I do have about the industry,” he said. “I defi- nitely am concerned for buyers’ agents.” He said there are agents who work almost ex- clusively with buyers who will be affected by the settlement more immediately than others. But he said sellers and their agents will be harmed too. “The seller, who’s not a Real- tor or real estate professional, they’re going to think, ‘Oh, I don’t have to pay a buyer’s agent anymore. I’m going to save X amount of dollars.’ It’s not that simple because their home’s not going to be marketed as fully.” On the buyer’s side, one of the big up- coming changes is that buyers’ agents will now have to enter into a formal representa- tion agreement with a buyer before they even see the home. “That is a massive shift,” he said. “They’re asking ‘Hey, commit to me before we even know each other.’” He also said that now a buyer will have to decide how they will pay a buyer’s agent if the seller won’t. At that point, a buyer may opt out of dealing with an agent or Realtor entirely. They may try to work directly with the seller’s agent. The problem with that, he said, is the seller’s agent is contractually obligated to rep- resent the best interest of the seller. “So that buyer is going to not get anyone looking out for their best interest,” he said. “A buyer’s agent works extremely hard. That’s part of the tragedy of all this.” They’re the ones on the road for hours on the weekends showing homes, he said. They’re the ones who are writing up offers at late hours of the night, sometimes with very little notice. “They’re the ones having to counsel and educate and advise a first-time homebuyer or a distressed home buyer about how to win a deal, how to get into a home,” Jack said. “They’re the ones, so a buyer’s agent carries a heavy load.” Without such an agent, homebuyers have no one representing their best interest. This could cause them to miss certain require- ments and deadlines, costing them more money in the end. “I think we’re going to see a high level of liability issues, a high level of contracts that terminate when they normally wouldn’t,” Jack predicted. He said it’s hard to see who is benefiting from these changes. He is going to stay in real estate for now, but is considering his op- tions “very seriously.” It’s uncertain what the total effect of the settlement will be, but some think it will ac- tually bring about little change. “In my opinion, nothing really changes,” said Jay Narey, a local real estate agent. Narey, who has 20 years experience in both residential and commercial real estate, said the main part of the settlement is that listing or selling agents will now be prohibited from publishing a buyer’s agent’s commis- sion inside the MLS system. “Nothing prohibits them from doing so outside of the MLS, however,” Narey said. The listing or selling agent could instead post the buyer’s agent commission on their website, for example. But going forward, Narey expects sellers will have to decide how much, if any, commission they are willing to offer in order to secure a buyer. On the other hand, buyers will have to decide if they wish to see properties where the seller is offering no or re- duced commission and pay their agent themselves. Sure, some Realtors may leave the industry, but Narey thinks this settle- ment will hurt home buyers more than Realtors. “In my opinion, this settlement does not help or protect the con- sumer in any way,” Narey said. “On the contrary, it exposes buyers to po- tential exploitation by sellers.” Ashley Gentry, president of Me- troTex Association of Realtors, has been a licensed Realtor for nearly 20 years. She’s a second-generation Re- altor who co-owned a brokerage with her mother. “My mom didn’t want me to get into real estate,” Gen- try said. “So, what does any good de- fiant daughter do? She goes and gets a real estate license.” Gentry is the youngest female president of her real estate association, which has been around for about 100 years. She works mostly with residential properties but also has large investor portfolios. To her, all of this change just makes the process less efficient. Now, sellers are likely going to have to negotiate the buyer’s agent’s service fees. But sellers can still offer to pay those fees. “I think we are still going to see a very co- operative landscape, but it is a big change,” Gentry said. There will be new forms, prac- tices and procedures. Whatever happens though, she thinks the industry will make it out alive in the end. “I got into the business when we Unfair Park from p6 >> p10 Photo Illustration by Sarah Schumacher/Getty Images
