Buyer’s agents are already cutting commissions: Download | Private Equity Weekly

Each week on Download, Inman’s Christy Murdoch goes deeper into the week’s hottest stories to give you the information you need to face Monday. This week: In the post-Size world we now live in, agents and brokers have responded to the new reality by slashing buyer commissions.

It seems after Cesare | Burnett believes that many real estate agents and brokers spend their time in one of two ways. Some people are in deep denial, arguing that the current commission model will win out and if everyone sticks to it we can get back to business as usual.

However, other agents, brokers and thought leaders are already looking at the new normal, gauging consumer feedback and rethinking how they charge the buyer of a transaction.

It’s early days and lawsuits continue to pile up. We don’t yet know how most agents will respond to the changing commission conversation. Will we eventually create a new industry standard, or will we move to a more decentralized system where unique and personalized commission models become a strong differentiator? Only time will tell.

Mike Repka, CEO and managing broker of DeLeon Realty in Palo Alto, Calif., reacts to the jury verdict in the Sitzer | case Burnett is preparing to change his commission strategy. That’s why his brokerage began advertising total commissions of 3.5% or less to sellers who worked with the company. The listing agent charges a commission of 2.5%, while the buyer’s agent charges 1% or $10,000.

DeLeon Realty agents are employees and not independent contractors. Since 2017, the brokerage has offered free representation to buyers interested in a listed property who haven’t already worked with an agent.

While many in the industry have long complained about so-called “discount brokerage”—one might wonder how there could be discounts if there were no “standard” commission rates—brokers who charge flexible commissions see it as a form of consumerism. Customer-friendly approach, service first choice.

Wondering how to handle a buyer’s premium conversation? This week, we offer three possibilities: one that moves to a listing-focused “discount” model, two that involves a negotiation strategy modeled after the commercial real estate industry, and three that is based on a detailed value proposition statement.