HousingWireHousingWire
Although nearly a year may have passed since the National Association of Realtors’ (NAR) commission lawsuit settlement business practice changes went into effect, industry leaders still cannot decide whether sellers should be sharing offers of cooperative compensation upfront.
“We need to get sellers away from offering upfront compensation,” Linda O’Koniewski, the CEO of Leading Edge Real Estate, said during a panel discussion Sunday afternoon at HousingWire’s The Gathering.
O’Koniewski feels that by telling prospective buyers and their agents what a seller is willing to cover up front, it is a disservice to the seller, as it prevents them from negotiating the term as part of the home sale transaction.
“There is absolutely no logical reason whatsoever, in my opinion, to ever tell the buyer’s agent what the seller is willing to offer for compensation,” James Dwiggins, the co-CEO of NextHome, said. “You are putting your cards on the table. If you are an agent on the list side, telling the buyer’s agent what you seller is willing to pay, you are literally telling the buyer’s agent to request that as a concession, damaging your seller, which is a violation of your fiduciary duty.”
Byron Lazine, the CEO and broker of One Team at William Raveis Real Estate, understands Dwiggins and O’Koniewski’s arguments, but based on his post-Aug. 17 experience, he doesn’t believe upfront offers of compensation are harming sellers.
“In our experience, if you don’t offer anything up front, you get all these offers coming in asking for 2.5% or 3%,” Lazine said. “But if you tell the buyer that all you are willing to cover is 1.5% of 2%, then most of them won’t ask for more than that. What is better for the seller strategically?”
Despite Lazine’s experience, Dwiggins and O’Koniewski still don’t agree.
“This entire thing, the lawsuits, the investigations, could be solved instantly by NAR going, ‘We don’t endorse cooperative compensation any more. It makes no logical sense and it is what got us into these lawsuits in the first place,’” said Dwiggins. “And then train your agents so that buyer’s agents know that if a seller says they are willing to entertain any and all requests, their client can ask for help with their compensation in their offer.”
While NAR has yet to take this stand and a best practice for how sellers deal with cooperative compensation has yet to emerge, the Department of Justice (DOJ) has some strong feelings.
Last week the DOJ reiterated its belief that listing agents and sellers should not make upfront blanket offers of cooperative compensation. In a filing in the Nosalek lawsuit, the agency wrote that “the United States maintains that blanket, upfront offers of buyer broker compensation by sellers or their listing agents constitute an anticompetitive practice that inflates costs for home buyers and sellers.”
The DOJ first publicized its opposition to cooperative compensation in February 2023. The agency later announced that it did not want offers of cooperative compensation “anywhere.”
