A letter from Century 21 Quest CEO & Designated Managing Broker, JJ (Jessica Joaquin) Devore in response to today’s CNN article:

“Today is the day. August 17th. Today the way we conduct our business, as real estate industry professionals, has fundamentally been transformed. The above mentioned CNN article by Samantha Delouya is speaking of the National Association of REALTORS (NAR) settlement with the Department of Justice (DOJ) which is the root cause of these unprecedented changes taking place.
However, the dialogue doesn’t particularly resonate with me (sorry CNN).
I find myself debunking its words. “Baked into the sales price”? “Searching the mls to determine commission amounts and then steering clients towards those homes”? NO I yell back at the page…that’s not how our industry operates. At least not from my vantage point.

THE REALITY

Buyers pinpoint the criteria they would like in a home. The multiple listing service (mls) is a database of homes on the market that show REALTORS what is currently for sale. Based on the parameters set by the buyer, the buyers agents conduct showings until their buyer finds “the one”. The sellers then receive money from the sale upon a successful closing and in turn pay their listing agents. The listing brokerage where the sellers agent works then agrees to share that compensation received with the cooperating buyers agent that has successfully brought a ready, willing & able buyer to the table. This is the cooperative compensation model that has worked well for decades. In this example, the money is clearly coming from the buyer, whether they are paying cash or getting a loan, no buyer means no deal.

WHAT HAPPENED

So if that is true then how can these lawsuits have gained such traction? The answer is not everyone in our REALTOR family was doing and saying the right things with proper disclosures as was always required by law in many states.
For example, buyer’s agents telling their clients they “work for free”. Not true, never true. As agents, brokers, managing brokers, we are paid a professional service fee for the guidance we provide.
Buying a home is one of the most difficult processes. There are so many moving parts and different scenarios to navigate. Individuals who may only go on a real estate quest a few times in their entire life. Therefore, home buyers and sellers are wise to hire a guide to help illuminate their path into  these unchartered territories.

THE RESULTS

But what if that guide acts in an unprofessional manner? Unfortunately, then the entire industry suffers. As of today, cooperative compensation is NOT allowed to be posted in the mls for all REALTORS to see. The parameters of cooperation in which we, as REALTORS, have always operated are no longer visible. Our buyer’s agents no longer know just by going into the MLS how much the seller’s agents are offering to share with them if they bring a successful buyer to the transaction.

THE COST OF DOING BUSINESS

Instead, they will now have to have conversations with their buyers to determine if buyer clients will be able to possibly pay their professional service fee in addition to a slew of inspections (if they opt to do their due diligence to glean more about what they’re buying), earnest money (to secure the contract), lenders fees (to get a mortgage), title work (to ensure clear title), closing costs, down payment, homeowners insurance and more. Sounds like a lot of money coming out of the buyer’s pockets, right?? That’s because it is!
The costs of buying a home continues to rise. So what does the seller end up having to pay? Title work fees (shared cost with the buyer), transfer tax fees, possible repair item fees (if inspection issues are found) and their agents professional service fee.

The Big Picture

Is the big real estate picture coming into clearer view now? Shared costs between both parties trying to get this deal done allows everyone to win. Sellers receive the money from those who are buying the house and can afford to pay commission that is enough to cover the agents on both sides. Buyers then have the money needed for all their out of pocket expenses.
Here at Century 21 Quest we will do our very best to navigate this new normal and still provide the same level of excellent 121% service our clients are used to. We will be transparent on how we do business and clearly deliver our value. Backed by our local, state and national REALTOR associations and Century 21, we will rise above the noise and remain strong for those seeking our assistance so we can continue to provide the best possible real estate services to the Central Illinois area.