Seller to Brokers is Different than Broker to Broker

Anthony Lamacchia: Here we go again folks, this is going to be my fourth attempt to explain how we are going to be handling compensation moving forward post-settlement start date, which is right upon us now. I’ve done other videos where I talked about how we will not be participating in broker to broker, brokerage to brokerage compensation sharing. After all folks, let’s remember, that is the root, that is the beginning of how all of these lawsuits started.

Even though the NAR settlement doesn’t say that we shouldn’t do broker to broker compensation, we, my company, and many other companies, some huge, very impressive companies as well, have decided to take the settlement a step further and just stay away from the sharing of compensation. Now some have heard that and have twisted my words and said, oh Anthony doesn’t want to pay co-brokes. I’ve heard that one and I’ve heard other things. Here I am, and I’m going to explain this for you on the board.

This was the old way of doing business. Seller had the commission, seller had the money, seller paid listing broker. Listing broker shared a portion of that commission when the seller wanted to, which was most of the time with the buyer broker or buyer brokerage. All I’m proposing, ready? It’s magic. This stays, take this out, go directly from here to here. Take a look, two arrows, seller to listing broker, seller to buyer broker, brokerage. That doesn’t look that hard to me, does it to you? It sounds like it’s hard to some. If you’re a realtor at one of these companies that is saying, no, we’re going to stay with the old way. We’re going to share compensation. I might be a little concerned about that, at least because it is highly likely that your way of doing business will have to change again.

When myself and all my advisors that are in this room with me made this decision three or four months ago, we said, you know what? We want things to change for our agents all at once. We want the changes to be one time, buyer written agreements, no more compensation in the MLS, writing compensation into contracts, and so on. We said, we’re just going to do it at once. I will say in this video, and yes, I’ll take this clip, Brandon here, we’ll take this clip, and we’ll share it with you when it comes through. Down the line might be six months, might be three, might be a year. I think this is the direction that the industry is going, directly from seller, directly to buyer brokerage. Should they want to do that? Whether they offer it out proactively or whether they receive it in an offer, and they negotiated, I don’t know.

Either way, I believe broker to broker compensation sharing is going to be ending, little by little. Some brokerages are getting ahead. We happen to be one of them. Some are waiting. Either way, no one that is doing this is saying that people shouldn’t be paid or brokerages shouldn’t paid. Now I’m going to show you something else that we are doing related to this. I want to show you some language from our listing agreement, and I simply want to show you how we are giving sellers the choice as they really have always had. Now it’s going to be even more blatantly clear in our listing agreement. I’m just going to show you a portion of our listing agreement

Buyer representative fee. In the event a buyer is represented by a broker, seller instructs broker to– This is option one. Seller instructs broker to proactively communicate an offer of compensation, which will be paid by seller to the buyer’s brokerage and the amount of whatever percent of the net sales price. In this case, the total commission due would be whatever. You’re adding that. You’re adding that, plus what we charge on the listing broker side, which is above.

Then the second option, seller instructs broker to not proactively offer compensation to buyers brokerages. Seller understands and acknowledges that any request may be made through a buyer’s offer to purchase and is fully negotiable. We’re giving two options. Then we have a section about unrepresented buyer. I already mentioned to you on the top, we talk about our listing broker fee. I’m not going to give away our entire listing agreement, but I hope this is more clear to those that are involved in those that are commenting.

I also want to point out the language that we’re going to have to screenshot it. The language that we are giving to our agents here at Lamacchia Realty to use when communicating compensation. There’s two options. The first option is thank you for your interest in my listing. The seller is not proactively offering compensation but understands that requests may be made through a purchase contract. Any request for compensation should be incorporated into the buyer’s offer/purchase agreement. That’s one of the options that we’re giving our agents to have to cut and paste.

The other, when the seller is proactively offering it. Thank you for your interest in my listing. The seller is proactively offering buyer brokerage compensation of whatever percent. Remember what I said, seller, buyer broker, seller, buyer broker, right? Of the net sales price upon closing so long as seller and buyer come to a mutual agreement on price and terms. That’s very important. We don’t want our sellers to be boxed into paying this if it’s an offer they don’t like, but we’re giving the sellers the choice. Do you want to proactively offer, which I recommend they do, and I’ve said that in other videos.

We’ve got a fiduciary duty, folks. Remember that whole battle I had back in May with a bunch of people that didn’t know what they were talking about that got completely smoked when they tried to take me on, and I showed the fiduciary duties. Do you remember that? It talks about how you’ve got a duty of disclosure. You have a duty to talk to your seller about what could negatively affect them in achieving top dollar for their home and what could positively affect them in achieving top dollar for their home.

This is the language we’ll be using for communications, whether it be text or email. I read you some language from our listing agreement, talking about the two options. I hope that makes it more clear. I want to end with this. I appreciate everyone or many in the business watching my videos. I appreciate the commentary. I appreciate the feedback that is mostly very positive but occasionally negative. Oftentimes, I learn the most from the negative comments. To the handful of you that reached out and had a little bit of feedback to me last week, I thank you.

One of the things that I think we could have been a little more subtle on was the subject line of our email, and I’ll take personal blame for that. That wasn’t our marketing team. That came straight from me. When I reread the email, it said, we will not, in caps, be participating in broker to broker compensation. If someone only read that, I could understand them being confused. If they continue to read, they would have saw how we said, but we love it from sellers. Then the image said, we welcome it from sellers.

I understand attention spans can be short. I, too, have been guilty of only reading a headline and making up things in my own mind. We’ve all done it. In this particular instance, in this particular situation, we can’t be doing that. There are going to be a lot of moving parts as somewhat of a moving target. There are some brokerages that are continuing to do brokerage to brokerage compensation. There are some that aren’t. There are some brokerages that are going to have websites, or as part of their website, the compensation posting for all their listings. We’re not doing that. Myself, and our general counsel and advisors and everyone else, we don’t think that’s the wisest decision.

I’m not criticizing those who do. They might say the way I’m doing it is wrong. That’s okay. All I’m pointing out is, we don’t think it’s smart to have that out there like that. If you read the finite details of the NAR settlement, it says, you can only drive people to the homepage of the website. As I mentioned in prior videos, would I love the exposure on lamacchiarealty.com? Of course, I would. I think it would be a little funny to have lamacchiarealty.com on MLS. People go there, they get to the homepage, and then realtors have to find the page that talks about compensation? No. Our communications are going to be mainly through email, of course, some through text, of course, some verbally. That’s the way we’re going about it in our company.

Our realtors are doing a terrific job, embracing the training that we’ve put on, some of which started in the summer of 2012. Yes, I said 2012. Then last fall, as soon as the case went the wrong way, as soon as the verdict came in that I wholeheartedly disagree with, and I’ve been very blunt about that in prior videos, we started building our new training system. We started honing in on this newer way of doing business.

Truth be told, sellers are always paying the compensation. Then you could also argue, well, aren’t buyers paying it anyway? They’re the ones bringing the money to the table. Those of us in the business, we know that’s a debate that’s been going on as long as real estate time has been going on, which is long before me. Who really pays the commission, right? The way we’re doing it moving forward our listing agreement, our compensation forms, our communications, we believe they’re very clear. The good news is it’s already been tested for almost a month. The state of New Hampshire decided to implement this, July 15th.

Our amazing realtors, we have over 80 licensed Lamacchia Realty realtors in the state of New Hampshire, probably 100 now. It’s probably an old number but anyway. They’ve been utilizing this system ever since it started in New Hampshire. They’re the first state I know of. Guess what? It’s going extremely well. Our properties are selling. Our sellers are happy. Buyers are happy. Buyers are clear. The other brokerages that we’re talking to and communicating with and working with to sell properties, it’s going smooth. We’re happy about it.

Thank you all again. Thank you for tuning in. Stay tuned in here and to my Instagram page. Thank you.

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