For the first time ever we closed today on a $2,400,000 Kailua home that was offering only $1, yes ONE DOLLAR commission.

The MLS does not allow a seller to negotiate the commission down, but they do allow the seller to pay Realtors more commission (isn’t that nice of them LOL), so putting in $1 essentially made the commission negotiable, and a deal was reached that everyone was happy with.

So now if your Realtor tells you commission is not negotiable you can let them know it can be negotiated up, just not down, and it is possible to sell a home offering $1 commission, which essentially sends a message that commission is negotiable.

Have you ever heard of a Flat Fee Buyer’s Agent Commission? Maybe soon you will.

There are at least 3 big class-action lawsuits against Realtors claiming the fixed 2.5% buyer’s agent commission should not be paid for by the seller but instead the buyer should pay their own agent.

Their argument is this would allow buyers to negotiate the commission, the same way sellers have options, such as our $3,500 Flat Fee.

It would be a huge change for Real Estate buying and selling if sellers are no longer forced to pay a 2.5% commission to a buyer’s agent.

We will see how this turns out.

I read an article in a Real Estate publication that was titled “6 reasons NAR’s commission rules work”. It was an article that backs up why commissions should stay the same.

There is a lawsuit that contends that buyers should pay their own agent commission. Currently, buyer’s agents are paid a fixed commission from the seller.

The argument is this would allow more competition on the buyer’s agent commission.

For example, on the seller’s commission, there are many options. We offer a $3,500 Flat Fee option, and many sellers pay an agent 2.5% to 3%. However, on the buyer’s side, there are no options. The commission is fixed, normally at 2.5% to 3%. There is no opportunity for a flat fee commission option, or to negotiate the commission based on the amount of work required. If the seller offers anything less than the going commission rate Realtors might not show their home to buyers.

I noticed most Realtors agreed with everything said, but it left me perplexed as I did not agree or understand any of the points made.

The way I see it, Realtors like their fixed 2.5% commission on the buyer’s agent side. They don’t want buyers asking them to reduce the commission, or asking them if they will offer a flat fee. They don’t want a free and open market where buyers have different levels of service and different fees based on the service they get.

I get that. If I am a Realtor representing a buyer purchasing a $2 million property, I am getting $50,000 in commission. Why would I want a buyer asking me if I would do it for a $3,500 Flat Fee instead, or perhaps negotiate the commission down to $5,000 or $10,000?

However, Realtors have to realize from the buyer’s perspective they like the idea of saving $40,000+ on their purchase. If the seller does not have to pay the buyer’s agent $50,000, they can sell for $50,000 less. If the buyer can then pay a $3,500 Flat Fee to their agent, the now saved $50,000 less $3,500 which equals $46,500.

The article tried to convey things like lenders won’t lend on buyer’s agent commissions if paid directly, even though they lend on buyer’s agent commissions now. They said it will be the end of the MLS and would prevent a free and open market, lol. These two are really funny because the MLS makes no money on buyer’s agent commissions, so the MLS will go on regardless, and for them to say a free and open market is forcing sellers to pay 2.5% commission is very strange indeed.

Anyway, it will be very interesting to see if this lawsuit changes anything.