Aug. 17, 2024, was a day that would live in infamy. The real estate world as we knew it was ending. An industry that did life-changing work, positively impacting local communities and economies, was experiencing a legal reckoning to the tune of a nearly $1 billion settlement.
Would buyers really sign a buyer representation agreement obligating them to pay a particular amount, even if we asked the seller for compensation as part of an offer? Would sellers want to compensate a buyer’s agent, especially after the media spin that ensued about our profession after the Sitzer | Burnett verdict? And how would the practice changes impact how a seller would compensate their agent?
These were the burning questions on our mind, along with many others, such as 58 questions agents should be asking about commission lawsuits. We had no way of knowing what would happen until it did.
A year later, here are my takeaways, based on my in-the-trenches experience as a bi-coastal agent practicing in Northeast Florida and Southern California.
1. Transparency
Buyer consultations help set the tone of what it means to have buyer representation in preparation for the consumer signing a representation agreement. 2024’s focus was on creating and perfecting a buyer presentation, along with communicating our value proposition as a buyer’s agent. It helped slow down the process and not see us as door-openers.
Just like other professions, there needed to be a meaningful dialogue about our role in the process, what we do, the buyer’s role and responsibilities, and the costs involved. Our services are not free, and there used to be a lot of mystery as to how we got paid and where it came from. This has been a great opportunity to debunk myths and misunderstandings about the process.
However, I’m not sure the buyer fully appreciates or understands all that goes into working with us from our first contact with them until they purchase and close on a property. This may not be a few weeks “thing.”
It could be a journey of several months or even years with lots of stops and starts. With the release of the Rayse app, we can add that into our consultation and set the buyer up to stay connected to what we are doing in real time on their behalf, no matter how “mundane” it may seem.
This will help elevate their understanding of the amount of time and tasks put into their search. I believe over time, with consistent use by agents, there will be a greater appreciation of all that goes into our role by the consumer.
2. Compensation
Despite the transparency and communication of a buyer agent’s role in the homebuying process, most still don’t want to pay their agent compensation if they don’t have to, and in many cases, cannot afford to.
With the high cost of housing, interest rates, and many homes needing updates and repairs from inspections, buyers simply don’t have much of an extra cushion to pay their agent. Based on my experiences in two markets, buyers want their agent to seek compensation from the seller.
Even in competitive situations or when discussing it as a strategy to buy the home at a lower price, buyers weren’t interested in paying compensation to their agent.
Seeing the fee in the buyer representation agreement still raises some eyebrows for highly analytical types, despite assurances about seeking compensation from the seller and showing them the available forms and sections on a contract on how to make that happen.
In my Florida market, we have a state form that allows a buyer to make an offer contingent upon the seller paying compensation to their agent, which helps ease some anxiety about the process.
3. More loyalty
Buyers are in control of the terms of representation agreements they feel comfortable with. As such, I have found they respect and honor that commitment so long as their agent is working hard on their behalf and bringing value to the relationship.
While there are always buyers who don’t want to commit to one agent while buying a home for whatever their reasons, the representation agreement requirement has shut down a lot of shifty behavior in this regard.
4. A better title?
A real estate agent’s job description is never absolute. No two transactions are alike, nor are the buyers and sellers involved in them. There are always differing dynamics, situations and challenges involved.
After Sitzer | Burnett and all that we went through in preparation for Aug. 17, the word “agent” or “Realtor” no longer seems appropriate. These terms are sorely lacking any sense of substance, and all agents, whether stellar, good, average, doing it as a side gig or checked out, are perceived the same.
This needs to change, considering buyer representation requirements. Some brokerages have different titles for their agents involving the word “advisor,” for example, which is certainly a step up from “real estate agent.” It’s time for our industry and brokerages to do a better job with titles.
Agents can and often call themselves anything they want, which results in a lot of confusion and unvetted/verified “credentials” to back that up. But do any of these titles honestly reflect an agent’s skill sets and demonstrated expertise? When you meet with an attorney in a larger firm, you know if they are a younger or more experienced attorney with varying titles like “junior associate,” associate, partner, senior partner, etc.”
5. Seller-paid compensation post-Sitzer | Burnett
Sellers largely seem to be firm on what they want to pay a buyer’s agent, and that’s it, no matter what the offer is. Based on my experiences with buyers making strong offers at full asking price or very close to that, the number did not seem to impact the seller’s decision on what to offer, either way.
Nor did a thorough positioning of the buyer’s strength and presenting a comprehensive offer, along with teeing up myself, credentials, and track record to assure the listing agent and their client that they would be working with a professional who would proactively manage the transaction in a timely and efficient manner.
A buyer’s agent is a buyer’s agent in a seller’s mind, and they all seemed to be viewed the same. Perhaps presenting a past buyer workflow from Rayse to a seller with an offer will help them see things differently. What they will do may largely be influenced by their own agent. And if that agent has agreed to take less than what a buyer’s agent wants, a seller may not be keen to pay the buyer’s agent more.
In working with several buyers coast to coast, sellers were set in stone in what they wanted to offer a buyer’s agent, except where they were competing with a lot of new construction (and there is a lot of it for sale in my Florida market).
It’s no secret that builders’ incentives are too good for many buyers to pass up these days, so resale sellers have to really up the ante in what they can offer. While most can’t offer the level of concessions builders can, they were very willing to pay aggressive compensation to buyer’s agents.
In the case of one buyer I was working with on the West Coast in the $2 million price point, we went through several escrows on homes that didn’t work out for various reasons before one stuck. In each case, I found the sellers in this price range wanted to offer 2 percent and not a penny more. Several of the listing agents voluntarily shared that they were getting compensated at that amount or less.
6. Cheaping out
It’s been rare, but I have come across a few situations, mostly in Florida, where the seller wanted to offer a low flat fee. On the first home that I wrote an offer on post-Sitzer | Burnett, the seller was offering $5,000 compensation, but the listing agent encouraged me to put what I wanted to request in the offer. My buyers made a full price offer because they loved the house and didn’t want to lose it.
The listing agent, who was top-notch, educated the seller ahead of time that the reality of the market was such that they should expect buyer’s agents to request much higher compensation. While the seller could do whatever they wanted, of course, they ultimately agreed. They were getting a divorce and thought that by offering less, they would save money.
In another scenario with a different buyer who was paying cash, the seller wanted to offer $3,000 of buyer’s agent compensation on a property in the high $600,000 range.
Although it was not communicated in MLS this way, the listing agent shared that they essentially put the listing in MLS for the seller to be sort of FSBO and were only getting 1 percent on their side. The house appeared to be very nice, but had already been on the market for quite a while.
I later learned that many buyers with agents had gotten turned off by the seller’s attitude and decided to skip looking at the home. My buyer was also discouraged by this attitude and didn’t want to pursue the home. She thought that if the seller is this cheap, how is she going to be if the inspection finds issues of concern?
A few weeks later, the listing agent reached out to advise that the seller had increased their offer of buyer compensation to $10,000. By then, it was too late as my buyer had gone under contract on another home.
While that property was paying 2 percent, and my buyer representation agreement was higher, I was willing to amend it to receive lower compensation. My buyer generously offered to pay the difference, as they felt my team and I had worked very hard on her behalf. I think many buyers recognize that, but the number of buyers who are willing and able to write the check is rare.
7. Murky waters
Post-Aug. 17, 2025, much remains TBD. I touched on many questions in several articles last year, such as “58 questions agents should be asking about commission lawsuits“ and “9 post-Sitzer questions we still don’t have answers to,” and there are many issues that remain unresolved.
- Enforcement mechanisms of compensation agreed upon in a buyer’s representation agreement, if not paid by a seller, remain nonexistent. It is largely up to the agent to pursue with little support from their brokerage, other than maybe a letter reminding the buyer of their obligations. There’s currently no way to track these scenarios, but they are out there, and we as an industry need to put some infrastructure in place. With this being the new normal for the foreseeable future, the ability to collect compensation from a buyer should be streamlined and much easier than it is now, with a variety of payment options available, including a credit card.
- No central registration for buyers through MLSs. I proposed this to ensure compliance and minimize confusion for buyers working with multiple agents. Every market is different, and inventory and pricing may affect buyer behavior. We were lucky to transition to buyer’s agreements during a slow time in the real estate market. However, a low interest rate, inventory-challenged market that spurs multiple offers may drive different buyer behavior from those who may not want to be loyal to just one agent and sign multiple agreements that create confusion. There are buyers out there now who have done exactly that. The Rayse app would be a great way to integrate buyer registration with MLSs that are deploying it for agents’ use and might encourage more agents to utilize this app. We have the tools and technology, but are we doing all we can with them?
- For situations where the buyer’s agent wants to set up a fee-based structure for working with a buyer, we are still largely shooting from the hip and making it up as we go along in this industry. It can be hard to know what an acceptable amount would be to charge for various aspects of working with buyers, as the amounts vary widely and may be affected by the kind of market you are in, the price range of the buyer, your experience level and what will be required in servicing them as a client. More work needs to be done in helping agents establish a fee schedule for their services based on a variety of factors in the market(s) they serve.
- Industry training/professionalism: The training for becoming a real estate professional needs a complete overhaul. Transacting real estate has become extremely nuanced and complicated. While a lot of it is trial by fire and through the school of hard knocks, brand new agents or those rusty on the process shouldn’t be “practicing” on the consumer. There needs to be different tracks for every stage of an agent’s career with continual focus on sharpening skills on how to properly complete contracts and related forms, dealing with complicated contract situations like home sale contingencies, continued marketing addendums, inspection and repair negotiations, appraisal renegotiations, a variety of contingencies and a deep dive into learning to navigate many unforeseen challenges in a real estate transaction. Brokerages, big and small, need to take a highly proactive approach with their pool of agents because they are responsible for them, and cleaning up transaction messes can be quite costly, as well as bad public relations.
- In addition, there needs to be education on working with different personality types and cultural backgrounds to help better understand where people are coming from, along with handling and managing a wide range of intense emotions consumers exude during the buying and selling process. The agent is the punching bag for all of it, and we as an industry are largely ill-equipped to handle these situations unless someone has come from a profession where they dealt with people at critical times in their life. More focus also needs to be on agent safety, mental health and wellness due to the intense challenges of this profession. With an incredibly diverse society as well as societal and household dynamics becoming more complicated, this kind of training is critical to elevating the industry beyond its status quo.
8. Compensation complication
I’m not going to lie, the practice changes have created a lot of extra steps and preparation when working with a buyer. That is not a bad thing, but different states and brokerages have a variety of forms utilized for buyer representation, and some of it is downright cumbersome.
Trying to manage some unknowns with these documents is challenging. It often triggers a lot of modifications because people and their wants are not exact. They said X, but it changed to maybe Y and Z. Amending timelines to extend or create a new agreement is another issue. Then the buyers pivot to new construction, and you need to know ahead of time what the rules of the builder’s game are compensation-wise, so you can ensure you will get paid.
The inability to modify a representation agreement so that compensation can only go down and not up when attempting to predict the future with these documents is another challenge. There’s no float for that. Trying to manage the unknown with how much a seller may pay a buyer’s agent is also a stress point for both the buyer’s agent and the buyer, who may be worried about whether they’ll be asked to compensate their agent on some level without the means to do so.
These agreements create some additional anxiety for consumers and agents alike. We are boxed in by a settlement, and it’s like shoving a round peg into a square hole in a business that demands flexibility. You must double- and triple-check everything to ensure all is done properly, so you can get paid. Unfortunately, some agents learned the hard way and lost out on compensation.
Major changes often trigger the need for more changes. A year after Aug. 17, 2024, took effect there remains a lot of red light, yellow light, green light. Will we as an industry be able to come up with practical solutions critically needed to elevate us to the next level with our new ways of doing business?
