In a move that has sent ripples across the real estate industry, the Real Estate Board of New York (REBNY) has announced significant changes to the rules governing buyer agent commissions. The amendment to the Universal Co-Brokerage Agreement stipulates that listing brokers will no longer be allowed to make the offer of compensation to the buyside broker, even if acting on behalf of the seller or owner. The rule change takes effect January 1, 2024
Historically, the Universal Co-Brokerage Agreement allowed listing brokers to offer compensation to the buyer’s agent on behalf of the seller, facilitating a smoother transaction process. However, with the recent amendment, this practice will cease to exist, requiring buyers and their agents to negotiate commissions independently of the listing broker.
Implications for Agents
1.Negotiation Skills: Buyer’s agents will need to sharpen their negotiation skills as they will now be responsible for securing their commission directly from the buyer. This change emphasizes the importance of clear communication and transparency between buyers and their agents regarding compensation.
- Building Value: Agents must now be more proactive in demonstrating their value to clients. By highlighting their expertise, market knowledge, and the range of services they provide, agents can justify their fees and secure fair compensation.
- Adapting to Change: Flexibility and adaptability will be crucial as the industry adjusts to this new norm. Agents should stay informed and be prepared to adjust their business models accordingly.
Implications for Buyers
- Understanding Commissions: Buyers will need to educate themselves on how real estate commissions work and be prepared to discuss and negotiate agent fees.
- Budgeting: With the potential of paying their agent’s commission directly, buyers will need to factor this into their overall budget when purchasing a property.
3.Advocacy and Representation: Despite the change, buyers should still prioritize having a dedicated agent to advocate on their behalf. A knowledgeable agent can provide invaluable guidance throughout the buying process, ultimately saving the buyer time and money.
Implications for Sellers
- Marketability: Sellers may find that their properties are more attractive to buyers if they are willing to contribute toward the buyer’s agent commission, as has been the tradition.
- Competition: The new rules may lead to increased competition among listing agents, as they seek to distinguish themselves in a market where the offer of commission is no longer a variable.
- Negotiating Offers: Sellers should be prepared for potential changes in how offers are negotiated, with buyer agent commissions becoming a potential point of discussion.
The amendment to the Universal Co-Brokerage Agreement represents a significant shift in the real estate industry, altering how agents, buyers, and sellers approach the transaction process. While it introduces new challenges, it also presents opportunities for all parties to advocate for fair compensation and value in their services. By staying informed, honing negotiation skills, and embracing transparency, the real estate community can navigate this new landscape successfully, ensuring a fair and equitable market for all.