Interview with Ed Zorn: Commission Changes and Industry Impact

Part 2: Concessions, Buyer Agreements, and Antitrust Compliance

Ed Zorn, Vice President and General Counsel of the California Regional MLS, continues his conversation with Inman about the upcoming changes to the commission structure and their potential impact on the real estate industry. In this second part of the interview, Zorn discusses the nuances of offering seller concessions, the changes that buyer agents can expect, and the importance of complying with antitrust regulations.

Concessions: A Change of Philosophy

Zorn believes that a dollar amount or percentage listed for seller concessions is crucial for effective marketing. He explains that offering concessions is a marketing strategy to drive a quicker, faster sale and help a certain segment of buyers, such as first-time homeowners, make their purchase. He warns against treating concessions as a replacement for compensation fields, as this could lead to confusion and potentially violate antitrust regulations.

Implementation: A Yes/No Approach?

Zorn acknowledges that some MLSs may choose to implement a Yes/No approach to concessions, which he believes is a safer route due to the fear of antitrust regulations. He notes that CRMLS, as an example, is likely to keep concessions viable to help certain groups, such as first-time buyers, purchase homes.

Buyer Agents: New Responsibilities

After August 17, buyer agents will need to adapt to new responsibilities, including proper training and skills in communicating transactions, understanding value, and negotiating prices. Zorn emphasizes the importance of setting a clear and competitive fee structure, as well as providing emotional support and counseling to clients. He also stresses the need for buyer agents to be prepared to negotiate the buy-side fee, as opposed to relying on the seller and listing agent to decide on the fee.

Compliance: Antitrust Regulations

Zorn highlights the need for the industry to focus on eliminating commission-sharing practices and ensuring that MLS forms support antitrust compliance. He suggests that listing agreement forms should only facilitate discussion between the listing agent and the seller, while purchase agreement forms should allow buyers to request payment of their agency fee. He also advises agents to review and understand the terms of the settlement agreement and MLS rules to avoid antitrust trouble.

Conclusion

The real estate industry is on the cusp of significant changes, and it is essential for agents, brokers, and MLSs to be aware of the implications. By offering concessions, buyer agents can better support their clients and drive sales. Additionally, the industry must prioritize antitrust compliance, focusing on eliminating commission-sharing practices and ensuring that MLS forms support the new regulations.

FAQs

Q: What is the main difference between concessions and compensation fields?
A: Concessions are a marketing strategy to drive sales, while compensation fields are related to agent fees.

Q: Can you give an example of how to offer concessions to sellers?
A: Yes, during a listing presentation, you can explain to sellers that offering concessions can help certain segments of buyers, such as first-time homeowners, and provide a marketing strategy to drive sales.

Q: How will the industry change after August 17?
A: Buyer agents will need to adapt to new responsibilities, including proper training, communication, and negotiation skills. Agents will also need to set clear and competitive fee structures and provide emotional support to clients.

Q: What is the most important thing to avoid in terms of antitrust compliance?
A: Eliminating commission-sharing practices and ensuring that MLS forms support antitrust compliance are crucial.

Author: www.inman.com

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