The New Rules of Real Estate Negotiations: Embracing a Commission Mindset Shift

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In an ever-evolving real estate landscape, the pressure on agents to adapt their negotiation strategies is mounting. The complexities of navigating buyer broker commissions and client negotiations can feel overwhelming, but the solution may be simpler than anticipated. A straightforward mindset reset, coupled with strategic language adjustments, can transform the way agents approach their deals, ensuring they remain at the forefront of the industry.

Challenging the Old Norms

Traditional models that rely on extracting the buyer’s agent fee from the seller or sharing commissions through the listing agent are being questioned. James Dwiggins, CEO of NextHome, offers a clear path forward, urging agents to break free from outdated practices. He advocates for a more flexible and market-driven approach, where sellers avoid pre-advertising buyer’s agent compensation. Instead, sellers should let offers dictate their strategy, keeping their cards close to the chest until negotiations begin.

“If you’re in a seller’s market or even a normal market, there’s no reason to advertise buyer’s agent compensation upfront,” Dwiggins asserts. “Let the offers come in, and then decide the best course of action. The focus should be on getting the highest possible net price, not on revealing your strategy prematurely.”

Overcoming Seller Objections

A common hurdle for agents is handling objections from sellers who balk at paying the buyer’s agent commission. Dwiggins suggests reframing the conversation to focus on the seller’s ultimate goal: achieving the highest net price for their property.

“The seller only cares about the net,” Dwiggins explains. “If an offer comes in that nets them significantly more, even after paying the buyer’s agent fee, they’ll likely accept it. It’s all about positioning the discussion around their financial priorities.”

Strategic Language Shifts

In the wake of legal challenges surrounding commissions, the words agents choose can significantly impact negotiations. Terms like “compensation” and “commission” have become charged, leading Dwiggins to recommend a shift to the word “fee.” This subtle change not only defuses potential objections but also opens up creative negotiation possibilities, such as offering credits for repairs or interest rate buy-downs.

Moreover, Dwiggins advises against using the term “concessions” in contracts, suggesting instead that agents refer to them as “terms and conditions.” This approach aligns with a broader strategy of keeping negotiations fluid and focused on achieving the best possible outcomes for clients.

Navigating Buyer-Broker Agreements

The landscape of buyer-broker agreements is also shifting, with new guidelines emphasizing consumer-focused language. The recently introduced eXp Buyer-Broker Representation Agreement, for example, replaces “compensation” with “broker fee,” framing the financial aspects of the agreement in a more palatable way for clients.

As the industry moves forward, agents must be diligent in aligning their agreements with these new standards, ensuring that their practices remain compliant and client-focused.

The Bottom Line

Dwiggins’ overarching message is one of simplicity and adaptability. In a market where everything is negotiable, agents should focus on tailoring their strategies to the specific circumstances of each deal. By embracing a mindset reset, honing their negotiation language, and remaining flexible, agents can navigate the complexities of today’s real estate market with confidence and success.