The key difference between the Ninja pre-showing meeting (asking qualifying questions, setting appropriate expectations, etc.) is that we will now be required to have a buyer representation agreement signed by the buyer detailing what our compensation will be. We'll need to be able to clearly articulate our value to our buyers and be able to explain to them how, in reality, not much is changing for them. We must be on point with this delivery, so practice, practice, practice.

Honestly, I was dreading having to deal with this, but I learned something last week from our legendary Orange Beach broker, Jeff McLaurin, that just 'clicked' and made it crystal clear to me. (To be transparent, Jeff is my idol. He's been doing this since the late 1800's and has forgotten more about real estate than I'll ever know! I try to be as much like him as possible. . . I just don't have the legs for those shorts.) But in all seriousness, Jeff simply explained that buyers have always FUNDED all costs of the transaction. The buyers (or their lender on their behalf) are the ONLY ones bringing any money to the table. They've always FUNDED the seller's loan payoff, listing broker's compensation, owner's title policy and other closing costs along with buyer broker's compensation. While the buyer is FUNDING these expenses, they still show up as debits to the seller on the settlement statement which decreases the seller's profit from the transaction.

Typically, the seller builds these costs into his or her sales price which, in effect, allows the buyer to FUND these expenses within the purchase price. There is no change to this. Some sellers may elect to offer no compensation to the buyer's broker (this has always been allowed) but that compensation can be requested along with other closing costs or prepaid items in the "Other Provisions" portion of the Purchase Agreement, just like we've done in the past.

I've practiced this message a few times with buyers this week and it went over extremely well. The simplicity of the message seemed to resonate with them as it did for me.

It is my understanding that since we will now have a signed document from the buyer agreeing to the buyer agent's compensation, our commission will be a legit buyer closing cost and therefore may be addressed between buyer and seller in the Purchase Agreement. The only change is that we are clearly explaining this fact to our buyers up front now.

I can't say for sure, but I do not foresee tons of sellers opting to offer zero compensation to buyer brokers. It is simply not in their best interest. The option to offer zero compensation is in effect now (and always has been). As of Thursday 5/23 when I wrote this Broker Bit, we have 3,177 total active residential listings in Baldwin MLS. Only 3 of them are offering 0% and only 18 are offering below 2%.