What Seller Agents Do (and How It's Changing)


Real estate sales continue to be a dynamic and ever-evolving market. Recently, there have been some legal rulings that could have dramatic impacts on the role agents play.

To understand the implications of these rulings, we're taking a step back to look at the role of a Seller Agent. Below, we'll cover things like basic Seller Agent responsibilities and how they make their money. We'll also share our thoughts on the recent ruling against the National Association of Realtors. Specifically, we'll look at what this ruling could mean for Seller Agents in the future if it stands.


What Do Seller Agents Do?

Seller Agents are real estate professionals who represent the person/people selling a property, and they have numerous responsibilities. Their main goal is to see the property sell at the best possible price and terms.

Historically, here are some of the main responsibilities of Seller Agents:

  1. Initial Meeting and Consultation. The agent meets with the sellers to understand their goals and discuss the key features of the home. They offer advice on how to enhance the home's appeal and value.
  2. Assessing Property Value and Improvements. The agent evaluates the property to suggest improvements or repairs that could increase its market value. They can recommend reliable service providers for any necessary work.
  3. Staging the Home. The agent assists in preparing the home for sale. They provide advice on tidying up and arranging furniture to make it appealing to potential buyers.
  4. Professional Photography and 3D Tours. They take professional photos and create virtual tours of the property to make it look good in online listings.
  5. Setting the Price. The agent analyzes the market to find a good selling price by looking at similar properties nearby.
  6. Marketing and Listing the Property. The agent advertises the home on various websites and may also put up signs and hand out flyers. Additionally, they may hold open houses to attract potential buyers.
  7. Negotiating Offers and Closing the Sale. The agent looks at offers, helps negotiate for the best deal, and guides the seller through paperwork and closing.


How Seller Agents Earn Money (and what they have to spend up-front)

Put simply, real estate agents earn money through commissions, which are a percentage of the property's selling price. Most agents work under a brokerage, which splits the commission with the seller agent.

The split between the seller agent and the brokerage can vary significantly. While some agents might earn as much as 90% of the total commission, 50/50 splits are also common. For a 3% commission on a $300,000 home sale, for example, the difference between a 90/10 split and a 50/50 split would be $4,600.

No matter what the split is, a significant amount of the money earned goes to repaying expenses. Here are some of the more common expenses that seller agents pay up-front:

  • Operational Costs. The day-to-day expenses that real estate agents incur can add up quickly. These expenses include things like annual Realtor fees and lockbox keys. Transportation costs can also be expensive, especially in rural areas.
  • Listing Expenses. For each listing, seller agents have to pay for things like real estate signs, photography, and videography. Market analysis can also be expensive and time-consuming. Open houses carry expenses for things like staging, food, and flyers. These costs add up quickly, especially for real estate agents with multiple listings at once.
  • Targeted Marketing and Online Presence. Choosing where and how to market a listing online changes from agent to agent. Regardless of individual marketing strategies, one thing that's consistent is the cost of online advertising. It can easily cost well over $1,000 to advertise a single listing on platforms like Zillow, Google, and Facebook.


What the Ruling Against the N.A.R. Means for Realtors and Seller Agents

The recent ruling against the National Association of Realtors (NAR) has significant implications for seller agents. If it stands, this ruling could transform the traditional structure of real estate commissions in the coming years.

This ruling called into question the current commission structure in real estate transactions. Today, it's standard practice for home sellers to pay commissions to the seller and buyer agents. This ruling challenges that standard practice.

The NAR currently has a "cooperative compensation" policy for properties listed on the Multiple Listing Service (MLS). The policy requires seller agents to offer compensation to buyer agents if they want to list on the MLS.

Critics of this policy say it inflates housing costs to maintain high commission rates. For example, a higher selling price could benefit the seller and buyer agents, but not the sellers and buyers. The majority of Realtors and real estate agents are not the target of these criticisms. Rather, the target is the NAR and certain corporate brokerages behind the policy.


The Future of Seller Agents: Predictions and Possibilities

If the litigation against the NAR succeeds, there are numerous implications. Let's look at some of the more likely changes the real estate industry could see in the coming years:

  • Fewer Real Estate Agents. Successful litigation would likely decrease the total commission pool for real estate transactions. Some early predictions are that the annual commission pool in the real estate sector could shrink by 30%. A decrease as large as this would likely cause many agents to leave the industry.
  • Fewer Buyer Agents. The NAR's cooperative compensation policy basically guaranteed commission for buyer-brokers. Without this policy, buyer agents will need to change how they earn money with their clients. Some established agents will be able to transition and continue charging a percentage of the sale price. Others may transition to flat fees, hourly rates, and/or service fees. However, many will likely look at moving away from representing buyers entirely.
  • Fewer First-Time Homebuyers. In today's market, sellers pay the buyer real estate agent's compensation. Changing this could impact first-time homebuyers if they have to pay buyer agents directly.
  • (Hopefully) More Industry Competition. Changes such as these could create more competition in the real estate industry. We will see fewer agents, but the ones who stay will likely be more professional and experienced.


Summary

The real estate industry is complicated, and the ruling against the NAR won't change that, regardless of whether or not it stands. Seller agents, buyer agents, and the companies they work with will have to adapt in the coming years, regardless.

If you're in the market for buying or selling a house in Colorado Springs, the team at Best CS Homes is on your side. Just fill out the form below and we'll be in touch!

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