House of Questions - Page 2

Who is being hurt the most by this regulation change?

Falk: "Buyers will probably be hurt the most, because if sellers aren't offering commission compensations, the buyers will need to come out of pocket to pay their agents. It was already very difficult [for buyers] getting enough money together for a down payment—and now buyers have to worry about paying commissions as well!

"Buyer's agents are also going to feel the pain. It's going to be more difficult for buyer agents to get deals together—first, with their buyers on commission compensation, and then with buyers and sellers—a process that may or may not put commissions back on the table."

Begin: "Right now, I believe it's the consumer [who's apt to be hurt]. Particularly those consumers with modest resources, first‐time buyers, and those who may try to go it alone without the tools to handle [the buying process]. Compensation has always been negotiable, and calculated up front for the seller [prior to the property's marketing]. Now, everyone is far more wary of one another—and trust is the basis of good relationships."

Will more listing agents (who represent sellers) now try to control both sides of sales transaction?

Falk: "There have always been agents who have tried to capture both sides of sales. This will make it easier for them to do so if buyers walk into their open houses without any buyer/broker agreement in place. I do think we will see more listing agents doing both sides of deals as a consequence of the new regulations. In that regard, agents who represent buyers may have a more difficult time making a living, which makes discounting their services even more challenging."

Begin: "Not all listing agents want to have both ends of a sale. I am sure there will be more representation of buyers by listing agents, mostly driven by buyers."

A year down the road, what will the fallout from this regulation look like?

Falk: "We are going to see fewer buyer's agents in the market. We'll see more listing agents doing both sides of the deals, so they should do well. In the end, if prices don't come down as a result of the increased cost to buyers, sellers will be the big winners because they will be paying less…Buyers and their agents will be feeling the financial pain."

Begin: "I think a lot of agents will leave the business. Agents who can articulate their value and have solid reputations may see an increase in their business. I can't see into the future, but only time will tell if compensation will be greatly affected."