While homebuyers and sellers don’t see much of the behind-the-scenes action, the real estate market thrives on collaboration. One key aspect of this collaboration is broker cooperation, where agents from different firms work together to sell homes. This cooperation is largely driven by the Multiple Listing Service, which allows agents to share listings and commissions. But this cooperation may soon come to an end.
In a February ruling, the Department of Justice might be ending broker cooperation. At Premier Utah Real Estate, our team wants you to understand how this ruling may impact your home-buying and selling experience. If you are considering getting into the market soon, keep reading to learn more about the impact this ruling may have on you.
What is Broker Cooperation?
Real estate agents often work together, often referred to as broker cooperation, even if they are from different companies, to help people buy and sell homes. This cooperation is often formalized through multiple listing services (MLS), which allow brokers to share property listings and offer commissions to other brokers who bring in buyers.
When one agent helps sell a home listed by another agent, they share the commission. This encourages agents to help each other because they both get paid when the home sells. Because agents cooperate, homebuyers have access to more homes. Your agent can show you homes listed by other agents, not just their own.
Agents build good relationships with each other, which helps the buying and selling process go more smoothly. They follow rules and guidelines to ensure they work together fairly and honestly. However, following a recent settlement involving the National Association of Realtors and major real estate firms, we might be experiencing the end of broker cooperation.
What are the Potential Effects of Ending Broker Cooperation?
Ending broker cooperation could have significant effects on the real estate market, impacting homebuyers, sellers, and real estate professionals in various ways:
Homebuyers
Fewer Options: Ending broker cooperation means buyers might only see homes listed by their own agent’s brokerage. If homebuyers are hoping for a variety of homes to choose from, they might be more limited in their choices than they originally anticipated.
More Legwork: New homebuyers may have to contact multiple agents to see a variety of properties. This additional work may make the home search process more complicated and time-consuming, which can be frustrating if you have limited time.
Higher Cost: In order to make up for ending broker cooperation, agents might have to increase their fees to compensate for their reduced business. This increase may result in a rise in the cost of buying a home.
Home Sellers
Less Exposure: Ending broker cooperation may result in houses receiving far less visibility, as they are only visible to the listing agent’s clients. With less exposure, home sellers may notice a reduction in the pool of potential buyers.
Longer Selling Times: When there are fewer agents working to sell your property and a significantly smaller pool of potential homebuyers, it may take much longer to sell your home than it has in years past.
Potentially Lower Prices: While we’ve seen a steady rise in the price of homes over the last few years, this may end when ending broker cooperation. Home sellers may notice lower offers and sales prices as this change takes place.
Real Estate Agents
Reduced Incomes: Ending broker cooperation means agents might see a decrease in earnings since they will have fewer opportunities to earn mission from cooperating on sales.
More Competitive Environment: Agents may have to compete more fiercely for listings and buyers, possibly leading to more aggressive marketing and sales tactics.
Increased Workload: Ending broker cooperation may mean agents need to spend more time searching for suitable properties or buyers, increasing their workload.
The Market
Less Efficiency: As we experience the end of broker cooperation, the market could become less efficient, with more fragmented information and less collaboration leading to slower transactions.
Higher Barriers to Entry: New or smaller brokerage firms might find it harder to compete without the cooperative network, potentially reducing market diversity.
Changes in Business Models: Real estate firms might need to adapt their business models, possibly leading to more in-house listings or exclusive buyer agreements to retain control over transactions.
Overall Impact
Ending broker cooperation could lead to a more fragmented and competitive real estate market, making the process of buying and selling homes more challenging for everyone involved. Homebuyers and sellers might face higher costs, reduced options, and longer transaction times, while agents would need to adapt to a more competitive and less collaborative environment.
Navigating the Real Estate World with Premier Utah Real Estate
Whether you are ready to buy or sell a home in Northern Utah, our team at Premier Utah Real Estate is here to help. Our team of expert real estate professionals has been serving homeowners across the area since the mid-1990s. There isn’t anything we haven’t seen. From marketing and selling homes that others haven’t been able to sell to help you stand out in a sea of buyers, we’re ready for anything the market throws at us. If you would like to learn more about how ending broker cooperation may impact your ability to buy or sell a home, or you have any questions for us, don’t hesitate to contact us today.
Follow Us