I was thinking of a James Taylor song today. It goes, “I’ve seen fire and I’ve seen rain. I’ve seen sunny days that I thought would never end.”

Well, I’ve seen a lot of changes in my real estate career. I started in the real estate business way back in 1989. (I know it’s hard to believe since I only look 40.) 1989 was before the internet, electronic key boxes, and agents lip-syncing on social media. We had to call for an appointment on every listing – with no cell phone. It was before form fill software. Can you imagine? When I started, our contracts were about two pages long. They came in “notepad” form meaning you would just pull a contract from a stack that had binding gum at the top. In 1989, we either hand-wrote our contracts or, if we really wanted to show our professionalism, we would type them. On a typewriter. That’s a machine with a keyboard, but…never mind.

Agency was different then too. There was no need for an IABS because everyone worked for the seller. When a buyer would walk into the office we would say, “Don’t tell me anything confidential because I’m obligated to tell the seller.” Then we would proceed to ask them about their finances and credit rating. We all worked as sub-agents of one another, and we helped each other to “get the deal done.” That was all well and good until I was selling a house to my sister. I had to represent some seller who was the client of another firm, and not give my sister advice or opinions. To do so would have been dual agency, which was illegal in Texas. But, that’s how we operated, often with a wink and nudge for our friends and family.

Then came the new concept of buyer agency. There were actually agents who were going against the time-tested tradition of sub-agency and they were representing the buyer. Those people were not to be trusted! How dare they not share information with us that would help us “get the deal done” even if it might not be in the best interest of the buyer. In the early days of buyer agency, many companies independently made the decision to not offer broker-to-broker compensation to buyer’s agents out of fear that buyer’s agents might “put us out of business.” Then the industry had an awakening that maybe working FOR the person you are working WITH was actually the best way. We went from everyone doing sub-agency to almost everyone doing buyer’s agency, and a 360 with many of us choosing to not offer any compensation to subagents.

In 2006, I chaired the Texas REALTORS® Task Force on Agency. After meeting with members from all over the state for several months, we had several recommendations. Among them were supporting legislation that all real estate agreements must be in writing, and TREC rule changes that customers could decline representation. We also discussed doing away with sub-agency. Another recommendation was to create something called a “PDF” of the IABS and email it to all of the members. Remember, this was 2006. Unfortunately, our recommendations were, as it seems, before their time.

I’ve seen fire and I’ve seen rain. I’ve seen so many changes in our industry over the years. I’ve seen us change from sub-agency to buyer’s agency. I’ve seen the rise and fall of the internet companies that we thought would surely put us all out of business. I’ve seen compensation removed from the MLS because of a class-action lawsuit, and still we somehow manage to survive as an industry. We survive because we provide value to our clients.

Now, it’s time to change again. As we adapt to this post-settlement paradigm, let’s not continue to do things just because that’s the way we’ve always done them. Let’s do things that make sense, like doing away with broker-to-broker compensation before someone forces us to do so. Here’s why it makes sense. You provide value and your buyer agrees to pay you what you are worth. The buyer can ask the seller to pay all or some of the buyer agent compensation in the contract. There is no reason for it to flow through the listing broker, now that there is verbiage in paragraph 12. Isn’t that what caused the lawsuit in the first place? Sellers said they didn’t realize that the fee they paid to their broker would go to the buyer’s broker. Why are we still fighting to do it that way?

We have a real problem right now while we are in this transition. Some firms use paragraph 5A of the Listing Agreement and offer broker-to-broker with TXR 2402. Some firms don’t allow broker-to-broker compensation, so they use paragraph 5B and let the buyer and seller negotiate it in the contract. When you are showing a property, you need to know which way or if they are offering BAC so that you know how to structure your offer. So you may have to call each listing agent. At least we have cell phones, but this isn’t 1989. We shouldn’t have to do that anymore!

Here's the problem. We went from (essentially) one way a buyer’s broker can be paid (through MLS) to now 7 different ways. Seven? Yes. The Buyer Broker can be paid by:

1. The Listing Broker (2402)
2. The Seller (paragraph 12)
3. The Buyer (the Buyer Rep Agreement)
4. Partially by the Listing Broker and partially by the Seller
5. Partially by the Listing Broker and partially by the Buyer
6. Partially by the Seller and partially by the Buyer
7. Partially by the Listing Broker, partially by the Seller, and partially by the Buyer

When we stop using broker-to-broker compensation, we will remove all except the Seller and the Buyer. I know that if we are honest, some of us just fear that we won’t be able to get paid as much as we have in the past. We fear that this change will “put us out of business.” Let’s learn from history. I can assure you that we will survive, and we will thrive. If you know your value and can communicate it to your clients, not only will you not be put “out of business,” but your business will increase.  So, let’s go through the fire and the rain. We can do it because sunny days are ahead!