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MAKE YOUR LISTING AGREEMENT BULLET-PROOF:

• Posted 11-14-2016
• Brokers  
• Industry   Tips  

Five Important Clauses to Help Avoid or Control Litigation

Every yacht broker should have a carefully written Listing Agreement to help avoid a lawsuit. If a lawsuit is unavoidable, these five clauses can control the outcome.

1. Commission Clause  – It goes without saying that is important to protect your commission up front in the Listing Agreement. Doing so means more than just stating it as a percentage of the gross sales price.

As every broker knows, the hard work of marketing a yacht for sale may result in a transaction that is not strictly a purchase and sale. The commission clause in your Listing Agreement should protect your commission when your work results in something other than a traditional sale including: a trade, exchange, donation, long term charter, or stock purchase in a corporate entity that may own the yacht. Planning for these events up front in your Listing Agreement will avoid the uncertainty of whether and when you will be paid for your work.

2. Duration Clause  – The duration or term clause is also important to protecting your commission. Most Listing Agreements are exclusive-right-to-sell agreements. This means that the owner agrees to pay a commission to the listing broker during the term of the Listing Agreement regardless of whether the ycht is sold through someone else. Clearly stating when the Listing Agreement begins and ends is vitally important.

A Listing Agreement should include a specific period of time from signing that the exclusive listing will remain in effect, entitling a broker to a commission during this period of time. It should also contain language addressing termination for a material breach of the agreement after written notice and a specific time period to fix (or “cure”) the breach asserted.

Requiring the parties to provide written notice of a breach and an opportunity to “cure” before an agreement is lawfully terminated can protect the broker’s commission in the event of a dispute. Many lawsuits have been decided on the question of whether proper notice of an alleged breach had been given.

3. Integration Clause  – This clause states that your Listing Agreement is the entire agreement between the parties and supersedes all earlier negotiations, agreements, and representations. Having an integration clause can protect you when there is a dispute between an owner and a broker over whether the broker made certain promises that are not in the Listing Agreement.

In a lawsuit, people sometimes “remember” things differently. The integration clause can be used to effectively limit a party from claiming that there were promises or agreements other than what are written in your Listing Agreement. Many lawsuits have been dismissed because an agreement contained an integration clause.

4. Venue Clause  – If you can’t avoid being in litigation, you can often avoid finding yourself in litigation out of state if your Listing Agreement has a venue clause. Often, a yacht owner lives in one state, the yacht is another, and the listing broker is in yet another state. This can mean multiple possible locations for a lawsuit to be filed.

To limit the costs of defending a lawsuit in a distant location, and provide more predictability for both sides in a dispute, a Listing Agreement should contain a clause stating where all the parties must file any lawsuit relating to the Listing Agreement. This is called a venue clause.

The venue clause should contain a clear statement of the state and county where the parties are required to file a lawsuit. A well written venue clause will also contain an agreement between the parties waiving an objection to a lawsuit being filed in the agreed-upon location and state the law that will apply.

For example, for a brokerage located in Fort Lauderdale, the venue clause may provide that a both parties can only file a lawsuit in Broward County, Florida, and that Florida law would apply to any dispute. Simply put, if you are a Fort Lauderdalebased broker, and you cannot avoid a lawsuit, you would probably prefer litigating in Florida over some remote location.

5. Attorneys’ Fees Clause  – Courts in the United States apply the “American Rule” when it comes to paying for attorneys’ fees in a lawsuit. Regardless of who wins, each party is required to pay its own attorneys’ fees unless there is a statute or agreement in a contract that requires the losing party to pay. Many people defending what they believe to be an unfair lawsuit, find this rule to be unfair because even if they win, they still “lose” by having to pay the cost of their attorneys. In your Listing Agreement you can change the “American Rule” by agreeing ahead of time that the prevailing party in any dispute shall be entitled to recover its attorneys’ fees and costs.

Whether you already have a standard Listing Agreement, or you are in the process of having one written, these five clauses should always be considered. Additional clauses and concepts to bulletproof your Listing Agreement also can be found in the FYBA form Listing Agreement.

Article Author: BY ROBERT ALWINE & UMBERTO BONAVITA, Robert Allen Law

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CENTRAL LISTING AGREEMENT

This Central Listing Agreement defines the terms and conditions whereby MYERS YACHT SALES, LLC., hereafter called Broker agrees to manage the sale of the vessel described below on behalf of the undersigned owner/agent, hereafter called Owner. Vessel Name__________________________ Year _________Length_________Mfg. ______________________Model_______________ Type ________________Hull ID #___________________________________ Doc # ___________________State Reg # ________________ This agreement shall be effective for 90 days from this date and thereafter, until revoked by a 30 day written notice by either party. _____________initial Broker shall have the sole right and authority to manage the sale of the above described vessel at the Listing Price of $___________________.

1. Owner agrees to deliver the vessel in good title, free and clear of liens. The usual and customary practice for examination, water trials, bottom inspections, surveys and closing the transaction shall apply.

2. For securing a purchaser for the above-described vessel: Upon the sale, donation, trade or exchange of the vessel, or if it is otherwise transferred or conveyed during the term of the agreement the owner agrees to pay a commission of 10% of the sale price or $3,000.00, whichever is greater. This commission shall be paid to MYERS YACHT SALES, LLC , whether the purchase is secured by Broker, or any other party, at the price and terms mentioned or at any other price and terms acceptable to the seller. Should the vessel be sold or traded after termination of this agreement, within 6 months of official notification of termination, to a party, their assigns, or controlled business entities that was procured through the efforts of Broker, or co-operating brokers, owner shall be liable for payment of the full commission. _________(initial)

3. Owner agrees to provide easy access to the vessel at all times, for the purpose of showing while not in use by the owner, to refer all inquiries of brokers or other interested parties to Broker on a timely basis; to notify Broker should the vessel be moved, or temporarily not available for showing; to allow Broker to prominently display a “For Sale” sign during the term of this agreement and to replace sign, if removed during use of vessel.

4. Broker agrees: to carefully inspect and secure complete information regarding the vessel, to provide local and national marketing information in regards to the value of the vessel in order to determine a market value, to direct concentrated efforts of the organization in bring out a sale, to advertise as deemed advisable, in local and national advertising venues, at not cost to the seller, to arrange for surveys, bottom inspections, sea trials, at the direction of the seller, to assist the buyer in arranging financing, to assist in the closing, to show the vessel as required, to promote the sale of the vessel through national electronic listing services, of which broker is a member in good standing. 5. As owners agent, Broker is authorized to accept receipt for, and hold all money paid or deposited as a binder theron and if such deposit be forfeited by the prospective buyer, Broker may retain one half of such deposit, but not to exceed the amount of the commission, as compensation.

6. Owner indemnifies and holds Broker and agents harmless against any loss, damage, theft, suit or claim arising while the vessel is being shown, handled, ferried, or in the possession of Broker, at the direction of the owner. It is specifically understood and agreed that the Broker does not assume and is not delegated, by the owner, care, custody, or control of vessel by reason of this agreement. Broker will not move the vessel from its berth without expressed approval and acceptance of these terms from the Owner.

7. Owner understands that this agreement does not guarantee a sale, but it does guarantee the Broker will make and earnest and continued effort to sell the vessel until the agreement is terminated.

8. In the event of any dispute, claim, questions or disagreement arising out of our relating to this agreement or the breach thereof, the parties herto shall use their best efforts to settle such disputes, claims or disagreements. To this effect, they shall consult and negotiate with each other, in good faith, attempt to reach a just and equitable solution satisfactory to both parties. If they do not reach such solution within 60 days, then upon notice by either party to the other, disputes, claims or differences shall be finally settled by the laws applicable in the State of Florida.

9. Owner acknowledges having understood the terms of this agreement and receipt of a signed copy, that this document represents the entire agreement of the parties, that no other representations, warranties, guarantee of sale or promises of any kind have been made to me other than those set forth herein, and that this agreement is binding on all heirs, executors, successors, and assigns of Owner and Broker.

_______________________________________________ Myers Yacht Sales, LLC Licensed Florida Yacht Broker

Date _________________________________

Owner’s Signature _______________________________________________ Owner’s Printed Name _____________________________________________ Owner’s Address _________________________________________ _______ Date _________________________________ ________________________________________________ Owner’s Home Phone ______________________Cell ___________________ Work Phone ______________________ Email _________________________

Copyright 2020 Myers Yachts.  All Rights Reserved.

CENTRAL LISTING AGREEMENT This Central Listing Agreement defines the terms and conditions whereby MYERS YACHT SALES, LLC., hereafter called Broker agrees to manage the sale of the vessel described below on behalf of the undersigned owner/agent, hereafter called Owner. Vessel Name__________________________ Year _________Length_________Mfg. ______________________Model_______________ Type ________________Hull ID #___________________________________ Doc # ___________________State Reg # ________________ This agreement shall be effective for 90 days from this date and thereafter, until revoked by a 60 day written notice by either party. _____________initial Broker shall have the sole right and authority to manage the sale of the above described vessel at the Listing Price of $___________________. 1. Owner agrees to deliver the vessel in good title, free and clear of liens. The usual and customary practice for examination, water trials, bottom inspections, surveys and closing the transaction shall apply. 2. For securing a purchaser for the above described vessel: Upon the sale, donation, trade or exchange of the vessel, or if it is otherwise transferred or conveyed during the term of the agreement the owner agrees to pay a commission of 6% of the sale price or $2,000.00, whichever is greater. This commission shall be paid to MYERS YACHT SALES, LLC, whether the purchase is secured by Broker, or any other party, at the price and terms mentioned or at any other price and terms acceptable to the seller. Should the vessel be sold or traded after termination of this agreement, within 6 months of official notification of termination, to a party, their assigns, or controlled business entities that was procured through the efforts of Broker, or co-operating brokers, owner shall be liable for payment of the full commission. _________(initial) 3. Owner agrees to provide easy access to the vessel at all times, for the purpose of showing while not in use by the owner, to refer all inquiries of brokers or other interested parties to Broker on a timely basis; to notify Broker should the vessel be moved, or temporarily not available for showing; to allow Broker to prominently display a “For Sale” sign during the term of this agreement and to replace sign, if removed during use of vessel. 4. Broker agrees: to carefully inspect and secure complete information regarding the vessel, to provide local and national marketing information in regards to the value of the vessel in order to determine a market value, to direct concentrated efforts of the organization in bring out a sale, to advertise as deemed advisable, in local and national advertising venues, at not cost to the seller, to arrange for surveys, bottom inspections, sea trials, at the direction of the seller, to assist the buyer in arranging financing, to assist in the closing, to show the vessel as required, to promote the sale of the vessel through national electronic listing services, of which broker is a member in good standing. 5. As owners agent, Broker is authorized to accept receipt for, and hold all money paid or deposited as a binder theron and if such deposit be forfeited by the prospective buyer, Broker may retain one half of such deposit, but not to exceed the amount of the commission, as compensation. 6. Owner indemnifies and holds Broker and agents harmless against any loss, damage, theft, suit or claim arising while the vessel is being shown, handled, ferried, or in the possession of Broker, at the direction of the owner. It is specifically understood and agreed that the Broker does not assume and is not delegated, by the owner, care, custody, or control of vessel by reason of this agreement. Broker will not move the vessel from its berth without expressed approval and acceptance of these terms from the Owner. 7. Owner understands that this agreement does not guarantee a sale, but it does guarantee the Broker will make and earnest and continued effort to sell the vessel until the agreement is terminated. 8. In the event of any dispute, claim, questions or disagreement arising out of our relating to this agreement or the breach thereof, the parties herto shall use their best efforts to settle such disputes, claims or disagreements. To this effect, they shall consult and negotiate with each other, in good faith, attempt to reach a just and equitable solution satisfactory to both parties. If they do not reach such solution within 60 days, then upon notice by either party to the other, disputes, claims or differences shall be finally settled by the laws applicable in the State of Florida. 9. Owner acknowledges having understood the terms of this agreement and receipt of a signed copy, that this document represents the entire agreement of the parties, that no other representations, warranties, guarantee of sale or promises of any kind have been made to me other than those set forth herein, and that this agreement is binding on all heirs, executors, successors, and assigns of Owner and Broker.

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What A Yacht Broker Can Do For You

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Especially when buying or selling a large boat, the right broker can reduce stress and make the transaction go smoothly and painlessly.

A broker can take the complications out of buying or selling your next boat. (Photo: Michael Vatalaro)

When BoatUS member David Issacson bought his first boat 26 years ago, he searched the newspaper classifieds in the morning (remember those?), located a couple of candidates before noon, and by 3 p.m. wrote the seller a check for $1,000 for a 17-foot boat he took fishing that day. "It was so simple then," he says. "Pretty much like buying a cheap used car. I don't even think I got a bill of sale. It was all done with a handshake." Now that he's retiring, he's looking for his fourth boat, which he says will be much bigger, probably in the 42- to 45-foot range. "I have no idea what it's going to take now. I've never had a boat that was documented or had a loan on it. I don't even think they have classifieds in the paper anymore, and I'm not sure what the process is these days."

Issacson is exactly the type of person who could benefit from using a boat broker. Boat brokers are similar to real-estate agents, but with important differences: They're far less regulated, and their commission is 10 percent rather than six percent. Unlike realtors who must take classes, sit for an exam, and be licensed in every state, only boat brokers in Florida and California have to be licensed and only California requires an exam. In most other states, anyone can call themselves a boat broker. And while all brokers have certain legal responsibilities to their clients, selecting one should be done carefully. Ask around at your marina or boatyard and get referrals from others who have used a broker before. Talk to two or three and get a feel for them, just as you would with a real estate agent. One way to increase your chances of finding the right broker is to look for a Certified Professional Yacht Broker (CPYB). These brokers are members of the Yacht Brokers Association of America (YBAA), have taken a comprehensive exam, have pledged to abide by a code of ethics, and will work with the BoatUS Dispute Mediation Program (see links in sidebar).

If You're Selling

There are several advantages to using a broker, the biggest of which is exposure. Plastering "For Sale" signs in yacht clubs and marinas can't equal the power of a broker's listing, especially with larger boats that have a smaller pool of buyers who may not even be in the same state. Brokers typically list boats through websites such as Yachtworld, which is easily searchable by anyone, anywhere in the world. Only brokers can list boats on the site, which functions much like the Multiple Listing Service for real estate agents.

Here's How A Broker Can Help

If you're the seller, a broker will:.

• Advertise your boat. Brokers should list your boat on Yachtworld and advertise in other places where appropriate. Find out what their marketing plan is and get it in writing.
• Price your boat realistically. Brokers have access to recent sale prices and know a good starting point.
• Prescreen responses to advertising. This will avoid most tire kickers.
• Show your boat to prospective buyers. This will save you from wasting time with buyers who don't show up.
• Communicate all offers from potential buyers to you.
• Negotiate the selling price. This is where brokers can really earn their money.
• Draw up sales agreements and accept deposits. Many brokers can do this electronically over computers, tablets, and even smartphones.
• Arrange for sea trials and schedule surveys.
• Coordinate closing.
• Transfer funds to you. Now you can start shopping for your next boat.

Correctly pricing a boat is critical to getting it sold, and an experienced broker has a very good idea of what a boat will sell for and can price it accordingly. Brokers typically have access to what similar boats have sold for in the local area and they'll prepare a listing based on the kind of boat and type of buyers expected. They'll take photos, write an enticing description, and recommend things to improve the look and marketability of your boat. Brokers can also help you navigate some of the more confusing aspects of selling such as corporate ownership, loan payoffs, bills of sale, and other documents needed for transferring ownership. Aside from listing and advertising the boat, their most important job is helping move the process along once a buyer is found. Brokers can also help a buyer obtain financing and assist with changing the USCG documentation. While the 10-percent commission is usually not negotiable, brokers will sometimes discount it for a sale that might be falling apart because of a survey report or other defects found on a boat. The different listing contracts used by brokers can be confusing, but they're not complicated once you understand the two main types, a central agency agreement and an open listing agreement.

A central agency agreement (sometimes called an exclusive listing) means you've hired a specific broker to sell your boat. With this type of agreement, the broker typically lists your boat on Yachtworld and — this is important — is obligated to sell it through a co-brokerage arrangement. Co-brokerage means that if another broker finds a buyer for your boat, your broker agrees to split the commission with him. This incentive to help each other is why about 70 percent of all brokerage sales are co-brokered. Keep in mind, though, with this type of agreement, even if you bring in the seller or end up donating your boat, you'll still be liable for the broker's commission. The majority of brokerage sales are central agency agreements.

An open listing agreement means you've given more than one broker the right to sell your boat and you also retain the right to sell it on your own. The disadvantage is that because no broker is guaranteed at least a part of the commission, it's not very likely any of them will spend the money to list your boat on Yachtworld or pay for other advertising. There can also be confused communications between multiple brokers and potential buyers. On the other hand, a hungry broker may be more motivated to bring you a buyer because he would get the entire commission. With this type of agreement, if you find your own buyer, you don't owe anyone a commission. For either type, don't be pressured into signing for a longer term than you're comfortable with. Six months is typical, but don't be afraid to ask for less, though a broker typically needs at least a couple of months to generate interest. Usually, you can walk away from any contract after giving 30 days notice. Most agreements automatically renew, so give notice before that if you want to cancel. No matter what kind of listing, ask for biweekly progress reports.

Selling It Yourself

For Sale By Ow ner (FSBO) certainly sounds attractive. Not only do you pocket 10 percent more than if you used a broker, but you're in charge of the whole process. Selling it yourself has drawbacks, however. You won't be able to get the same kind of national exposure a broker can, and you'll be responsible for keeping the boat in top condition and available for showing. And, because most boat shopping occurs on weekends, expect to be tied down during your time off. Finally, like many others, you may simply dislike negotiating. But if you want to save some serious money, BoatUS can help. Our thousands of online classified listings are viewable by anyone, anywhere in the world, and we offer an escrow service that takes the anxiety out of the financial part of the transaction. We also offer members full documentation service, boat financing, comprehensive insurance, and on-water and roadside towing coverage.

If You're Buying

While owners may find the process of selling to be an anxious one, buyers are looking for their next dream boat and are likely to be enjoying looking around, trying to find the perfect fit. But buyers tend to get apprehensive once it comes to plunking down hard cash. This is where a broker can make the process less stressful. Brokers should have a separate bank account for holding deposits and there should be wording in the contract specifying what the sale is contingent upon as well as how and when the money will be returned if the sale falls through.

It's important to remember that the broker in a typical sale is getting paid by and working only for the seller, not the buyer. A broker will try to get the highest possible price (that's what his commission is paid from) and will try to sell his client's boat even if it's not necessarily the best deal for you. You're on your own with negotiations and paperwork advice. You can, however, enter into an agreement with a broker through a buyer's broker arrangement. A buyer's broker will represent you, not the seller. Once they know what you're looking for, they can scour their sources and suggest likely boats for you to view, assist in negotiating a price, and help with the paperwork. Typically, a buyer's broker gets a commission split from the seller's broker so there's no cost to you, but read the agreement before signing.

When it's time to seriously consider a boat, it will need to be hauled out and surveyed — something that's usually paid for by the buyer, though as with anything in a sale, that's negotiable. Never use a surveyor recommended by the broker or seller; it's critical to hire an independent, qualified surveyor (see links, below) who has no stake in the outcome. Not only will the survey uncover needed repairs and deficiencies, it will also establish a fair market value, all of which can be used for negotiations. It will almost certainly be needed for financing and insurance as well.

Useful Links

• Finding a Certified Professional Yacht Broker
• Find a Marine Surveyor
• BoatUS USCG Documentation Service
• BoatUS Financing
• BoatUS Insurance
• Find out if a Florida Broker is licensed

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Charles Fort

Contributing Editor, BoatUS Magazine

Charles Fort is BoatUS Magazine's West Coast Editor. He often writes local news items for BoatUS Magazine's Waypoints column and contributes to Reports, in-depth tech features in every issue written to help readers avoid accidental damage to their boats. He is a member of the National Association of Marine Surveyors, he's on ABYC tech committees, and has a 100-ton U.S. Coast Guard license. He lives in California.

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Owing Commissions to Boat Brokers

• By Raleigh P. Watson
• Updated: March 4, 2018

Unfortunately, many sellers do not closely read their brokerage listing agreements. However, there are hidden terms in all agreements that vessel owners should understand. One such term involves the legal obligation to pay a commission after a listing agreement has expired or been terminated.

Procuring Cause Doctrine

The procuring cause doctrine is a legal theory based on the principle of good faith and specifies that a broker deserves a commission if he initiates negotiations between a buyer and seller through some affirmative act, even if the sale occurs after a listing agreement is terminated. Most listing contracts used today are “exclusive right to sell agreements.” In other words, the owner gives the exclusive right and authority to one brokerage to manage the sale of their vessel. Under such an agreement, the procuring cause doctrine is typically inapplicable and normal rules of contract interpretation apply. Hence, the terms of the listing agreement govern, including when a commission is owed.

Look for the Language

Through most listing agreements, a commission must be paid to the broker even after the contract is terminated if the vessel is subsequently sold to an individual to whom the vessel was previously shown during the term of the contract. Normally, the paragraph is not clearly labeled. Sometimes it will be titled “Other Situations,” and other times it may not be identified at all. To be fair, this type of language is not restricted to yacht brokerage, and the public policy behind it makes sense. Owners should not be able to terminate a listing agreement and immediately sell a vessel to someone a broker brought to them without paying a commission.

The Terms Should Be Clear

Unfortunately, the language in most listing agreements lacks specificity and oftentimes favors the brokerage. The relative time frames should be clear, what affirmative action the broker must take to trigger that particular clause should be unambiguous, and the burden to share relevant information should be logical and fair. For example, should a broker be owed a commission if he spoke to a potential buyer one time when the boat was listed but the owner sold it to that same person six months after the listing expired without ever knowing the broker showed it to that individual in the first place? It probably depends on who you ask. That can be a tricky situation if the language is vague.

A Few Pointers

Some small adjustments in the language can make a big difference. To begin with, a seller should ensure the broker is required to “physically show” and/or “substantially present” the vessel during the term of the listing. Many agreements simply require a boat to be “submitted” or “introduced” by the brokerage. Those words are too ambiguous in this context. Secondly, the time frame should be clear and reasonable. Most listing agreements allow for six to 12 months after the listing has expired or been terminated, but anything longer is probably unfair to the owner.

Thirdly, and perhaps most important, the burden should be on the broker to provide a list of names to the owner after the contract has expired. Most listing agreements will either fail to require a list of persons to whom the vessel was physically shown or put the burden on the owner to request such a list. Ideally, the broker is required to provide the owner a list within 10 to 15 days after termination of the listing agreement. Hence, the owner should not be obligated to pay a commission to that broker on a subsequent sale if such a list is not provided. In my opinion, this is a more logical way to handle the process, and fairer to the owner and any subsequent brokers.

What Can Happen

I have personally seen situations where an owner has been caught owing a commission to two different listing brokerages. The first broker initially showed the buyer the vessel, but the listing agreement was terminated shortly thereafter. The owner listed the boat with another brokerage, which began negotiations with the same buyer a few months later and eventually sold the boat. The second broker assumed it was fine to proceed as normal because the owner never requested or provided a list of persons from the previous broker in accordance with the initial listing ­agreement. Of course, there is certainly blame to go around in that scenario, but the owner signed the contract and the terms were not in his favor.

To be clear, brokers are extremely important tools for sellers. Regardless, I strongly recommend every owner to read their listing agreement and hire a maritime transaction attorney to review the terms if it makes them feel more comfortable. It is crucial the owner and brokers understand the relevant terms so all parties are protected.

Raleigh P. Watson  is a contributing author, and a Partner at Miller Watson Maritime Attorneys.

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What Do Yacht Brokers Do? 8 Things To Expect (Selling & buying)

From buying to selling boats and enjoying life on the high seas, the exciting life of a yacht broker seems like a dream to many.

What exactly is involved in their job?

This article will highlight some of the key responsibilities of a yacht broker.

Table of Contents

The 8 Main Functions Of Yacht Brokers

A yacht broker helps to make sure that everything goes smoothly behind the scenes of buying and selling a yacht.

They do a lot to help to make sure the stress of buying or selling a yacht is less stressful and can help to speed the process up.

1) Looking at the Boat

Whether the client is purchasing a boat or selling one, the yacht broker will first need to view the vessel.

This is in order to get a good idea of the condition of the yacht. He or she will need to appraise the condition of the boat.

Another responsibility is to talk to the crew about the maintenance schedule. The yacht broker will also need to look at the ship’s papers. Having all of the right certificates in order and documents is crucial to sealing the deal.

2) Appraising the Boat

The yacht broker will also want to talk to his industry contacts to get an idea for how much the yacht is sold for.

The yacht broker has the important job of saving the seller or buyer time and pain when it comes to selling a boat.

A yacht broker can help with assessing the boat and surveying it to make sure it is in premium condition. They will attend the survey with you, or for you, if you are not able to. The broker will act as the intermediary during the process of the sale.

3) Filling Out The Paperwork

The yacht broker’s job is to make sure that the paperwork gets done. This includes collating the documents for the actual closing of the sale, preparing technical specifications, to making sure the yacht has all of the appropriate certificates.

They will also guide the yacht owner through aspects such as loan payoffs, corporate ownership, bills of sale, and similar documents.

4) Briefing The Parties Involved

A yacht broker will need to direct clients to the best possible marine lawyer for their specific yacht.

The yacht broker may need to help encourage the deal to keep pushing through.

5) Marketing

Marketing is an essential part of the yacht broker profession, especially when they are representing the seller of a yacht.

In the past, a yacht broker operated out of a big office building, and people would walk by and visit because they were considering purchasing a yacht.

Now, in the era of the internet, people from all over the world have access to a yacht broker and their services.

The yacht broker may make use of advertising such as banner ads or videos. Marketing yachts effectively makes use of the internet, so a yacht broker may make posts on social media, classifieds, or their personal website to sell a yacht or find one.

Some yacht brokers might make a video walk-through of the yacht and explain the features to potential clients. Others will have a professional website that acts as a point of contact.

6) Duties While Selling

As stated above, the broker will list the yacht on Yachtworld and other appropriate outlets. They also have the responsibility of pricing the yacht reasonably. Brokers will have access to recent sales, and they know how much they should go for based on recent sales prices.

When they receive responses to the yacht adds, they will prescreen responses so as to find those that are most likely to lead to a sale.

A yacht broker will also have the duty of showing the boat to people who are interested in buying it. They’ll give them the tour, and be sure that the boat is in pristine condition.

The yacht broker will also answer any questions that the buyers have.

Another responsibility they have is to communicate negotiations with the yacht owner. They will also handle the pricing of the yacht , which is where they might get their earnings from.

Finding the right price is a big part of getting the boat sold.

Part of their job would be to take pictures of the boat and to write a description of it that entices buyers.

7) Securing the Sale

When a price is agreed upon, the yacht broker will draw up the sales agreements and will also accept deposits.

Modern technology allows them to do this electronically with smartphones, tablets, and computers.

A yacht broker will secure sea trials where the potential buyer will take it for a test drive on the water as well as schedule surveys.

After the sale is made, they will transfer the funds to the yacht owner.

A yacht broker can assist a buyer in getting financing for the yacht.

8) Duties After the Sale

The broker’s job doesn’t stop after the boat is sold.

They can also assist in docking, boat detailing, and refining it to meet the buyer’s needs.

Their industry connections can help a lot in this process after the boat is sold, and helps to make boat ownership a rewarding experience.

Types of Agreements With Yacht Brokers

Some yacht brokers take a 10% commission on the sale of the boat and might bring it down in order to secure a sale on a boat. There are different types of agreements.

A central agency agreement, or an exclusive listing, means that a seller has hired a specific broker to sell their boat.

The broker may then list it on Yachtworld or a similar site. They then enter a co-brokerage agreement. Co-brokerage is when another broker finds a buyer for the yacht, and the original broker splits the commission with them.

Almost 70% of all yacht sales are done in this way because of this incentive. In this agreement, even if an owner brings in a buyer or donates the boat, they are still liable to pay the broker commission.

Most of the yacht sales are completed with a central agency agreement.

Another type of sale is the open listing agreement. In this setup, the owner can bring in more than one broker for the sale.

The owner also retains the right to sell the yacht on their own.

A disadvantage to this type is because they are not guaranteed commission, they might not spend money that is necessary to advertise the boat. It also might result in communication errors among more than one broker and prospective buyers.

However, on the other hand, a motivated broker might be more likely to bring in a sale because then they would be guaranteed the entire commission. The typical length of the agreement is around six months.

Yacht Broker Duties If You Are Buying

Brokers help to ease buyer’s anxiety when putting down large amounts of cash for a luxury yacht.

They might set up a separate bank account for the transaction and the necessary deposits.

The contract will specify what the contingencies of the sale are, and also how much or how the money will be returned if the sale does not go through.

For the buyer, the yacht broker will have the advice they need to find the right boat at the right price. They’ll be able to open doors and find opportunities that benefit both parties and create a win-win situation.

They work as an advocate on behalf of the buyer and will be priceless when it comes to negotiating and securing a sale.

Know The Role Of The Broker

In most sales, the broker is a worker for the seller and not the buyer.

This is an important part to remember. Their job is to get the highest price possible to satisfy the buyer and to make money. It is possible for a buyer to enter into an agreement with a broker with a buyer’s broker agreement.

A buyer’s broker represents the buyer, not the person selling the boat.

When they know what type of yacht the buyer is looking for, they will search for it through their contacts and resources available to them. They will assist in finding the right boat for the buyer’s needs and budget as well as assist in the necessary paperwork.

A buyer’s broker will typically get a split in commission from the seller’s broker.

There may be no cost to the buyer for using a buyer’s broker, but be sure to read the details of the agreement before signing.

A yacht broker has priceless industry knowledge that will assist in the buying and selling of yachts. A trustworthy broker will help save buyers and sellers time and money when they are making the purchase. They’ll pool the talents and resources of a team of brokers to support the transaction go quickly and smoothly.

Finding the right yacht broker with experience and integrity will make a big difference in the process. A yacht purchase is a significant investment, and teaming with the right people helps to ensure that the investment is the right one.

They understand the market and all of the nuances involved in buying and selling.

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How to Create a Co-Brokerage Agreement

To create a Co-Brokerage Agreement for a deal, go to the Terms page.  Make sure that you have identified both the Listing & Selling Broker in the Brokers of Record Section, as displayed below.

Your guide to commercial real estate leasing and investing

Commercial real estate commission: a complete guide.

You’re interested in commercial real estate and are ready to get down to the real important matter— the money. 

What is the typical commercial real estate commission rate?

When do you get paid your commercial real estate commission?

In this article, we will answer these questions and more. Keep reading to learn the ins and outs of commercial real estate commission.

Covered in this article:

• Commercial Real Estate Commission Guide

How Does Commission Work In Commercial Real Estate?

3 factors that affect your commercial real estate commission.

• Commercial Real Estate Commission Rates
• The Brokerage Split — Commercial Real Estate Broker Commission
• The Number Of Agents Involved In The Transaction

When Do You Receive Your Commercial Real Estate Commission?

Commercial real estate commission in texas.

Just like residential real estate, commercial real estate agents operate on a commission based on the sale or leasing of a property. 

Let’s take a look at how real estate commissions are structured.

Who Gets Paid A Commission In Commercial Real Estate?

For the bulk of commercial real estate deals, commercial real estate commission is paid to one or two real estate agents:

• Listing Agent: This agent is responsible for marketing properties and fielding inquiries for the property owner, landlord, or seller.
• Buyers Agent : This agent is responsible for locating commercial real estate space for sale or rent for tenants and buyers.

Who Pays Commission In Commercial Real Estate?

Commercial real estate commission is either paid by a property owner or landlord , depending on if the property is for sale or for lease. 

When a property is sold, the property owner is expected to pay all commissions upon closing. 

However, in a leasing transaction, the owner/landlord may only be expected to pay half of the commercial real estate commission at lease signing and the other half upon tenant occupancy.

If you’re considering dipping your toe into commercial real estate, the earnings potential is probably one of the perks that intrigues you the most. 

Let’s talk about the money.

How much commercial real estate commission can you expect to make? 

The answer to this question can vary depending on three different factors: 

• Real estate commission rates
• The brokerage split
• The number of agents involved in the deal

#1: Commercial Real Estate Commission Rates

Before diving into a commercial real estate transaction, the seller and commercial real estate broker must agree on a commission , which is typically a percentage of the sale price. 

Sometimes, the commission will be listed in an agreement, when the brokerage firm is able to enter into an exclusive listing agreement with the seller. If the brokerage firm is not listing the property, the broker and seller will sign a listing agreement to confirm both parties agree with the commission price. 

When it comes to commercial real estate commission rates , brokers can decide whatever commission rate they want to charge and can vary their rates depending on the deal. However, it is up to sellers to determine whether they will agree upon the given commission rate.

What Is The Average Commission On Commercial Real Estate?

Due to antitrust laws , it is illegal for brokers to have an agreement that establishes a standard commercial real estate commission. A commercial real estate commission rate will mainly depend on the price of the property. 

For example, a typical commercial real estate commission can vary from 4-8% in deals under $1 million. Once you go above $1 million in property value, the commercial real estate commission will begin to decrease. 

For example, a property with a $10 million sale price could pay a commission rate of 1-3% due to the extremely large sticker price of the property. 

In some instances, the commission may be a flat fee. Though uncommon, some brokers and sellers prefer to agree upon a flat fee, where a predetermined commission is received upon closing regardless of the property’s final sale price.  

A commercial real estate broker can also choose to have a minimum commission as a safety cushion in case the seller ends up accepting a low offer for the property.

Commercial Real Estate Lease Commission Rates

Commercial real estate commission for a lease transaction is typically based on a property’s comparable value . 

For example, if a five year lease has a monthly payment of $6,000, the lease value would be based on the total payments over the course of five years. In this example, your commission would be based on the $360,000 property value.

In some cases, the landlord may try negotiating the commercial real estate commission rate to be reduced for longer leasing terms. 

If the property in our example was being leased for 10 years, the broker could agree to a rate of 4% for the first 5 years and a rate of 3% for the remaining 5 years. 

Additionally, the broker can negotiate to be paid a commercial real estate commission upon lease renewal. This is typically a reduced commission rate.

Another common reason for negotiating a commercial real estate commission rate for a lease could be to incentivize a deal for a low-occupancy building. 

While these instances of negotiation do occur, the bulk of your transactions will likely be done on a non-negotiable commission rate.

#2: The Brokerage Split — Commercial Real Estate Broker Commission

As a commercial real estate agent, you work for a real estate broker.

Even if you handle the entire transaction on your own, state laws require the commission to be paid to the broker. It is the responsibility of the commercial real estate broker to pay the real estate agent commission. 

Brokers can structure their commercial real estate commission in a number of ways, depending on how the brokerage is organized.

Typical Brokerage Split For Small Brokerages

Some real estate firms are comprised of a single broker and a few agents.

It is common in small real estate firms for the real estate broker to take a piece of the commission and give the rest to the real estate agents involved in the transaction. 

In cases like this, splits are pretty simple. 

Agents may start out with a 50/50 split and get to keep a larger percentage as they bring in more commission. 

However, a 60/40 split is typical. In this case, the agent would receive 60% of the commercial real estate commission and the broker would keep 40%. 

The brokerage split could also be based on a sliding scale that resets yearly . As real estate agents bring in more commission, their portion of the split can increase.

Typical Brokerage Splits For Larger Brokerages

Larger brokerages can be set up in teams. 

For example, there may be separate teams for: 

• Executive properties
• Office properties
• Retail properties

Each team in the brokerage is run by a manager with a number of agents working underneath them. 

In cases like these, the real estate agent may get a lower percentage because there are more agents involved in the split.  

For example, the real estate agent keeps 40-50% of the commercial real estate commission while the team manager receives 20-30%, and the brokerage keeps the rest. 

Some brokerages operate on shared commissions. This is where each member of the team gets a piece of the commercial real estate commission earned from each other’s closed deals.

Some brokerages make the bulk of their money by charging agents a flat fee . An agent may be charged $15,000 to $25,000 a year and only keep 5-10% of the commercial real estate commission instead of a larger chunk.

The Bottom Line

There is no one “best” commercial real estate commission structure. What works well for one real estate agent may not be ideal for another. 

For example, if you work best in a team environment, you may make more money working on a team even if you get to keep less of a commission. 

If you’re stronger on your own and feel like you don’t need the support of a manager to help you with transactions, you may make more money working solo and taking in a larger commission percentage. 

Some brokerages may offer a draw , in which the broker advances a set amount on a weekly or monthly basis. 

It is important to note that draws are not salaries. Think of draws as an advance on future commissions. You must pay back this amount before receiving any of your commercial real estate commission.

Draws can be an attractive option for those trying to get established as a commercial real estate agent, or those that just want more consistency with their income. 

When considering a draw, keep in mind that you will want to start earning commissions to help offset the draw amount before you start to rack up too much debt to the brokerage.

It’s also important to keep in mind that if for any reason you want to switch to a different brokerage, you must pay off the total draw amount first.

#3: The Number Of Agents Involved In The Transaction

Commercial real estate deals usually have two agents involved, and in some cases, more than two agents. 

This can happen when another agent brings a buyer to the listing agent. Typically, the buyer’s agent gets paid out of the commission that the seller or landlord pays, meaning the listing agent has to split their commission. 

This scenario is less usual in commercial real estate than it is in residential real estate, but it still happens. 

It may sound like the listing agent is getting the short end of the stick in this case, but it does help them close the deal and they still receive a commercial real estate commission for selling their buyer another agent’s listing. 

The split among agents is commonly 50/50, but this isn’t always the case. Like everything involving commercial real estate commission, the split can be handled a number of different ways depending on the commission itself.

Typically, you can receive your commercial real estate commission approximately 30 days after the sale or lease is executed and the commission agreement is executed.

The turn-around time can be shorter or longer than 30 days after the sale/lease and commission agreement is executed depending on your brokerage’s payment process.

However, there are some cases, although not typical, where you may not receive all of your commission at once. 

For example, a broker and landlord can also agree to a structured payment where the broker receives commission payments over a set number of months. 

If the building being leased is under construction, a broker may agree to receive half the commission after closing and the other half after build-out. 

While these scenarios can happen, it is more common to have commission paid upfront after closing the deal and the commission agreement is executed.

The commission agreement is one of the first steps in a commercial real estate transaction. The closing process is a little more complex and will take up the bulk of the time to complete before you feel that commission check in your hands.

The closing process for commercial real estate occurs in 4 steps: 

• Signing Legal Entity Contracts
• Due Diligence
• Title Report and Execution of Closing Documents

In Texas commercial real estate, the average yearly earnings for a commercial real estate agent is approximately $75,000.

Commercial real estate commission rates can vary from city to city in Texas for two main reasons: 

• Antitrust laws ensure there is no industry standard for commercial real estate commission rates. 
• Cities can have different market conditions, which can affect the percentage of your commission. 

Let’s take a look at some of the main city hubs for commercial real estate in Texas.

Commercial Real Estate Commission: San Antonio

While there is no industry standard for commercial real estate commission rates, a 4% commission rate is typical for the San Antonio commercial real estate market . 

Keep in mind that while this commission rate is common, a large number of factors, as previously discussed, can influence your commercial real estate commission and this number is not a guarantee.

Commercial Real Estate Commission: Houston

Like San Antonio, the Houston commercial real estate market has a typical commission rate of 4% . 

While there is no industry standard commercial real estate commission rate, a 4% commission rate is a common proposal in this area.

Commercial Real Estate Commission: Dallas

Dallas is a broker-heavy area and is the leading city for commercial real estate deals in the entire county. 

In the Dallas commercial real estate market , a commission rate of 4.5% is commonly seen. 

Like any commercial real estate market, it is important to realize that this is not an industry standard nor a guaranteed commercial real estate commission rate.

Other posts:

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A Guide to Leasing a Retail Storefront for Rent

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Housing | The 6% commission on home sales is likely…

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Housing | catherine, princess of wales, announces she has cancer, housing | the 6% commission on home sales is likely ending. how much could bay area buyers and sellers save, the change is the result of a landmark settlement by the real estate industry’s largest trade group.

A correction to an earlier version of this article has been appended to the end of the article.

The standard 5% to 6% broker commission on home sales may soon become a thing of the past, which could mean big savings for Bay Area home buyers and sellers.

The change in how commissions are priced, set to take effect nationwide in mid-July, is the result of a recent landmark settlement by the real estate industry’s largest trade group to level the playing field for buyers and sellers to negotiate lower rates. According to some analysts, it could slash fees by almost a third .

In the Bay Area’s outrageously expensive housing market, experts say fees could drop by potentially tens of thousands of dollars as real estate agents face increasing competition for the still-lucrative commissions, calculated as a percentage of a home’s final sale price.

“Younger, hard-working Realtors will be willing to offer a much lower number because, with home values so high, that’s still a big commission,” said Louis Mirante, a housing policy expert with the pro-business group Bay Area Council.

The net effect: The region’s astronomical home prices, which typically factor in commission fees, could soften a bit, Mirante said, though it’s not yet clear by how much.

To survive in this new paradigm, agents may need to work harder to justify their rates by honing their expertise or offering new services. On the flip side, more could start offering flat fees, or discounted rates for basic services such as writing up a contract. Meanwhile, a growing crop of startups from the Bay Area and beyond see a prime opportunity to replace them altogether.

“Agents are really going to have to up their game to showcase their value,” said Ken DeLeon, a Silicon Valley broker specializing in luxury homes.

What exactly is set to change? Last week, the National Association of Realtors agreed to a $418 million court settlement to end its practice of directing home sellers to offer to pay the commission for buyers’ agents.

Right now, sellers generally pay both their agent and the buyer’s agent a fee of around 2.5% to 3% of the sale price. For a $1.1 million home — the typical cost in the Bay Area earlier this year — that could come to about $66,000. Generally, the charges are baked into the listing price.

Critics say the realtors association has conspired to keep fees artificially high by requiring that sellers’ agents advertise buyers’ agent fees alongside listings in the main database of homes for sale. That not only discourages negotiation over rates, critics argue, but incentivizes agents to steer buyers toward homes with higher commissions.

Realtors respond that rates have always been negotiable and that successful agents build their reputations by getting clients the best deal.

Still, many acknowledge the new rules could be a seismic shift for the industry.

While sellers will continue to be able to pay buyers’ agents, many agents are expected to start contracting directly with buyers, potentially giving house hunters more leverage to shop for a better rate.

DeLeon said since more buyers could start paying those fees out of pocket, they’ll be more likely to want an experienced agent who knows the ins and outs of a local market. He said the days of dabbling in real estate to make a quick buck off the Bay Area home market may be numbered.

“Using your third cousin, using the family friend, is going to become a lot more rare,” he said.

To set himself apart from other agents, DeLeon said he often helps buyers find a mortgage lender, insurer or contractor to help with a home remodel. And when acting as the seller’s agent, his firm is trying something new: offering a buyer’s agent a flat fee, starting at $10,000.

In the latter case, if the buyer’s agent wants more, the buyer can pay the difference. Otherwise, DeLeon is prepared to represent the buyer for the listing free of charge. Despite the low margins, DeLeon said he’s seeing more than a dozen offers on some properties.

Some agents, however, worry shifting how commission fees are paid could hurt first-time homebuyers already straining to afford the Bay Area’s hefty down payments and closing costs.

Under the current structure, buyers can effectively cover commissions with their mortgage. But if sellers are less likely to agree to cover the buyer’s agent’s commission, agents say the added upfront cost could push homeownership further out of reach for some.

“They simply don’t have the cash on hand to compensate their agent, regardless of whether the sale price is lower,” said Oakland agent Felicia Mares.

Matt Parker, a long-time broker, wants to help overwhelmed home seekers by giving them the tools to buy a property without hiring an agent at all.

His new company, Alokee, based in Walnut Creek and Seattle, seeks to automate the home buying process — from making an offer to filling out the paperwork to close a deal — through its online platform. Buyers either pay a $10,000 fee or select services a la carte.

“They’re already identifying homes, they’re already letting themselves into homes, and what they really need is a boost as far as getting an offer off,” he said.

Alokee isn’t alone. Fledgling companies such as Los Angeles-based Arrivva and Beycome in Florida offer similar services.

It remains to be seen how significant the demand for such startups could be, but with the traditional agent-buyer model now in flux, Parker expects more entrepreneurs to test the market.

“There’s a huge blue sky that’s opened up,” he said.

Correction: March 20, 2024   An earlier version of this article incorrectly reported that Matt Parker is a Bay Area broker. His company, Alokee, is a broker based in the Bay Area.

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6% commission fees for real estate agents are going away. What to know about the new rule

The policy changes could help spur price competition for agents’ services and lower the cost for sellers who typically now cover the commission costs for the buyer’s agent, as well as their own, by alex veiga and heather hollingsworth | the associated press • published march 19, 2024.

The cost of hiring a real estate agent to buy or sell a home may soon change, along with decades-old rules that have helped determine broker commissions.

The policy changes could help spur price competition for agents' services and lower the cost for sellers who now typically cover the commission for the buyer's agent, as well as that of their own.

In turn, more homebuyers could face pressure to pay for their agent's commission out of pocket. That could be a challenge, especially for buyers already stretching financially to make a down payment and cover other upfront costs involved in buying a home.

Still, housing market watchers say it can't be immediately determined how significantly any changes that potentially shift the cost of hiring an agent to a homebuyer will affect home sales. An adjustment period is likely as buyers, sellers and agents figure out how to navigate what comes next.

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“I just think it’s too soon to tell," said Greg Kling, an associate professor at the University of Southern California Marshall School of Business who has taught and written about real estate taxation. “We’re going to either see prices are going up for buyers, or the market is going to correct itself."

What's driving the change?

As part of a settlement announced Friday , the National Association of Realtors agreed to make some policy changes in order to resolve multiple class-action lawsuits brought on behalf of home sellers across the U.S.

The trade group agreed to change its rules so that brokers who list a home for sale on any of the databases affiliated with the NAR are no longer allowed to include offers of compensation for a buyer’s agent.

This change is meant to address a central assertion in lawsuits brought against the NAR and several major real estate brokerages: that homeowners are being forced to pay artificially inflated agent commissions when they sell their home.

The trade group also agreed to require agents, or others working with a homebuyer, to enter into a written agreement with them. That is meant to ensure homebuyers know going in what their agent will charge them for their services.

If the court signs off on the settlement, the NAR would implement the rule changes in mid-July. Meanwhile, several real estate brokerage operators, including Anywhere Real Estate and Keller Williams, have reached separate settlement agreements that include provisions for more transparency about agent commissions for homebuyers and sellers.

“The residential real estate marketplace will take some time, perhaps several years, to fully process the implications of this settlement," said Stephen Brobeck, senior fellow at the Consumer Federation of America. “But over time more, agents will feel free to offer different types of compensation and more consumers will comparison shop and negotiate commissions in a more transparent marketplace.”

Home buyers to be spared automatic broker commissions under new $418 million settlement

36% of homebuyers and sellers don't know they can negotiate real estate agent fees. Here's how to do it

What does this mean for homebuyers.

The key potential change centers on who foots the bill for real estate agents who represent homebuyers.

Currently, an agent or broker representing a home seller typically splits a commission — often around 5% to 6% of the home's sale price — with the agent working on behalf of the homebuyer. Such an arrangement is known in the industry as “cooperative compensation.”

Under the proposed NAR settlement, a broker who represents a seller would no longer be allowed to include a blanket offer of cooperative compensation to a prospective buyer's agent when they advertise the property on NAR-affiliated Multiple Listings Services, where a majority of U.S. homes are listed for sale. This is meant to remove any incentive from a buyer's agent to steer their client away from home listings that don't include a cooperative compensation offer.

However, the proposed rule change leaves it open for individual home sellers to negotiate such an arrangement with a buyer’s agent outside of the MLS platforms, essentially creating a loophole for agents to keep things as they are now.

Homebuyers could also ask the home seller for a concession that includes money to help cover the buyer’s agent compensation.

What happens if a seller doesn't want to offer to pay the buyer's agent commission? Homebuyers would be on the hook to shop around for an agent they can afford. They'd also have to sign a contract with an agent before they enlist their services, spelling out how much the agent's compensation will be.

Having to factor in another expense into their homebuying budget could be challenging for homebuyers without a lot of savings or financial flexibility, making it tougher for them to navigate the housing market.

Still, many variables are at play when it comes to buying or selling a home, not the least of which is how motivated each party is to close the deal.

“If I’m a buyer and I know this seller is not going to reimburse my agent, then I may make a lower offer," said Kling. "Now, obviously in a hot market, that strategy’s not going to work. But then in a hot market, I would have paid over listing price anyway.”

How might this affect home sellers?

The biggest change for homeowners looking to sell is they could push back against paying for buyer-agent commissions, which could translate into considerable savings.

Consider a seller who agrees to pay a 3% commission for their listing agent — instead of potentially twice that to cover the buyer's agent, too — and sells their home for February's national median sale price of $379,100. That homeowner would save roughly $11,373 paying only their agent's commission.

“The settlement will also encourage more sellers to negotiate the compensation of their listing agents,” said Brobeck.

Still, sellers may still face some pressure to cover buyer-agent commissions.

The NAR built in an exception to its proposed rule change that would allow a buyer’s agent to see offers of cooperative compensation on home listings being advertised by their own brokerage.

That workaround could tempt buyer agents to “steer” clients away from any listings that don’t come with an upfront compensation offer, which could prompt sellers to offer more competitive commissions to be split between their agent and the buyer’s, analysts with Keefe, Bruyette & Woods wrote in a research note Monday.

“So long as steering incentives still exist, home sellers may be compelled to offer supracompetitive commissions to buyer agents in order to avoid steering,” the analysts wrote.

How might this change the real estate industry?

One concern is that by making it easier for sellers to opt out of making a cooperative compensation offer to buyer agents, some buyers will opt against hiring an agent or only doing so toward the end of the process after they've gone through most of the home hunt themselves. That could end up weeding out some "lower-performing brokers," Kling said.

Another scenario is that alternative types of real estate business models will become more popular. This includes using discount brokers that will list a home for a flat fee of $500.

“They don’t offer any compensation to the buyer agent because the buyer agent negotiates their own conditions if they want more,” said Mike Downer, a broker associate with Coldwell Banker Realty in Naples, Florida. “That business model has been around for a long time.”

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