A couple in Roscoe Village recently became the first known sellers in Chicago to test the waters on eliminating the buyer’s agent commission offering.
One of Chicago’s top residential brokers, Leigh Marcus of @properties Christie’s International Real Estate, changed the buyer broker’s commission offering for his $2.2 million listing at 1922 West Grace Street to $1 last week, turning heads in Chicago’s luxury real estate industry.
The standard 2.5 percent co-op commission offering was reinstated Tuesday, but the back-and-forth offers a glimpse into how agents will respond to changes ushered in by the National Association of Realtors’ settlement in the landmark Sitzer/Burnett case.
While sellers are well within their rights to offer low or no commissions to buyer agents, Compass agent Mario Greco said he saw the $1 commission offering as a shrewd business move by Marcus.
“We’re in the transitional phase and feeling-out phase, and it looks like (Marcus) is the first big agent from a big brokerage that has decided to throw down the gauntlet,” said Greco, leader of the top brokerage team MG Group.
“And that’s his prerogative, but it just didn’t sit well with anyone I spoke to, and it kind of shocked me because it’s only going to accelerate things into uncertainty, because we’re still not sure exactly how things are going to shake out,” he said.
On the other hand, Marcus may have been the first Chicago agent to take on a client resistant to paying a buyer’s agent commission, but he most certainly will not be the last, Compass agent Rafael Murillo said.
“You’ll probably see less of it in the luxury market, but at entry-level pricing for first-time homebuyers, where the demand tends to be a lot higher and supply is significantly lower, you’ll probably see more sellers not wanting to offer a buyer’s agent commission,” Murillo said.
Murillo said he doesn’t fault Marcus because, at the end of the day, it’s up to the client.
“Personally, if there is a listing that is not offering a buyer agent commission, that’s not going to stop me from showing that property to my client,” he said.
Marcus said he initially talked the sellers of the Grace Street property, a 6-bed, 4.5-bath home on the border of Roscoe Village and North Center, out of the idea of eliminating the buyer’s agent commission.
They then went back to their original idea of eliminating it to “open up the market, make the home more affordable and fit more people’s budget,” he said.
“After several thoughtful discussions, they made the decision to lower the listing price and remove the offer to pay a buyer’s agent commission, feeling that this approach would best align with their interests,” Marcus said in a written statement.
When the commission offering was eliminated on the local MLS, the sellers added an addendum to the listing “to negotiate a buyer broker commission into their offer price,” he said in the statement.
This has been done in the suburbs, where the residential market is hot, and there is less of a need to cover the buyer’s agent commission to entice buyers. But this was the first time it was done in Chicago following moves by NAR and, now, @properties Christie’s International Real Estate, to settle lawsuits filed over commission rules.
This is the new normal, Murillo said, part of changes that will force agents to prove their worth to buyers who may have to compensate them in new ways, which Chicago agents like Marcus, Compass’ Jeff Lowe and @properties co-founder co-CEO Thad Wong have referred to as a win for the industry.
“In a way, he’s ahead of the game for the short term,” Greco said. “But, in a business where you need to have cordial relationships, I don’t think you make friends by doing this. I think he decided his bottom line is more important than his reputation, and he just went ahead and did it.”
“In fairness, the seller appears to be a deal-seeking sort of guy who lists as cheaply as possible,” Greco said after discovering who the previous listing agent on the property was.
Before working with Marcus, the owners of the Grace Street home, Bijal Ravindra Shah and Uma Bansal, listed the property with Robert Picciariello of Prello Realty last year. Prello Realty is known as “one of Illinois’ most successful discount real estate brokerage companies,” according to its website.
The listing’s 2.5 percent commission was restored Tuesday after The Real Deal spoke with Marcus and reached out to @properties for comment.
In a written statement, Marcus said he and his clients came to the decision that reinstating the commission offering was “the best way to achieve a sale that meets their time and price objectives.”
Depending on the neighborhood, Murillo said he would advise sellers he works with not to eliminate buyer agent commission offerings given the current state of the market.
Greco agreed.
“If and when the market slows down, becomes more balanced, and multiple offers begin to wane, sellers will not be as likely to remove buyer agent compensation because they will need as much traffic as they can possibly get,” Greco said.
The Grace Street property has been listed multiple times since May of 2022 without sale.
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