Melissa Savenko, Long & Foster Innsbrook Glen Allen Realty.
Illustration by Lanette Behiry/Real Estate News

Buy Side: The impact of Sitzer/Burnett hits home 

When Melissa Savenko told a pair of buyer clients about the recent verdict, they balked at the idea of paying commissions. She thinks it's just the beginning.

November 19, 2023
6 minutes

Lawsuits and speculation around the future of compensation have put buyer agency in the spotlight. In this series of stories, we hear directly from buyer's agents about what they do, their paths to success and their thoughts about how their jobs could change.

Melissa Savenko didn't have to wait long to feel the impact of the Sitzer/Burnett commissions verdict.

A couple of well-qualified buyers looking at higher-priced homes told the Virginia-based agent they'd be interviewing other agents because they couldn't afford to pay her commission.

"They had been looking with her father who was a Realtor outside of the market," Savenko said, but they needed someone local who could show homes on short notice.

So they reached out to Savenko. "We talked about what they were looking for, their timeline, budget, must-haves, wants," she says. "Then I said, 'Hey, I've got to talk to you about this new lawsuit.'"

Told that they might be on the hook for her commission, the couple soon got cold feet, she said.

Commissions lawsuits will 'structurally change our industry'

It's just the beginning, predicts Savenko, an agent with Long & Foster Innsbrook Glen Allen Realty in Glen Allen, Virginia. Having gone through the ups and downs of the real estate market since 2005, she said she knows change is inevitable. But the impact of Sitzer/Burnett could be more jarring.

"This feels different," she said. "It's going to structurally change our industry, and I don't know — and I don't think anybody knows — what it will end up looking like," she said. "And I think there may end up being a little bit, or even a lot of, 'Be careful what you wish for.'"

A former corporate lawyer, Savenko has a deeper understanding of the commissions lawsuits than the average agent. And it's not just those on the buy side who need to worry about the verdict.

"I don't have any active listings right now, thank goodness," she said. "I'm halfway wearing my real estate hat and halfway wearing my lawyer hat. If I were representing a seller, don't I have a responsibility to go to them and say this decision has come down? Isn't that my obligation as a fiduciary?"

Savenko said she would have to tell potential sellers that they aren't required to offer compensation to the buyer's agent, but also that the impact of that decision isn't clear. "Maybe you won't have as much traffic through your house," she said. "How do I convince them that it's really in their best interest?" she asked. "Is it in their best interest? I don't know, in a market that's already heavily seller-favored."

Flexible on commissions, but not on 'ridiculous' dual agency

On the buy side, Savenko said she's already required to use a buyer-broker agreement. It has three options for compensation: a set percentage, the percentage offered by the sellers — or it can be left blank.

And she's been flexible. "If I had a buyer-broker agreement that said they were going to pay me 3% but the compensation offered by the seller was 2.5%, I didn't go after my buyer for the difference."

But she won't budge on one topic: "I do not do dual agency period, end of story," she said. "It's legal in Virginia, and as a lawyer I find it absolutely ridiculous that it's legal."

A dual agent can carry information between the two parties, but — legally — the agent can't advise or give guidance. "You get paid twice as much money to do less work," Savenko said.

The reality is, dual agency rarely happens the way it should, she said, and that's a symptom of a larger problem in real estate. "The barriers to entry are too low."

Savenko got her real estate license to support her family's home-flipping efforts, not intending to quit her law career.

"I interviewed with every single brokerage in town. It was a very eye-opening experience," she said. "I came from a very competitive field. And when I was starting in real estate, people were sticking a mirror in front of my face and saying 'If you fog this, we want you to come to work for us.'"

Within six months of signing with a "wonderful" broker and starting to work as an agent, she decided to quit her law firm job and sell full time. 

'Lots and lots of agents are going to wash out'

In the wake of the Sitzer/Burnett verdict, Savenko expects to see a major disruption to the industry. "Lots and lots of agents are going to wash out of the business," she said. "I'm not gleeful about that. But I do think there are too many bad agents in our business. Inexperienced agents don't bother me as much as unethical agents. … Unfortunately there are too many of those in our industry."

To survive in a post-Sitzer world, Savenko said buyer's agents need to explain, and demonstrate, that they aren't just there to find houses and open doors. Most buyers can find their own homes on portals like Zillow, she said. But agents have to help buyers understand that there's a lot more to the transaction.

"If you want to trust the most important investment in your life to a Google search or some dude who's going to charge you $199, you do you," she said. "I'm not the right person for you."

"My job is getting you under contract and getting you from contract to closing. I will negotiate the best deal for you, and I have to get you through inspections, appraisal, financing," she said. "I can provide you with access to professionals who in my opinion are good at their job: Closing attorneys, inspectors, roofers. And I am with you every step of the way."

Experienced buyers already recognize the value of having an agent, Savenko said. "That should be a sign to everyone looking to buy."

Her message to buyers: "Ask yourself, if agents are worthless or not worth very much, why do investors, the most sophisticated real estate buyers, and high-net-worth individuals almost always use them?"

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