Inverse Commission™: By Nature a Decoupled and Buyer Centric Compensation Model

The Department of Justice (DOJ) has been increasingly vocal about its concerns regarding traditional real estate commission structures. These concerns center around the potential for anti-competitive practices and conflicts of interest that can harm consumers. In response to these concerns, innovative models like the Inverse Commission™ are emerging, offering a refreshing alternative that prioritizes transparency and client advocacy.

What is the Inverse Commission?

Inverse Commission is a revolutionary compensation model that aligns the incentives of buyer agents and brokers (NEGOTIATORS®) with the interests of home buyers. In this model, agents earn more when they negotiate a lower price for their clients. This is in stark contrast to the traditional commission structure, where agents earn a percentage of the sale price, regardless of whether the buyer could have gotten a better deal.

Why is Inverse Commission™ De-coupled from Seller Agency’s compensation by its Nature?

The Inverse Commission™ model is inherently decoupled because it breaks the traditional link between the buyer’s agent’s compensation and the seller’s interests. Here’s how:

  1. Buyer’s Agent Compensation Is Negotiated Separately and only with the buyer: In the Inverse Commission™ model, the buyer’s agent’s compensation is not determined or paid by the listing agent or seller. Instead, it is a separate negotiation between the buyer and their agent, ensuring that the compensation is aligned with the buyer’s goals rather than the seller’s incentives. This separation decouples the buyer agent’s earnings from the seller’s influence or the listing agent’s control. In this model, WHETHER SELLRES OFFER OR DISCLOSE AN OFFER OF COMPENSATION OR NOT for buyer agents the NEGOTIATOR’s® prepares an offer on behalf of the buyer and seller will decide about it afterward.  This essentially removes the need of such compensation preset in full on and off the MLS completely.
  2. Performance-Based Structure Aligns with Buyer Outcomes: The Inverse Commission™ model ties the buyer’s agent’s compensation to their performance in securing savings for the buyer (e.g., a lower purchase price, seller concessions, or negotiated credits). This makes the compensation entirely dependent on the results delivered for the buyer, rather than on simply closing a deal or the property’s sale price. By rewarding results for the buyer rather than a percentage of the sale price, the model is structurally decoupled from traditional sale-based commission systems.

Key Characteristics of Inverse Commission™ that Reinforce Decoupling:

  • Separate Calculation: Unlike traditional commissions calculated as a percentage of the sale price, Inverse Commission™ is determined independently at the final stage. It’s based on the difference between the Highest Estimated Value (HEV) and the final price, making it distinct from the sale itself.
  • Performance-Based instead of Sale-Based: Inverse Commission™ isn’t tied to a percentage on total price of the property or predetermined amount. It’s directly linked to the NEGOTIATOR®’s performance in securing savings for the buyer. This performance-based aspect separates it from the traditional model where commission is simply a percentage of the sale, regardless of the agent’s effort or results.
  • Buyer-Centric Focus: Traditional commissions inherently link the agent’s earnings to the seller’s proceeds, creating a potential conflict of interest. Inverse Commission™ shifts the focus entirely to the buyer’s side. The NEGOTIATOR®’s incentive is to achieve the lowest possible price, decoupling their compensation from the seller’s interests and aligning it solely with the buyer’s goals.
  • Promoting Competition over Cooperation: Unlike the traditional model where buyer’s and seller’s agents may be incentivized to cooperate for a sale-centric approach and have no conflict of interest with each other, Inverse Commission fosters competition. It positions the seller’s agent and the NEGOTIATOR® as opposing forces in the negotiation, each with distinct objectives. The seller’s agent aims for the highest price, while the NEGOTIATOR® seeks the lowest, creating a natural adversarial dynamic. This reduces the potential for collusion, as their compensation is inversely related – the NEGOTIATOR®, like buyer, benefits from a lower price, while the seller’s agent benefits from a higher one like seller. This inherent and healthy conflict of interest of agents on each side safeguards consumers against practices that could harm the buyer and seller being in conflict of interest with their own agents, ensuring a more competitive and transparent negotiation process.

Addressing DOJ Concerns

The Inverse Commission™ model directly addresses the DOJ’s concerns about undue influence in traditional compensation models. By decoupling the buyer’s agent’s compensation from the seller’s interests, this model promotes transparency, fosters competition, and ensures that buyers are represented by agents who are truly incentivized to secure the best possible deals on their behalf.

The Future of Buyer Agency

The Inverse Commission™ model represents a significant step towards a more equitable and transparent real estate industry. By prioritizing the buyer’s interests and aligning incentives with their goals, this innovative compensation structure has the potential to revolutionize how real estate agents are compensated and how buyers are represented in the market.

 

inverse commission vs traditional commission

Inverse Commission vs Traditional Commission

In low-inventory or seller-dominated markets, NEGOTIATORs® may not always be able to push the price down significantly due to competitive multiple-offer scenarios. However, what they can do is provide a strategic advantage through transparency, trust, and value-driven guidance.

For instance, let’s break it down with an example.

Scenario: Low-Inventory Market (Role Model Comparison)

  • Listing Price: $1,000,000
  • Market Situation: 3 competing offers, requiring a budget of $1,100,000 to win the deal.

1. NEGOTIATOR® Approach:
NEGOTIATOR®: “My compensation model is based on the Inverse Commission structure, where I get paid 50% of what I save you. To help you secure this home, I’ll ask for 2.5% to be refunded into a GAP fund and put it in the offer. Part of this fund goes toward my compensation, and the rest directly benefits you. My goal is to negotiate the deal at $1,050,000 instead of $1,100,000 and find flaws in the house to your advantage. If I succeed, you save extra $$, and I get paid more for delivering better results. If I can’t, I’ll get paid less than traditional fixed 2.5% agent. That’s my financial motivation.”

2. Traditional Agent Approach:
Traditional Agent: “I earn 2.5% of the total sale price, as added in the offer. It doesn’t matter to me whether the final price is $1,050,000 or $1,100,000—my compensation remains the same. Ethically, I’ll try to secure the property for $1,050,000, but my income isn’t tied to this effort. That’s my moral obligation, rather than absent financial incentive, drives me to do my best for you.”

This comparison highlights a critical point, while both scenarios for buyers has almost the same $ cost: why buyers should consider being represented by a NEGOTIATOR® instead of a traditional agent or falling into the pitfalls of dual agency. The NEGOTIATOR® approach not only prioritizes the buyer’s best interests but also builds trust by aligning financial incentives with results.

Even in challenging markets and low-inventory environment, this approach gives buyers a compelling reason to choose proper representation and ensures they feel confident about the process. Ultimately, it’s about showing buyers that having a skilled and certified NEGOTIATOR® on their side is about much more than just getting the deal—it’s about getting the best possible deal with full transparency and trust.

What did we aim to achieve with the Paris Paradigm™ and NEGOTIATOR® models?

This is a brief overview of what we’ve been working on for the past couple of years, give or take.

A consistent model to bring strong value to Buyer’s Agency around the world. This carries more meaning in the current legal climate in the U.S. and Canada.

What did we aim to achieve with the Paris Paradigm™ and NEGOTIATOR® models?

1. Creating the first-ever Performance-Based model for Buyer’s agency.

Seller’s Agency has always been performance-based – the higher they sell, the better for them and their client. Interests aligned. No question. But Buyer’s Agency getting paid based on the total property price? Not that much buyer-friendly! This is what we call unintentional conflict of interests.

2. Creating a system that rewards true professionals.

This model ensures that dedicated, skilled agents earn what they deserve for their expertise and commitment.

3. Providing a compelling reason for buyers to seek representation.

With the Inverse Commission™, buyers finally have a reason to feel they aren’t overpaying for service. The more I save for you, the better I get paid. If I don’t save, I close the deal without charging a dime!

4. Separating the roles/payments of Listing Agent and Buyer’s Agent.

With the Inverse Commission™, NEGOTIATORS® (i.e., Buyer’s agents) are no longer “collaborating” with listing agents with the same financial interest. They’re negotiating from the other side of the table with inverse monetary interests.

5. Giving buyers a systematic reason to trust their agent.

Now they have it. Their representative is paid in a way that benefits them directly. Ethics and morals don’t have to be the primary foundation of trust; the NEGOTIATOR®’s compensation structure speaks for itself.

6. Ensuring Buyer’s Agency can prove their commitment to their fiduciary duty.

What better evidence than motive?
“I did my best to secure the best deal for you for your property of choice—because if there were room to do better, I’d do it to get paid more!”

 

How the NEGOTIATOR® Model Can Prevent Steering in Real Estate

In the real estate industry, one of the primary issues at the root of recent litigation is the phenomenon of steering – the practice where some agents or brokers guide buyers toward properties with the highest commission payouts. Steering not only raises ethical concerns but also diminishes buyer autonomy and can skew market competition, limiting options based on agents’ interests rather than buyers’ needs.

The Paris Paradigm™, particularly through its innovative NEGOTIATOR® model, addresses this challenge directly. Here, we explore the key factors that differentiate the NEGOTIATOR® model from traditional paradigms and how it is designed to eliminate steering entirely.

The Core Differences Between NEGOTIATOR® and Traditional Models.

Several elements set the NEGOTIATOR® model apart from the traditional real estate approach, and these elements collectively work to prevent steering.

Property-Specific Contracts: Ensuring Buyer-Driven Choices

In the traditional model, buyers’ agents are often verbally contracted to show multiple properties, with their compensation based on the final sale. This structure allows room for steering, as agents might subtly prioritize higher-commission listings. In contrast, the NEGOTIATOR® model requires agents to enter property-specific contracts with the buyer.

In the Paris Paradigm™, buyers independently select the property they are interested in before the NEGOTIATOR® steps in to negotiate on their behalf. By focusing on a certain, buyer-chosen property, there is no room for steering since the buyer’s choice is finalized before negotiation begins. This shift ensures the buyer’s preferences are primary, minimizing any external influence on the decision.

Inverse Commission Structure: Transparency in Negotiation and Compensation

Unlike the traditional commission model, where agents’ earnings are a percentage of the property’s sale price (potentially motivating them to close higher-price deals), the NEGOTIATOR® model introduces an Inverse Commission™. This model aligns the agent’s compensation directly with savings they secure for the buyer, known as the GAP. The larger the savings achieved, the greater the NEGOTIATOR®’s commission, incentivizing them to negotiate the best possible terms for their client.

The Inverse Commission™ is transparent: the buyer is informed of the exact GAP in each property negotiation and understands precisely how the NEGOTIATOR® will be compensated. This structure makes the NEGOTIATOR®’s financial motivation clear and directly aligned with the buyer’s interest in a favorable purchase price, with no hidden fees or incentives.

Unlike the traditional model, where the buyer agent’s compensation based on the total property price could conflict with the buyer’s interests, the Inverse Commission model fully aligns the interests of the buyer and their agent (NEGOTIATOR®).

The Inverse Commission™ vs. Traditional Model

In the traditional model, a real estate agent’s compensation is set in advance, prior to negotiations, which often contributes to steering. In contrast, the Inverse Commission™ model offers a fully transparent compensation method, clear to both the buyer and the NEGOTIATOR®. However, the final amount is determined by the NEGOTIATOR®’s efforts and is calculated post-negotiation.

The NEGOTIATOR® Model and Buyer-Driven Bidding

In the NEGOTIATOR® model, because the Highest Estimated Value (HEV) can be validated through a buyer-driven bidding process, properties with a high potential for discount or GAP become transparent to the buyer and will not be the target for the steering. This process effectively normalizes the HEV through competitive bidding, placing downward pressure on inflated values and high GAP properties. This will ensure, NEGOTIATORs® are not over compensated and their advice to the buyer is driven by a normalized and logical potential for the compensation.

How the NEGOTIATOR® Model Restores Buyer Trust and Market Transparency ?

By eliminating the agent’s control over property selection and aligning their compensation with buyer savings, the NEGOTIATOR® model fosters a more transparent, buyer-centered real estate process. Buyers can be confident that their agents are negotiating on their behalf without any hidden motives. The combination of AI-guided navigation and the Inverse Commission™ model sets a new standard in real estate, focusing squarely on buyer satisfaction and ethical agent conduct.

In an industry that has faced scrutiny over steering practices, the Paris Paradigm™ offers a solution that not only empowers buyers but also holds agents to a higher standard of transparency and integrity. This model not only addresses past criticisms but also positions real estate transactions to be more equitable and buyer-focused in the future.

Buyers are often under-represented in the real estate market!

If you’re a buyer who has already found a house through the internet, we want to know: which approach do you think is the most convincing and why? 🤔💭

🔍 Share your thoughts in the comment section! 💬 Your insights could help shape the future of buying homes! 🏠💡

💥 Plus, don’t forget to share this poll with your network! 📢 One lucky re-post voter will win a USB-C power bank! 🔌⚡️

Let’s get the conversation started! 🚀

Which elevator pitch is most convincing for a buyer to accept representation, and why?
(Share your thoughts in the comments!)

  • ⏰💵>> Hourly Rate
  • 🔄💰>> Inverse Commission
  • 📈💲>> Traditional Commission
  • 💵✔️ >> Fixed Fee

Vote Now!

How the NEGOTIATOR® Model Can Elevate Your Real Estate Career!

A webinar with Terri Murphy about weekly tips on how the NEGOTIATOR® role in the Paris Paradigm can transform your approach in real estate. Today, we are joined by the insightful industry legend John Reilly (author of The Language of Real Estate), and Eileen O’Driscoll, Real Estate Broker, a top broker-manager and board advisor for our company!

✨ What Makes This Model Unique?

Our goal? To shift the focus to higher-level negotiation strategies that serve both buyer and seller ethically and transparently. The Paris Paradigm combines two roles – the NAVIGATOR™, who helps clients view properties, and the NEGOTIATOR®, who ensures buyers get the best deal possible.

Eileen shared a powerful example of a young buyer who missed out on a property by going directly to the listing agent. This is a common misconception – thinking that bypassing a buyer’s representative will work in their favor. But here’s the truth: without a dedicated NEGOTIATOR®, the buyer might end up paying more, since the listing agent’s responsibility is to the seller.

🔹 Key Benefits of the Paris Paradigm™:

  1. Buyer Control: Buyers can select a property with a NAVIGATOR™, then choose a NEGOTIATOR® to advocate specifically for them.
  2. Performance-Based Pay: The NEGOTIATOR® earns more as they save the buyer money, fully aligning their interests with the buyer’s.
  3. Education & Training: We’re creating a certified NEGOTIATOR® program that trains agents to represent buyers in a transparent, results-driven way.

As John Reilly pointed out, this model is all about empowering buyers through choice and transparency. The NEGOTIATOR® model shifts from being transactional to relational, building trust that lasts well beyond the sale.

Curious? Check out informative videos to learn more about this new approach that’s reshaping real estate.

Gearing up for the NEGOTIATOR® experience coming your way!

Mark your calendars now! Every Tuesday at 12:00 EST the Data Advocate and NEGOTIATOR® Team host a webinar on the latest innovations to handle residential real estate transactions under the “new norm.”

Our hosts today were our TDA team: John Reilly, Saul Klein, and me (Terri Murphy) along with Eileen O’Driscoll, Real Estate Broker Broker/Owner from C21/Concept 100 in Oradell, N.J. and Giselle Abadi, Co-Founder of Realtyna sharing insights on the Inverse Commission™ strategy that was born in Paris, France.

The insights from this diverse team help agents experience options “outside the traditional” protocols for compensation in transactions to a new and advanced process of assisting buyers (and sellers) with their expertise using a unique Negotiator process when negotiating transactions.

In the wake of recent lawsuits, huge settlements, federal and state regulations, the words of San Diego MLS Saul Klein ring true: “Digitization means that tomorrow won’t look like yesterday.”

Major changes in practice are taking place now as more negotiations are required between seller and listing broker; between buyer and buyer brokers; and between buyer and seller at the purchase table. Expect intense competition to occur among brokers jockeying to win the exclusive representation agreement on the buyside, just like listing brokers have always sharpened their presentation skills to win the exclusive listing contracts on the sellside.

Saul Klein and John Reilly offer guidance on how to integrate the new buyside negotiation skillsets into your practice.

Tune in every week on Tuesdays at noon EST for the latest updates.

For more information, check this video.

What Is Inverse Commission™?

One big reason for buyers to be represented!

Inverse Commission™ flips the script on traditional real estate commissions. Instead of agents being rewarded for higher selling prices, they’re incentivized to negotiate the best possible deal for the buyer. The better the deal, the higher their compensation. It’s that simple and transparent.

🏠 Buyer and NEGOTIATOR® Alignment

Discover how the Inverse Commission™ model aligns the interests of buyers and their NEGOTIATORs®, ensuring that your agent is fully motivated to secure you the best price possible. With compelling examples and easy-to-understand animations and webinars, we’ll show you why this approach results in happier buyers and more motivated agents.

💡 Why It Works

  • Save More: Learn how NEGOTIATORs® leverage their skills to reduce the purchase price, directly benefiting you, the buyer.
  • Transparent Motivation: Understand the clear and ethical motivation behind every negotiation, fostering trust and confidence.
  • Performance-Based Rewards: See how agents are rewarded for their hard work and negotiation prowess, not just the sale.

🎬 What’s Inside This Animation?

  • A step-by-step breakdown of how Inverse Commission™ works.
  • Insights into why this model is the future of real estate transactions, specially for buyers’ side.

✅ Whether you’re a first-time homebuyer, looking to invest in property, or a real estate agent ready to adopt a model that truly values your negotiation skills, this animation is for YOU!

Remember, with the Inverse Commission™ model, everyone on the buyer side wins.

 

A New Era for Real Estate Professionals: The NEGOTIATOR® Program

In business, whether it’s real estate or any other field, adaptability is key. Challenges arise, and the successful adjust and evolve. As real estate agents, we’ve faced changing landscapes and unexpected obstacles time and again.

Enter the NEGOTIATOR® Network – a completely new way to do business. Unlike traditional models where agents earn based on the total sale price, the NEGOTIATOR® is paid based on how much they save the buyer at the closing table. It’s a win-win, aligning incentives with the buyer’s interests.

The NEGOTIATOR® is a unique role with different responsibilities, compensation, and expertise. It’s not just a new job – it’s a whole new profession. Curious about how this works and how to get certified? It starts with a mindset shift. Educate buyers on how the system benefits them, and show the value of this approach. This program is more than a change; it’s the future of real estate negotiations. 🏡💼

Listen to our trainers and mentors: (Highlights only)

Alireza Memar , Terri Murphy , Eileen O’Driscoll, Real Estate Broker #InverseCommission , #NEGOTIATORNETWORK

How can compensation models better align with the buyer’s interests?

The Paris Paradigm’s Inverse Commission™ changes the game for real estate negotiations.

This chart highlights how the Inverse Commission™ (in green) ensures that agents are motivated to secure the best deal for the buyer, unlike the traditional model (in blue), which financially incentivizes higher prices.

In the traditional structure, as the price rises, so does the agent’s commission. But with Inverse Commission™, compensation grows when the buyer saves more.

This shift flips the incentives, ensuring that the buyer’s representative new profession (NEGOTIATOR®) is truly aligned with their goal—getting the best terms and price. 🔄

This innovative approach transforms real estate by putting the buyer first.

Are you ready for a commission model that works in your favor?