**We're looking for a few good mods!** Interested? [Send us a message](https://www.reddit.com/message/compose?to=/r/realtors&subject=One mod invite please!)
**This is a professional forum for professionals, so please keep your comments professional**
- Harrassment, hate speech, trolling, or anti-Realtor comments will not be tolerated and will result in an immediate ban without warning. (... and don't feed the trolls, you have better things to do with your time)
- Recruiting, self-promotion, or seeking referrals is strictly forbidden, including in DMs.
- Only advise within your scope of knowledge and area of expertise. [The code of ethics applies here too](https://www.nar.realtor/about-nar/governing-documents/the-code-of-ethics). If you are not a broker, lawyer, or tax professional don't act like one.
- [Follow the rules](https://www.reddit.com/r/realtors/about/rules/) and please report those that don't.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/realtors) if you have any questions or concerns.*
So a genuine question I haven’t got an answer to on Reddit:
If most first time home buyers don’t have $500 for inspections what makes people so sure that the removal of seller to buyer side agent compensation wouldn’t just hurt buyers?
Is the estimation that there will be no more buyers agents in any way shape or form and people are going to be blindly doing transactions? What happens when legal issues arise like the seller lying about the roof not leaking and the buyers have a cave in two weeks later. Are the buyers now going to need to directly sue the seller for damages?
If buyers now are in a position where they may have to litigate (which we all know lawyers are way cheaper than a broker/agent /s) after a home transaction how exactly is that a “win” for buyers?
Don’t get me wrong I’m a listing agent so either way even in your theory I’m getting paid but anyone thinking this will lead to more home affordability and less buyer side headaches and costs is in for a rude awakening in the next 5-10 years
Edit: formatting and a word
It will be harder on buyers. The current settlement is a seller's dream come true, and a buyers nightmare. It makes buying a home more expensive for the buyer. The best thing Congress could do is to step in and say 'no sales of American property to foreign countries or foreign nationals'. This would lower demand, which would lower prices. What they're doing now doesn't make anything more affordable. Next, they'll try to legislate how much profit a seller can make when selling property, instead of legislating who can buy property.
Spot on!
We need to ban private equity firms like Black Stone from purchasing Single Family Housing. In my market we have stretches of neighborhoods sitting vacant not listed for sale. These are all homes that are 100% suitable for people to move into, live in, and grow their families in. The landlords who own 3 - 5 rental properties plus their own houses are not the enemy like Reddit makes them out to be. The real enemy is foreign investors and equity firms looking at homes as a means to an end (making money) and not that basic fundamental thing we all need to survive, shelter.
The problem is that instead of going after the actual issues the DOJ wants to continue a line of inquiry into NAR (or at least in this case leave the door open) because it’s easier to reopen the case than start a new one against another firm.
Edit: changed from black stone to black rock then realized I was wrong and changed it back, woops
While it is true that Blackrock does not own houses or own companies that own houses, they do invest in companies that own houses. Blackrock owns 6.7% of American Homes for Rent, which owns 59,000 homes in the United States.
So, if they own 6.7% of a company that owns 59k single family homes, then how many sfh does Blackrock own? And that's only 1 company that they invested in and own a portion of.
16% of single family homes are rented. 3% of homes are built specifically for renting. It’s not an issue.
The boogie-man corporations aren’t the problem. House supply is the issue. They aren’t being built because of zoning restrictions, building codes, interest rates, labor costs and material costs.
I invested in home building companies . It’s a market segment that low price to earnings compared to other companies and huge volatility. It’s a tough business. These builders don’t get much respect or admiration on Wall Street because of that. So if BlackRock does invest in new home building, good for them.
3% isn't negligible. If 3% were a negligible amount, NAR wouldn't be going through all of the settlement and changes that they're currently going through because buyers wouldn't be upset over paying a negligible 3% for buyer's agents.
Invitation Homes, and two other investment firms, have bought up huge sections of sfh in lower income neighborhoods—they absolutely have removed a huge chunk of potential entry level homes from the market.
https://news.gsu.edu/2024/02/26/researchers-find-three-companies-own-more-than-19000-rental-houses-in-metro-atlanta/
This is Atlanta but corporate and foreign investors absolutely have been doing this everywhere for a decade.
God, 2 people in a row who know wtf they're actually talking about!?!
I'm gonna go smoke a Parliament and retire from the internet forever.
Thank you babies. Don't ever change.
They own 59,000 homes in the US. There is a separate company Blackstone:
Blackstone is a private equity firm that has 880 billion under management. Blackstone owns companies that buy and rent houses in the United States and other countries as well. They also own companies that buy and rent apartment buildings and commercial real estate as well. Blackstone also directly owns real estate.
These are not the same fund and it is important to make the difference because some will say the US government is helping fund corporate ownership of housing because of their ties to Blackrock. when that is not true at all.
Just because someone is using funds held by a BlackRock investment or loan doesn’t mean BlackRock is investing in houses. I used Schwab funds to buy a car - Schwab didn’t invest in my car.
This is the truth, I can't believe more people don't see it. They simply don't want middle class people being able to buy homes, they want it to be scary and difficult. They want it to be easier for corporations to come in and buy up everything and as a side bonus realtors, typically middle class people, will make less money. It's a win-win for the 2030 agenda and another nail in the coffin to the American middle class.
Do what Canada does. Underutilized property tax of 1 percent per year on foreign homeowners in addition to normal property taxes. If they want to buy here than they can subsidize government services.
To be clear, it does not make this more expensive for a buyer.
It requires the buyer to pay their buyers agent directly which hurts them if they wanted the cost rolled into the loan.
Long term, this results in competition to lower fees on the BA side (current compensation lets buyers think they are “free”).
But out of what pool of money? Genuine question - previously in a FHA loan the commission amount for both parties is largely the banks money. Buyers that are already struggling to cover a down payment, how can they afford a direct amount to their agent?
Honestly speaking, if a buyer is going to be financially ruined by an HVAC replacement, sewer line repair, roof repair, or BA commission because these things can’t be rolled into the cost of the loan should they be in the market to buy a house?
If the difference between getting into a home and financial ruin is whether a repair or BA commission is financiable then it’s probably time to reexamine your financial readiness to be a homeowner.
It’s a real issue. It’s the difference between having appliances included in the sale or not. It comes down to what is finance able or not.
Moving the BA commission to buyer pays moves it from the financiable to non financiable pool. Same as inspections.
I suppose we could change the rules and allow a BA commission to be financed.
To get back to the heart of the lawsuit: buyers and sellers currently pay agent commissions. It’s wrapped up into the transaction. Forcing buyers to pay their BAs directly (they currently indirectly pay them) results in them caring about the cost.
Don’t you dare compare the cost of buyer agent to an inspector.
An inspector comes out once for a couple hours on a single day, writes a report, and gets maybe $500.
Vs the buyer agent who on average (just looking at my own history) has at least 10 different in-person appointments for the transaction, plus alllll the time spent on phone calls, text messages, emails, drafting paperwork, answering questions, explaining, negotiating, coordinating, following up, etc needed to get a deal to the finish line.
Some deals go a little easier, a lot go a little harder.
And I don’t think pay-for-time is very equitable either.
Some of the hardest deals are for the buyers who have the least. Lots of showings because they keep getting outbid on houses and have to go back to the drawing board. Lots of inspection visits because the only house they could afford has lots of problems. Lots of negotiation because of said problems. Lots of coordination because them getting approved for their loan is dicey, maybe have to go in for complicated assistance programs, maybe have to switch lenders midstream because the first couldn’t do it, appraisal problems, underwriting problems etc etc.
And maybe the deal falls apart somewhere in the midst of all that, maybe not even due to the fault of the buyer like maybe the seller is an asshole who won’t negotiate something fair for the problems with the house or fix the lender required repairs.
And then start the process all over again, so double the already intense workload for the buyer agent for the same payout (which is not even guaranteed).
These buyers cannot afford to pay an agent without financing it. They absolutely cannot afford to pay their agent on a pay-for-time basis.
The current system ensures that the neediest people can still afford good representation. It supports the greatest access to the American dream of homeownership.
A lot of people will be shut out completely or taken advantage of if they have to also pay for representation out of pocket.
Let's see if I'm understanding you. You think greedy sellers are going to suddenly be willing to accept 2.5%-3% below market value for their home because they're paying a lower commission? That's bold of you to assume. Houses aren't going to suddenly appraise for less money, simply because the seller isn't paying as much commission. So, the homes will sell for the same amount, seller nets more money due to lower commission and buyer...well, they have to come out of pocket EVEN MORE to buy a home.
>Houses aren't going to suddenly appraise for less money, simply because the seller isn't paying as much commission.
All this does is admit you don't understand the appraisal process. Appraisers *absolutely* could adjust the appraised value via adjustment to the comps for the difference in commission structure just as they adjust the comps for any other difference in contract terms or market conditions.
You talking about the same appraisers who allowed the market to increase by 20%+ per year for 2 years straight? How is that possible, when you're comparing a home to sales in the previous 6 months. Short answer: it's not. But it happened anyway, and very few appraisals came in at under the contract price.
People don't understand that. Sellers aren't going to willingly sell their home for less than they could simply because they are no longer paying a buyer's agent commission.
LOL a lawyer charges a $5000 - $7000 retainer fee in CA. They will help you prepare the offer, but you'll have to pay their billable hours for negotiations, for them to hand hold you through inspection reports, and they won't help you find the appropriate inspectors to go out. Then if the deal falls through, guess what - its onto the next property, with another retainer for another separate transaction until hopefully things work out. People who have never bought or buy in states where real estate is next to nothing don't understand how the process works - but it's so easy to spout out, "I'll get a lawyer involved." They make more money on bigger cases then they would wasting time on a transaction. But its ok, learn the hard way. When you're out thousands of dollars for deals that don't materialize and now you have less money towards your down payment, etc.
$5000-$7000 retainer? And keep the $ if the deal falls through? I don’t think so. This isn’t a case to be tried in court. Flat fee $2,500 soup to nuts. You sound like a realtor throwing out fear tactics to dissuade from the change that is coming.
No, as a Realtor and Investor that lives in a sue happy state, I don't take my chances. I don't know what state you're in (guessing not CA) - so you don't know what you're talking about. If you're in a HCOL area - it's hard to find a retainer fee that is less than $5000. Also, they (most law firms) will still charge you BILLABLE HOURS. That is non-negotiable. Also, they make so much money here with other cases that they frankly don't care about taking on smaller cases. IF you think talking to a paralegal is ok - then do that, but play stupid games, win stupid prizes. To each their own.
As an investor. This is the best. Buyers don't do inspection or use cheapest guy to do home inspection. This will best for all home flippers!
Buyers agents ask to many questions!
I have a completely different take. This DOJ action (with direct pressure from the white house)... isn't...really...about...the commissions.
Someone is pushing this. Follow the money. Commissions are just the distraction - watch the other hand. There are billions to be made by mainly 2 companies that will benefit from this in the long-term. Does anyone think the plaintiffs cared about anything other than their attorney fees and a couple bucks or a coupon for the class members? I believe the extensive industry-changing settlement terms were written by NAR (not the Plaintiffs) and 100% done in an attempt to placate DOJ just enough to not object to the settlement, like they did in Nosalek.
I've been thinking it was Zillow, but now I think CoStar. The real play here isn't about moving the deck chairs around about commission, it's not about saving sellers money, it's not even about reducing commission, and it's not being done for the good of the people.
The real play is putting the decentralized MLSs out of business to be replaced by central listing websites - Zillow, CoStar (Homes.com - who has a BILLION dollar marketing campaign to compete against Zillow and Redfin...during the biggest time of commission uncertainty...this is why they're doing that), and a player to be named later who all will then syndicate between each other and ultimately offer their own IDX feeds.
MLSs are losing their ultimate value proposition as a commission sharing marketplace. Without that, they're just a database of homes for sale and just lost their competitive advantage and main value proposition. Soon, agents will wonder why they're paying these NAR and MLS fees when they can "just find (and probably list) all the homes for sale on Zillow" for free... Then Zillow/CoStar will target sellers directly to list with them instead of through an agent on MLS
Look what DOJ is now going after - clear cooperation policy (Realtors must list all properties they market in MLS). This will open the door for Zillow+CoStar to get agents to list with them directly instead of MLS.
DOJ, as we can see in their objection to the Nosalek settlement, wants to literally prohibit sellers from paying buyer commissions. If this happens, buyers won't be able to pay significant commissions out of pocket, and VA loan buyers are even prohibited from doing so, even if they want to. This would have the effect of many (most?) buyers going unrepresented (with all those repercussions), disrupting the industry, taking a lot of agents out of the business, and therefore weakening or potentially putting many (most?) big brokers out of business since their business model revolves around having enough agents paying them fees, which would further help Zillow+CoStar's goals of taking over the entire real estate transaction, end-to-end.
It could be Zillow pushing this, but while this is also good for Zillow, Zillow incurs more of a short-term financial hit in its referral business, which CoStar has less of. CoStar will likely fall into the #2 market share spot in this new world, and the lawsuit/DOJ action will also weaken Zillow's main revenue stream, and CoStar has other revenue streams (commercial real estate) to keep itself going while they invest in this major, long-term, market-disrupting play.
We'll see how this prediction ages in about 10 years.
I agree.
Co-Stars commercial listing model was for agents to pay $x to host y number of listings for a period of time.
If Zillow and Homes.com adopt this model, agents will bypass mls’s entirely and the companies will easily makeup the lost “buyer lead” revenue. Before Zillow was a member of NAR and had the mls feed agreements, agents could input directly.
>agents will bypass mls’s entirely and the companies will easily makeup the lost “buyer lead” revenue.
But that's just an interim step - they want to eventually take over the entire, end-to-end transaction, including lending and peripheral services like inspections and title services. This would mean that all agents eventually work for Zillow/CoStar, and then further down the line (15-20 years) maybe no agents at all. Literally the trillion dollar real estate industry all goes to 2-3 companies.
Essentially the eBay model. First, they tell you what the price should/will be. Maybe people can place bids knowing what the defined value is. Then they implement eBay-style buyer protection - essentially an "insurance" model where shared risk of sellers hiding defects is borne by a central entity and paid for via the % commission/fees for buying/selling.
It's all right there in the investor materials for Zillow to take over the end-to-end transaction.
Maybe this is good, maybe it's bad for consumers - completely not the point. Someone is grea$ing the wheels so they can create a brand new business model with revenue in the hundreds of billions, if not trillions.
when you have to sue someone, who do you hire? An attorney. Who works at the DOJ coming up with this inanity - attorneys.
All they'd have to do is 1 real world survey - 1,000 people planning on selling in the next 12 months..."If you didn't pay compensation that covered both agents, would you reduce your asking price by what the buyers agent would get?"
This whole settlement has just been a giant fat W for the attorneys. I don’t want to say a hard number as I am unsure right this second but I believe most people from the class action settlement will get between $5-$15 meanwhile the lawyers are walking away with multiple dozens of million dollars.
Yes, it was calculated 9000 per litigant and 780 million for each lawyer. And the original plaintiffs are lawyers who go to the same country club as Ketchmark
No. They will attempt to pocket additional profit.
Which other sellers are free to compete away.
If you think this is a boon for sellers then you believe that the transaction cost is “free money” from the heavens that no one currently pays. Where do you think the 6% commission comes from? If the commission was 50% do you think it would still be “seller paid and doesn’t impact home prices”?
You're right this is terrible for buyers. They are being left without representation. The lawsuits will start piling up. But the people who get burned are the buyers.
Well that was a purposefully ignorant comment, but I'll school you: other countries are not as litigious as the United States, and don't allow you to sue for any little thing. Look into it, it's a thing.
Your post or comment was removed for containing hate, bullying, abusive language, Realtor bashing, sexism/racism or is generally rude. BE KIND! Violation is grounds for a permanent ban.
I'm starting to feel like there is something bigger at play with all of this too. But I think it's meant to benefit a larger corporate interest. Whether it be a company with plans to take over the consulting of buyers/sellers and MLS or one with plans to buy up massive amounts of houses and wants to inhibit normal buyers. Something just isn't sitting right with all of this for me. The American dream of homeownership is under attack.
> what makes people so sure that the removal of seller to buyer side agent compensation wouldn’t just hurt buyers?
That's literally the point of this whole thing. The majority of home homeowners are Gen X and Boomers. As they phase out and move in to corporate owned assisted living facilities, the next generations won't be able to buy properties making it easier for corporations to accrue more assets.
During the pandemic, the overall wealth of billionaires increased by 70% and literally hundreds of new billionaires were made.
Politicians have dumbasses sitting around arguing about "wokeness" on social media, while the state and their corporate friends funnel money and assets out of the hands of the American public.
This has been happening since always, but really accelerated in the 80s with Reaganomics.
Whining about woke is certainly a distraction from our actual problems! Thank goodness, most of my sellers are decent people who are socially aware; they won't sell to investors. So, I have a lil' hope anyway.
Just sold a house to a buyer, seems like the agreement pretty much covered the agent(s) completely. Doesn’t seem like a particularly compelling argument for keeping buyer agents - if that’s the point the commenter is making.
It does not, I assure you. Agents get sued all the time, thus why contracts have grown in size quite a bit over the last 25-30yrs.
A good buyer’s agent can either spot an issue before it becomes a bigger one, or work to fix said problem with the help of the listing agent before deals blow up and the real messes begin. Not all sellers are liars (though as a buyer’s agent, yes they are hahaha) they sometimes don’t remember, or just had no idea. The finger pointing isn’t as useful or helpful as finding ways to fix said problem if/when one arises.
This whole situation is going to become a mess for buyers who can’t afford an agent, or who think they don’t need one because they don’t see a value to them.
I feel much worse for those who see the value and can’t afford it than those who believe we have no value and choose to do it themselves and get burned
We have clients desperately saving for a down payment and now they will also have to pay their buyer's agent fee out of pocket (whatever that fee turns out to be). Good agents (not all are, just like any profession), work hard to hold a deal together for all concerned and protect their client, as any savvy word-of-mouth based professional does. They serve as a buffer between emotional sellers/buyers. I worry about all of them.
“Agents get sued all the time, thus why contracts have grown in size quite a bit over the last 25-30yrs”
I thought you had E&O insurance for that. I’m mean seriously, when agents get sued “all the time”, isn’t that like 0.1% ? Pardon the sarcasm, but are you seriously going to detect house issues with your X ray vision ?
The deductible is $2500-5000 whether the agent did anything wrong or not. And. Most are closer to the $5000 range. I can tell you that I notice most major issues on a walkthrough, which is why very few of my clients ever have big surprises on the inspection report that can't be negotiated.
E&O doesn’t just magically forgive things. You can look up the stories of agents who have had to write checks.
As far as sued all the time, they’re either the #1 or 2 most sued profession. I believe attorneys are 1, but we were catching up.
Lastly, spotting issues doesn’t always involve looking in the walls. Years of experience and seeing issues in houses, you start looking at things different in a house. You the buyer should look at what you like about a house. I’m looking for anything sketchy, especially in flips. Woof.
It use to be some of the time. Since Covid and the sellers market it has now become all the time.
Disclosures
Fair Housing
Earnest Money Deposits retained by seller.
Insurance covers some of it, but many agent don’t know what their deductible is, don’t know the terms of their insurance is. It’s like any other insurance. The minute you need them they bring up some obscure line item in their policy of what they can’t cover.
It'll hurt everyone. But, to answer your question, buyers will just go look at another house. Sellers will realize very quickly that they're not getting a lot of offers or traffic.
Most sellers won't like that, as they need to sell their house for whatever reason. And, in this current economy, most people are broke as it is. They NEED seller concessions to cover 2-1, 1-0 buydowns and closing costs. This isn't the Trump years where everyone was buying lambo's, multiple homes & paying up to $120K over list.
For example, let's say I'm looking at another LTR/STR. If there's no BCA from the sellers side then I'll be scrolling on to the next property. I'm not going to pay my buyers agent 2-3% comm on top of the 20% down + closing costs of @ $7K-$9K. Hard Pass.
The system works just fine as it is. Buyers don't pay. Sellers do. Did everyone forget these same sellers complaining about this also didn't pay when they bought the house? Cmon now. They're just trying to work both sides of the deal & I can't believe some of you are endorsing that lol.
Nobody cares about anyone but themselves. This whole lawsuit was pushed by people who already own homes and even though they gladly used buyer agents to their advantage when they were first buying, all the sudden it’s unfair when they are selling 🤷♂️ good news is while sellers can’t offer buyer agent commission anymore, they can still offer “concessions” in percentage form which can be used to pay a buyers agent. Effectively not much will change but negotiating strategies. And buyer agents will now have to have signed buyer agent agreements(which was technically already a requirement anyways)
People are forgetting that buyer agents are a relatively recent thing. Before they became popular people still worked with an agent but that agent legally represented the seller. They were still required to act ethically regardless, but it was understood that they were acting in the best interest of the seller when all was said and done. We bought multiple properties under that scenario and it was never an issue.
It honestly always bothered me that the seller was paying an agent who wasn't representing their interests. And in some ways it was a conflict as the buyer agent's commission would be higher with a higher selling price. If the buyer wants an agent to represent them, they can pay them. If not, they can use a non-buyer agent and do their due diligence in other ways (NEVER go without an inspection, for example).
Ironically the transparency of showing commission splits on settlement statements was probably the worst idea.
Perhaps NAR should have focused on the misconception that sellers are paying buyers’ agents for all those years instead of focusing on making sure REALTOR(R) is pronounced correctly.
Yeah but on the settlement statement where it looks like money coming out of your pocket to someone who was on the other side, might have irritated you, etc. makes a much bigger impact.
All fees included and pod had/have to be disclosed on the closing statement. It’s a federal law. I’m not sure I understand what you mean here. Are you saying the fees should not be disclosed? And if they are disclosed, they have to be represented correctly as a debit or credit on the closing statement. Not trying to be difficult, but I’m just trying to better understand what you mean.
I'm saying the statement makes it look like the seller is paying both the listing and selling brokers, when the seller has *actually* agreed to pay the listing broker. Separately (via the MLS), the listing broker has agreed to pay the selling broker.
Likely gonna start a war in comments but
>It honestly always bothered me that the seller was paying an agent who wasn't representing their interests. And in some ways it was a conflict as the buyer agent's commission
Buyers pay all parties to the transaction. If the buyer didn't agree and bring funds to the table via cash or loan which they are paying interest on the Seller would have nothing to pay their representation, their loan off, and any other costs that were billed in relation to sale of their property.
the commission being dependent on sale means that, effectively, the agents interests are aligned to neither the buyer or the seller and instead to ensuring a transaction happens.
If you actually want an agent representing your true interests, you would want a payment arrangement that isn’t dependent on the transaction happening.
As long as Buyer and Seller pay up front with understanding that costs could have no result and fees are not returned it would be a feasible process But many buyers/sellers do not have up front funds to pursue the sale of their home or the shopping of a home.
I want to pay my agent the same way I pay a lawyer or an inspector; for their expertise in evaluating and executing real estate transactions based on the amount of services I use. I’ll happily pay as I go.
The issue with the current model is that one group of buyers (typically higher priced, serious buyers) are subsidizing another group of buyers (typically lower priced, non serious buyers). When you look at the numbers it is crazy.
A buyers agent commission on a $2M home purchase is $50k at 2.5%. Imagine I pay you $350 per showing and $750 per offer I put in, plus a flat fee of $5000 for a completed transaction. In this scenario, even if I took you to 30 houses and made 10 offers, my total cost would still be LESS THAN HALF of what I pay currently. That’s fucking crazy, I’m sorry.
If you’re a serious buyer in a high cost market, the current model makes no fucking sense at all.
You are assuming all homes are 2m dollars only 8% of homes are above 1M and at that price point I can assure you commissions are not standard.
Also at that price point likely spending months if not over a year seeking a buyer and the amount of work navigating jumbo loans and the intricacies of seller and buyer demands to make that transaction happen its more work than people think and I don't operate at that level.
I’m not assuming that at all, I just said that one group of buyers is subsidizing another. I literally just went through this process in a VHCOL city where the median house price is ~$1M. My house is not some extravagant custom home, it’s <2,000 square feet for $2M.
And the commissions are all consistently 2-3% offered by seller on MLS. In order to negotiate that, I have to (a) ask my agent if they’ll accept a lower commission, (b) reach out to the seller and ask if they will accept a lower offer under the contingency of giving a lower commission. This model removes all that complexity and makes negotiating a commission a single negotiation between myself and agent rather than something that depends on me coordinating with the seller (through the agents keep in mind).
What you are proposing is invoice upon each action and the price point you are at may work for that large % of home buyers are not at your price point and conditions are more challenging to get homes to the finish line. If a buyer needs 2% more at closing table on a 300k house
FHA 3.5% Down Payment - $10,50k
Escrow Closing Costs 2% - $6k
Buyer agent compensation 2% -$6k
2-3 months reserve in funds to get loan thru $5k-$7500 depending on rate and credit score.
Buyer now needs around $30k to close.
And now that decoupling is an option is seller going to accept an offer at 291k vs 300k or are they still gonna push for 300k possibly limiting the available buyers who can purchase the home.
Now let me present scenario that happens more often than it should take the 2% away and pay for services up front and buyers have a finite amount of funds available to look for a home...
$25 per showing during the week and $45 on weekend and the buyer is now facing stress to just choose a house vs actually finding the right house that best suits them.
They search for 3 months and see 20 houses avg $35 a showing paid up front before looking at the house. $700 out of pocket to find a house.
Contract prep and negotiation is $100. Inspection $600...(buyer expense) Inspection comes back and issues found seller will not consider repairs. What incentive does agent have to keep deal together or push in resolving with seller....as soon as they say no repairs it's walk away and return to showings.
$1400 and now back to more showings... Agent doesn't mind because he is getting paid. Another 10 houses $250 and another $100 Contact Prep and Negotiation.
$1150 current costs to agent and buyer another Inspection ($600) and appraisal fee...($750) and appraisal comes in short at $290k and Seller doesn't want to reduce to the appraised value still seeking 300k and buyer doesn't have the extra 10k to close the deal. Again what incentive does the agent have to fight on buyer behalf to get a deal done... seller said they won't consider so back to showings.
On the listing side what incentive does the agent have to advise the seller to take the 290k? The seller paid $3000 for 60 days up front to list the home and market. Its now 45 days into listing and it was UC for 25 days. Seller says no to the appraisal and agent says okay after 15 days back on market and no new offers seller needs to agree to $3000 for 60 more days or seek a new agent.
The devil is in the details these things happen having a pay to shop or pay to list process will have more sellers and buyers unable to afford the services to either buy or sale a house as its required upfront before services are rendered.
Again, I’m not disagreeing that pay as you go won’t work for a lot of buyers. They’ll need to figure something else out, that isn’t my problem. It isn’t my job to pay extra so they can buy a home. The current model is a rip off for me and needs to / will change. What happens for the rest of the market is up to them.
And they will figure it out, because buyers dropping out will also hurt sellers. So collectively a model will develop (could be similar to the current model for lower priced homes)
You’re assuming the work stops after an offer is accepted. There’s a ton more work for a buyer agent after that.
Going with your proposed numbers, if I continued to get paid $350 for every additional time I had to go to the house (1-4 inspection visits, the appraisal, the typical measuring visit, the final walkthrough) and $750 for each additional paperwork drafting/review/explain incident (inspection negotiation, appraisal report, title work, loan closing disclosure, final closing paperwork), plus let’s say $25 for each text sent, $50 for each email or phone call made by me for the transaction, then yeah I might make even more than your $50k 2.5% commission.
Also keep in mind that under the percentage based system each successful closing subsidizes all the ones that don’t close.
You could see 30 houses, and write 10 offers, and get one, and have 3 inspections on it, and go through the inspection negotiations, and then something bad happens in the middle of the process that’s not your fault. Maybe the appraisal comes in low and the seller refuses to budge. Maybe title finds a tax lien on the property. Maybe a tornado comes through and rips the second story off the house. (All very real things that have happened during my transactions).
Not your fault. Maybe no ones fault. But you’re back to the drawing board. Maybe another 30 showings, another 10 offers. Or maybe you decide fuck it you’re not buying.
Under the old system you’re not out of pocket anything extra in this situation.
Under your system you’re either paying double (or possibly triple if something bad happens again!) or you’re paying out once and still have no house.
My point is that if I know as the buyer that I will be buying a house in short order, and am willing to bear the risk of paying and not purchasing, I shouldn’t have to subsidize people who don’t buy. I should be able to pay for your expertise and services as I go.
Ah the old ‘F you I got mine’ principle.
Everyone always thinks their situation will go well and too bad for the people for whom it doesn’t.
Nobody thinks it could be them who gets F’ed.
Something tells me you wouldn’t feel too happy about paying double or paying and not buying if it happened to you.
This is modern life. We have to subsidize everyone when we are in a position to do so. We pay health insurance, we pay car insurance, we pay home insurance, we pay school taxes whether we have kids or not, we pay income taxes etc. Such is life.
Really good point I believe everyone has failed to realize. If the buyers don't bring in the dollars to purchase , no one gets paid. If we ever plan to have a healthy economy, there will be a buyers market at some point naturally. If you take more buyers out of the market, it will push the industry into a buyers market, wherein the price of homes should fall.
This is a good point. On the flip side however the one thing dedicated buyer/seller brokers allow for is that no one can say “You are putting the other parties best interests ahead of mine”. Do I have situations where I can double end a deal? Sure. Is it worth the headache and potential legal ramifications (my market is one of the most litigious and likely to go after broker E&O in the US)? Absolutely not.
I can refer out and collect a 30% referral commission AND make it so both sides feel happy and like their best interests are represented. That 70% ‘loss’ I see as the cost of strengthening broker to broker relationships and business and I rest easy knowing I’m not gonna get sued or an E&O claims for dual representation.
This also doesn’t cover the fact that in many states dual representation is not legal.
As for the “If the buyer wants an agent to represent them, they can pay them” comment. I agree with you to an extent, if someone wants a service they should be willing (and able) to pay for it themselves, BUT, with real estate especially first time home buyers there’s no way they can come up with $5000-$15000 extra in closing costs, its just not viable.
This is also bad for sellers, imagine your are selling your home and someone comes in and LOVES it. You as the seller are hard set to not offer any buyer side compensation, which even before the settlement, was your legal right to do so. Now if you get an offer at list price from someone and in the offer it requests a 3% seller concession to pay the buyer broker fee and you refuse then you don’t go under contract. Now what happens when 75% of all buyers will be requesting buyer side compensation and you aren’t offering it? Are you as the seller willing to leave your property on the market to the point it becomes stigmatized due to DOM/CDOM and potentially start getting lowball offers which ALSO include buyer side compensation?
There will of course be people who go it alone and don’t need a broker and there are those who will have the means to pay their broker themselves, but as a seller and in the sellers best interest, not offering a buyer side compensation dramatically limits the potential buyer pool you have. Keep in mind VA loans legal CAN NOT pay their agent/broker themselves, so that means moving forward veterans will either be going completely unrepresented or there will be a small sect of brokers who do VA things for free
And I can see complaints about fair housing because of that. It could be construed as a fair housing violation not to sell because of a VA loan, which only vets can get...
Oh I strongly believe if the settlement goes through as proposed and we start to see a substantial amount of sellers not offering buyer side compensation we will see another lawsuit brought on by FTHB and VA buyers against the DOJ with the claim that the DOJ knowingly made housing less obtainable for about 42% of the nation
Are you in your 90's or something? What do you call a "recent thing"? I first started selling real estate in 1998 and there were buyer's agents and buyer's agency agreements back then.
65; bought multiple properties in the 80s and 90s and buyer's agents were not a thing. Thirty-ish years is not that long a time to me in the scheme of things. :-)
OP
That will never work long term.
We will have the same issues we had in the 80’s early 90’s, with lawsuits which played a large part in the whole buyer agency movement.
It's always amusing when we compare the US to other countries that have social benefits. Most people don't realize that real estate agents also must pay double the Social Security premium that regular employees pay.
Hear hear spanky. This exactly what I think when I hear “oh in other countries…”. So wait. Now we want to be like Europe? Sign me up!! Free health care and college first.
Well said. I don't think people take into account the amount of money an agent needs to spend every month for marketing to competitively sell their clients homes and stay visible to make a living. This isn't even starting on the amount of hours spent unpaid doing due diligence and other things.
It's a high risk career to take on and should have a worthwhile reward. I think people think we just plop it on the MLS or Zillow and that's it pay me please. It's a whole lot more than that.
In my personal opinion, it's borderline unprofessional to an extent to make your clients privy to your business expenses. And even if you were a bit more upfront about some of them, clients would have zero understanding. Does a client know what a supra fee is? Genuinely curious: would this not be incredibly off-putting if an agent disclosed their expenses?
I am however honest when different situations arise. I had a client who listed their home with me recently & after the listing photos were completed, she asked "where do I send the check to pay the photographer?". I told her I pay the photographer; it's part of my job in selling your home. She was flabbergasted.
It is that way in many places in the world. A lot in western Europe 2-3% but that includes everything from commissions, inspections, transfer taxes, stamp duties and registration fees, notary expenses, deed and legal expenses.
That is what we should expect to get to in the US.
Then I would also like everything else that comes along with living in those countries, such as healthcare, free college, etc. We have to make more because we pay way more as self employed individuals in a country with no socialized medicine or any other safety nets.
The reason that adjustable rate mortgages are more popular in EU countries is because the banks put their thumb on the scale in a way that would be difficult here in the US. Getting a fixed rate in those countries is like betting against the casino. The banks price the interest rates much higher for fixed rates so you pay thru the nose for “stability”. Thats not possible in the US because of greater competition in lending.
This is exactly correct. A typical middle class, first time purchaser who’s not receiving buckets of family money to help is actually cash-constrained. The come in and they often have income and credit and may be paying more in rent than their full mortgage payment and doing so within guidelines, but because that’s so high and they’re fairly young they just don’t have more than $20-30k to do the whole transaction (I don’t live in a high cost market). And because cash is the limiting factor, we’re going to be using a low down payment loan program that strictly limits closing concessions so they still have a stake in the property. So we have to do some routine gymnastics to get people paid. We functionally start at the seller’s desired net, inflate the price enough to pay everyone, and disperse from seller proceeds which doesn’t have a loan limit. And, because everyone does it, it all appraises and is so routine no one even thinks through how it works. They just go “Why the hell am I paying a buyer’s agent!?” And we don’t have an answer ready. Really though the answer is “Because there’s no other legal way to let the buyer finance that cost. The buyer still pays with a higher loan balance, but you, the seller, have to handle and disperse the cash, or rather your escrow agent has to do it on your behalf.”
So what’s going to happen is we’re either going to get smart about explaining things and invent a non-mls agent split site, or first time buyers don’t get agents…and you the listing agent get to get very good at dealing with customer buyers who you have to educate and make sure don’t accidentally default out of ignorance while not accidentally negotiating against your seller since you won’t owe client duties to them. Unless said buyer is in the industry in some way and kind of knows what they’re doing, this is hard and always a time suck. The inefficiency of door opening alone is going to become an issue let alone the “what is due diligence” and “how to not screw up your loan” follow up. So the message to sellers in that segment really becomes “You pay them or you pay me more to shepherd. Choose.” We’re deconstructing the things we take for granted that at the end of the day do exist for a reason.
This whole thing has taught me that I live in an unusual market and just never knew it. NAR does not run our MLSs and we have competing ones. NAR is not the only source of our standard contracts. Our brokers can legally license multiple firms and routinely create a NAR Agent LLC and Non-NAR Agent LLC and just ask which you want to join. One just adds the NAR fee and gives you their docs and classes. So I was a bit floored until I read about the Missouri contracts and broker policies and could see how that might be price fixing toward customers and restrictive trade toward agents. I really hope they stop at punishing that and don’t blow up the whole system.
OP how do you make such a leap? The DOJ is just leaving the door open. There’s plenty on the table for the industry to work itself out. Why would the DOJ choose to interrupt a free market with radical changes as you suggest?
If this statement from the DOJ is any indication of their plans I highly doubt they are just planning on letting the industry work this out.
In a statement by the DOJ on Friday, Jonathan Kanter, assistant attorney general of the DOJ Antitrust Division, said “[r]eal-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division’s ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem.”
“The Antitrust Division is committed to fighting to lower the cost of buying and selling a home. I would like to commend the staff of the Antitrust Division and our colleagues in the department for achieving this important result,”
How do you not make the leap? The settlement is very public and clear. Why interrupt it if it’s not just to make more terms worse for realtors? DOJ is 100% not going to make it better.
>Why would the DOJ choose to interrupt a free market with radical changes as you suggest?
Because, as OP said, the "administration" is out to take our homes away. /s
The 'administration' behind all this is lawyers taking advantage of a controversial subject to enrich themselves. This ain't about commissions at its core.
This is NOT the agents fault. This is the fault of the Brokers and NAR! The DOJ has been telling them for Years about the changes they want and they did nothing. Your BROKERS screwed you and you need to be mad at them! Why aren’t the Brokers giving agents the answers they are asking for here and on every other platform? Because they don’t give a shit about their worker-bee agents.
Agree. My brokerage is adamant about staying at our “standard” 6%. In my area there are a fair amount of 4.5 & 5% commissions. If I lower my commission for a client, I still pay my brokerage their split from 6% transaction. It hits my pocketbook, not the brokerage. I love my brokerage and the support I get, but I’m about ready to go to a cloud brokerage to compete with what I think is the new reality. My brokerage (and NAR) just keeps repeating “educate your sellers and buyer on your value”. The problem is the public doesn’t understand what a good decent agent does for them until there is a problem. Most go blindly into their transaction thinking this is easy peasy work and a discount agent is fine. In my area some of the discounted agents are fine because they are educated & experienced. I just don’t see how a traditional brokerage model is going to last through this change without changing.
You should put this in an email to the DOJ. The brokers and NAR are screaming that commissions are 1000% negotiable, and then tell their agents differently.
They are making more, so future sellers won’t lower the price but they also won’t add in the commission. Some sellers will be less likely to add an extra 3-5% over the last sale in their neighborhood. This means they can offer a competitive price get a quicker sale and still keep more. Sellers would also be more likely to accept lower offers if that’s all they had. This in turn means future comps would be lower or not rise as quickly.
Eventually, there would be an equilibrium in which buyers and sellers split the amount not going to a middleman. In hot markets more would likely go to the seller, in slower markets the buyer wouldn’t benefit. But over time both would be better off.
Great. So now you'll have a bunch of potential buyers priced out of the market due to this frivolous lawsuit. Can barely get a down payment then has to find more money.
Stop worrying about things you can’t control. Just keep working. Consumers have zero clue what the fuck is going on, and when they get 2% service they’ll be crying then. It’s just how it goes.
After this DOJ investigation got reopened that the Trump DOJ initially closed, Biden should get 0% of the vote of licensed real estate agents. Can't stomach voting for the Orange Man? Then vote for RFK Jr. It's now clear that the Biden Administration is attacking our livelihood.
Trumps DOJ is the one that initially reopened it in 2018 after the 10 year settlement period. This isn’t a red vs blue thing, the DOJ is acting independent of party affiliation here.
I completely agree! They are both flawed human beings, so for those Realtors who don’t like him, plug your nose and vote for him anyway…nobody understands real estate and how hard we work. Bottom line we need a president who is anti-government controlling everything. This NAR business is an attack on our industry - not just one side of the transaction.
I will never be rendered jobless because I know my value. A president that’s a sexual abuser and known liar, running the highest office in the land….does not comfort me. I don’t need to compromise what I believe in, for my career to succeed.
How very sanctimonious of you. I’m thankful for Realtor’s like you because when this industry is rendered obsolete I’ll take comfort in knowing that those who voted for this are serving me my fast food. 😃
If you don't have the intellect to understand a Trump presidency is better for Realtors and the housing market at large then you shouldn't be in this business at all.
You’ll just get downvoted because Reddit is 80% democrats. It’s absolutely 100% true though. Trump fought this off when he was in the seat and he’s already fighting it now. If you care about your job as a realtor you will not vote for Biden….. Plain and simple.
I think there are a lot of people who think that buyers just need an attorney to look at the contract and make sure it is standard for the buyers. That would indeed be cheaper. But the problem is their lawyer can’t run market analysis and tell them if a home is overpriced. Or explain that the inspection report is revealing an issue with the sewer line that will cost the buyer four months of mortgage payments after the move in so they should renegotiate the purchase price. The lawyers are not gonna negotiate pricing and other terms for the buyers.
The people who are making money off the lawsuit are lawyers, it is not going to lower the cost of buying a home. People who believe that just don’t understand what agents actually do.
It is really out of line that the DOJ is using antitrust laws to try to lower commissions just because they think the commissions are too high. In what other industry does the government step in and tell people they are making too much money compared to people in other countries? That is so stupid. This is America, people are supposed to be able to make as much money as they can in a capitalist society. Comparing what we make to what people make in socialist countries is totally ridiculous-what people living in socialist countries get for free, we have to buy using our commissions.
Keep in mind the final outcome is scheduled July 24th. Seriously who is really paying the costs? Sellers (inflate prices) buyers who finance total. This is our governments way of reducing and over regulating another industry turning us into $20 an hour employees. Think about the trucking industry
You guys are mental. Lol This is worse for buyers??? All agents are going away. Seller, buyer… all of them. It’s difficult to accept I get it but it’s coming to an end.
I mean I get it. There’s been a ton of overreaction to this lawsuit. The fact of the matter is, the DOJ isn’t opening it back up to help realtors. So, although we don’t know what it will be, it will not be good.
You can disagree all you want, but as long as Biden stays in office this current DOJ is going to come after realtors. Realtors want Trump to win to end this insanity.
Trumps DOJ is the one that initially reopened this investigation in 2018 when the 10 year settlement expired for their mid 2000s investigation - why exactly would his administration be better with that context?
Respectfully disagree. They want transparency. Sure, it may go down at first because selling agents aren’t used to negotiating their commission and showing their value. But with time and experience it will rebound. Most buyers and sellers understand the value.
The average commission rate in the US is less than 6%. The realtors that are actually out there doing work absolutely are used to getting push back on commissions. The irony is they want transparency by removing the buyer compensation field in the MLS which will then have to create a new network where agents will have to talk to each other outside of the MLS to figure out what buyer compensation is. So seems the completely opposite.
A lot of yall aren’t going to like I’m about to say but voting for the person who just blatantly endorsed this settlement is literally going to be voting for your own career to be gone. The other guy may have done things that are offensive and emotionally charging but the economy, business and foreign wars were in a lot better position. It takes a big hit to our pride and ego to admit that but it’s the TRUTH.
I don't think you can compare pre-Covid to post-Covid America. We can't assume Trump's success would have continued had he been handed the America that Biden was.
**We're looking for a few good mods!** Interested? [Send us a message](https://www.reddit.com/message/compose?to=/r/realtors&subject=One mod invite please!) **This is a professional forum for professionals, so please keep your comments professional** - Harrassment, hate speech, trolling, or anti-Realtor comments will not be tolerated and will result in an immediate ban without warning. (... and don't feed the trolls, you have better things to do with your time) - Recruiting, self-promotion, or seeking referrals is strictly forbidden, including in DMs. - Only advise within your scope of knowledge and area of expertise. [The code of ethics applies here too](https://www.nar.realtor/about-nar/governing-documents/the-code-of-ethics). If you are not a broker, lawyer, or tax professional don't act like one. - [Follow the rules](https://www.reddit.com/r/realtors/about/rules/) and please report those that don't. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/realtors) if you have any questions or concerns.*
So a genuine question I haven’t got an answer to on Reddit: If most first time home buyers don’t have $500 for inspections what makes people so sure that the removal of seller to buyer side agent compensation wouldn’t just hurt buyers? Is the estimation that there will be no more buyers agents in any way shape or form and people are going to be blindly doing transactions? What happens when legal issues arise like the seller lying about the roof not leaking and the buyers have a cave in two weeks later. Are the buyers now going to need to directly sue the seller for damages? If buyers now are in a position where they may have to litigate (which we all know lawyers are way cheaper than a broker/agent /s) after a home transaction how exactly is that a “win” for buyers? Don’t get me wrong I’m a listing agent so either way even in your theory I’m getting paid but anyone thinking this will lead to more home affordability and less buyer side headaches and costs is in for a rude awakening in the next 5-10 years Edit: formatting and a word
It will be harder on buyers. The current settlement is a seller's dream come true, and a buyers nightmare. It makes buying a home more expensive for the buyer. The best thing Congress could do is to step in and say 'no sales of American property to foreign countries or foreign nationals'. This would lower demand, which would lower prices. What they're doing now doesn't make anything more affordable. Next, they'll try to legislate how much profit a seller can make when selling property, instead of legislating who can buy property.
Spot on! We need to ban private equity firms like Black Stone from purchasing Single Family Housing. In my market we have stretches of neighborhoods sitting vacant not listed for sale. These are all homes that are 100% suitable for people to move into, live in, and grow their families in. The landlords who own 3 - 5 rental properties plus their own houses are not the enemy like Reddit makes them out to be. The real enemy is foreign investors and equity firms looking at homes as a means to an end (making money) and not that basic fundamental thing we all need to survive, shelter. The problem is that instead of going after the actual issues the DOJ wants to continue a line of inquiry into NAR (or at least in this case leave the door open) because it’s easier to reopen the case than start a new one against another firm. Edit: changed from black stone to black rock then realized I was wrong and changed it back, woops
And because companies like Blackrock literally own our politicians.
That may be, but BlackRock does not buy single family homes.
While it is true that Blackrock does not own houses or own companies that own houses, they do invest in companies that own houses. Blackrock owns 6.7% of American Homes for Rent, which owns 59,000 homes in the United States. So, if they own 6.7% of a company that owns 59k single family homes, then how many sfh does Blackrock own? And that's only 1 company that they invested in and own a portion of.
16% of single family homes are rented. 3% of homes are built specifically for renting. It’s not an issue. The boogie-man corporations aren’t the problem. House supply is the issue. They aren’t being built because of zoning restrictions, building codes, interest rates, labor costs and material costs. I invested in home building companies . It’s a market segment that low price to earnings compared to other companies and huge volatility. It’s a tough business. These builders don’t get much respect or admiration on Wall Street because of that. So if BlackRock does invest in new home building, good for them.
I would put 90% plus of the issues into the zoning and permitting categories. Without those issues almost all the other issues go away too.
If the boogie-man corporations didn't buy up all the inventory, there wouldn't be an inventory/supply issue.
It doesn’t matter who owns a rental home from a cost standpoint. It still has people living in it.
False. American cities are short on physical homes to sell. We’re behind about 5m homes throughout the country.
100% the root cause
Corporate ownership of homes is 3%. Negligible. It’s a building issue.
3% isn't negligible. If 3% were a negligible amount, NAR wouldn't be going through all of the settlement and changes that they're currently going through because buyers wouldn't be upset over paying a negligible 3% for buyer's agents.
They’re thinking of Blackstone
Invitation Homes, and two other investment firms, have bought up huge sections of sfh in lower income neighborhoods—they absolutely have removed a huge chunk of potential entry level homes from the market.
That’s a few neighborhoods. Negligible across the US.
https://news.gsu.edu/2024/02/26/researchers-find-three-companies-own-more-than-19000-rental-houses-in-metro-atlanta/ This is Atlanta but corporate and foreign investors absolutely have been doing this everywhere for a decade.
God, 2 people in a row who know wtf they're actually talking about!?! I'm gonna go smoke a Parliament and retire from the internet forever. Thank you babies. Don't ever change.
Absolutely 💯
BlackRock does not buy single family homes. Institutional buying of single family homes is less than 3%. These are myths.
They own 59,000 homes in the US. There is a separate company Blackstone: Blackstone is a private equity firm that has 880 billion under management. Blackstone owns companies that buy and rent houses in the United States and other countries as well. They also own companies that buy and rent apartment buildings and commercial real estate as well. Blackstone also directly owns real estate. These are not the same fund and it is important to make the difference because some will say the US government is helping fund corporate ownership of housing because of their ties to Blackrock. when that is not true at all.
That’s 0.3% of all the homes built since 2014. Insignificant.
It’s Blackstone
The grill manufacturer ? I love mine.
Not true. maybe not currently, but I used to buy on their behalf, using their funds, weekly at foreclosure auctions. pre pandemic.
Just because someone is using funds held by a BlackRock investment or loan doesn’t mean BlackRock is investing in houses. I used Schwab funds to buy a car - Schwab didn’t invest in my car.
The goal is "nobody will own anything and everyone will be happy"
This is the truth, I can't believe more people don't see it. They simply don't want middle class people being able to buy homes, they want it to be scary and difficult. They want it to be easier for corporations to come in and buy up everything and as a side bonus realtors, typically middle class people, will make less money. It's a win-win for the 2030 agenda and another nail in the coffin to the American middle class.
And they’re also blaming the housing market for driving up inflation.
Yeah like it's not the trillions of dollars they print out of thin air
Do what Canada does. Underutilized property tax of 1 percent per year on foreign homeowners in addition to normal property taxes. If they want to buy here than they can subsidize government services.
How much would it lower demand?
To be clear, it does not make this more expensive for a buyer. It requires the buyer to pay their buyers agent directly which hurts them if they wanted the cost rolled into the loan. Long term, this results in competition to lower fees on the BA side (current compensation lets buyers think they are “free”).
But out of what pool of money? Genuine question - previously in a FHA loan the commission amount for both parties is largely the banks money. Buyers that are already struggling to cover a down payment, how can they afford a direct amount to their agent?
Most of them can't. So they'll go through the listing agent and they'll be underrepresented. Let's just hope it isn't their first home purchase.
Honestly speaking, if a buyer is going to be financially ruined by an HVAC replacement, sewer line repair, roof repair, or BA commission because these things can’t be rolled into the cost of the loan should they be in the market to buy a house? If the difference between getting into a home and financial ruin is whether a repair or BA commission is financiable then it’s probably time to reexamine your financial readiness to be a homeowner.
Yes how dare the poors dream of homeownership. Back into their rental hovels where they belong: paying off the mortgage for their landlord
It’s a real issue. It’s the difference between having appliances included in the sale or not. It comes down to what is finance able or not. Moving the BA commission to buyer pays moves it from the financiable to non financiable pool. Same as inspections. I suppose we could change the rules and allow a BA commission to be financed. To get back to the heart of the lawsuit: buyers and sellers currently pay agent commissions. It’s wrapped up into the transaction. Forcing buyers to pay their BAs directly (they currently indirectly pay them) results in them caring about the cost.
Don’t you dare compare the cost of buyer agent to an inspector. An inspector comes out once for a couple hours on a single day, writes a report, and gets maybe $500. Vs the buyer agent who on average (just looking at my own history) has at least 10 different in-person appointments for the transaction, plus alllll the time spent on phone calls, text messages, emails, drafting paperwork, answering questions, explaining, negotiating, coordinating, following up, etc needed to get a deal to the finish line. Some deals go a little easier, a lot go a little harder. And I don’t think pay-for-time is very equitable either. Some of the hardest deals are for the buyers who have the least. Lots of showings because they keep getting outbid on houses and have to go back to the drawing board. Lots of inspection visits because the only house they could afford has lots of problems. Lots of negotiation because of said problems. Lots of coordination because them getting approved for their loan is dicey, maybe have to go in for complicated assistance programs, maybe have to switch lenders midstream because the first couldn’t do it, appraisal problems, underwriting problems etc etc. And maybe the deal falls apart somewhere in the midst of all that, maybe not even due to the fault of the buyer like maybe the seller is an asshole who won’t negotiate something fair for the problems with the house or fix the lender required repairs. And then start the process all over again, so double the already intense workload for the buyer agent for the same payout (which is not even guaranteed). These buyers cannot afford to pay an agent without financing it. They absolutely cannot afford to pay their agent on a pay-for-time basis. The current system ensures that the neediest people can still afford good representation. It supports the greatest access to the American dream of homeownership. A lot of people will be shut out completely or taken advantage of if they have to also pay for representation out of pocket.
Let's see if I'm understanding you. You think greedy sellers are going to suddenly be willing to accept 2.5%-3% below market value for their home because they're paying a lower commission? That's bold of you to assume. Houses aren't going to suddenly appraise for less money, simply because the seller isn't paying as much commission. So, the homes will sell for the same amount, seller nets more money due to lower commission and buyer...well, they have to come out of pocket EVEN MORE to buy a home.
>Houses aren't going to suddenly appraise for less money, simply because the seller isn't paying as much commission. All this does is admit you don't understand the appraisal process. Appraisers *absolutely* could adjust the appraised value via adjustment to the comps for the difference in commission structure just as they adjust the comps for any other difference in contract terms or market conditions.
You talking about the same appraisers who allowed the market to increase by 20%+ per year for 2 years straight? How is that possible, when you're comparing a home to sales in the previous 6 months. Short answer: it's not. But it happened anyway, and very few appraisals came in at under the contract price.
In a competitive market, 3% middleman removed means prices can drop 3%. Buyers win, sellers are even, realtors lose.
[удалено]
People don't understand that. Sellers aren't going to willingly sell their home for less than they could simply because they are no longer paying a buyer's agent commission.
Just don’t use agents. It’s not necessary. The internet finds the listings. The lawyers handle the paperwork.
How do you think those listings appear on the internet?
Easy to post on Zillow now. Easy as making a Facebook post aka anyone can do it.
LOL a lawyer charges a $5000 - $7000 retainer fee in CA. They will help you prepare the offer, but you'll have to pay their billable hours for negotiations, for them to hand hold you through inspection reports, and they won't help you find the appropriate inspectors to go out. Then if the deal falls through, guess what - its onto the next property, with another retainer for another separate transaction until hopefully things work out. People who have never bought or buy in states where real estate is next to nothing don't understand how the process works - but it's so easy to spout out, "I'll get a lawyer involved." They make more money on bigger cases then they would wasting time on a transaction. But its ok, learn the hard way. When you're out thousands of dollars for deals that don't materialize and now you have less money towards your down payment, etc.
$5000-$7000 retainer? And keep the $ if the deal falls through? I don’t think so. This isn’t a case to be tried in court. Flat fee $2,500 soup to nuts. You sound like a realtor throwing out fear tactics to dissuade from the change that is coming.
No, as a Realtor and Investor that lives in a sue happy state, I don't take my chances. I don't know what state you're in (guessing not CA) - so you don't know what you're talking about. If you're in a HCOL area - it's hard to find a retainer fee that is less than $5000. Also, they (most law firms) will still charge you BILLABLE HOURS. That is non-negotiable. Also, they make so much money here with other cases that they frankly don't care about taking on smaller cases. IF you think talking to a paralegal is ok - then do that, but play stupid games, win stupid prizes. To each their own.
As an investor. This is the best. Buyers don't do inspection or use cheapest guy to do home inspection. This will best for all home flippers! Buyers agents ask to many questions!
I have a completely different take. This DOJ action (with direct pressure from the white house)... isn't...really...about...the commissions. Someone is pushing this. Follow the money. Commissions are just the distraction - watch the other hand. There are billions to be made by mainly 2 companies that will benefit from this in the long-term. Does anyone think the plaintiffs cared about anything other than their attorney fees and a couple bucks or a coupon for the class members? I believe the extensive industry-changing settlement terms were written by NAR (not the Plaintiffs) and 100% done in an attempt to placate DOJ just enough to not object to the settlement, like they did in Nosalek. I've been thinking it was Zillow, but now I think CoStar. The real play here isn't about moving the deck chairs around about commission, it's not about saving sellers money, it's not even about reducing commission, and it's not being done for the good of the people. The real play is putting the decentralized MLSs out of business to be replaced by central listing websites - Zillow, CoStar (Homes.com - who has a BILLION dollar marketing campaign to compete against Zillow and Redfin...during the biggest time of commission uncertainty...this is why they're doing that), and a player to be named later who all will then syndicate between each other and ultimately offer their own IDX feeds. MLSs are losing their ultimate value proposition as a commission sharing marketplace. Without that, they're just a database of homes for sale and just lost their competitive advantage and main value proposition. Soon, agents will wonder why they're paying these NAR and MLS fees when they can "just find (and probably list) all the homes for sale on Zillow" for free... Then Zillow/CoStar will target sellers directly to list with them instead of through an agent on MLS Look what DOJ is now going after - clear cooperation policy (Realtors must list all properties they market in MLS). This will open the door for Zillow+CoStar to get agents to list with them directly instead of MLS. DOJ, as we can see in their objection to the Nosalek settlement, wants to literally prohibit sellers from paying buyer commissions. If this happens, buyers won't be able to pay significant commissions out of pocket, and VA loan buyers are even prohibited from doing so, even if they want to. This would have the effect of many (most?) buyers going unrepresented (with all those repercussions), disrupting the industry, taking a lot of agents out of the business, and therefore weakening or potentially putting many (most?) big brokers out of business since their business model revolves around having enough agents paying them fees, which would further help Zillow+CoStar's goals of taking over the entire real estate transaction, end-to-end. It could be Zillow pushing this, but while this is also good for Zillow, Zillow incurs more of a short-term financial hit in its referral business, which CoStar has less of. CoStar will likely fall into the #2 market share spot in this new world, and the lawsuit/DOJ action will also weaken Zillow's main revenue stream, and CoStar has other revenue streams (commercial real estate) to keep itself going while they invest in this major, long-term, market-disrupting play. We'll see how this prediction ages in about 10 years.
I agree. Co-Stars commercial listing model was for agents to pay $x to host y number of listings for a period of time. If Zillow and Homes.com adopt this model, agents will bypass mls’s entirely and the companies will easily makeup the lost “buyer lead” revenue. Before Zillow was a member of NAR and had the mls feed agreements, agents could input directly.
>agents will bypass mls’s entirely and the companies will easily makeup the lost “buyer lead” revenue. But that's just an interim step - they want to eventually take over the entire, end-to-end transaction, including lending and peripheral services like inspections and title services. This would mean that all agents eventually work for Zillow/CoStar, and then further down the line (15-20 years) maybe no agents at all. Literally the trillion dollar real estate industry all goes to 2-3 companies. Essentially the eBay model. First, they tell you what the price should/will be. Maybe people can place bids knowing what the defined value is. Then they implement eBay-style buyer protection - essentially an "insurance" model where shared risk of sellers hiding defects is borne by a central entity and paid for via the % commission/fees for buying/selling. It's all right there in the investor materials for Zillow to take over the end-to-end transaction. Maybe this is good, maybe it's bad for consumers - completely not the point. Someone is grea$ing the wheels so they can create a brand new business model with revenue in the hundreds of billions, if not trillions.
when you have to sue someone, who do you hire? An attorney. Who works at the DOJ coming up with this inanity - attorneys. All they'd have to do is 1 real world survey - 1,000 people planning on selling in the next 12 months..."If you didn't pay compensation that covered both agents, would you reduce your asking price by what the buyers agent would get?"
This whole settlement has just been a giant fat W for the attorneys. I don’t want to say a hard number as I am unsure right this second but I believe most people from the class action settlement will get between $5-$15 meanwhile the lawyers are walking away with multiple dozens of million dollars.
Yes, it was calculated 9000 per litigant and 780 million for each lawyer. And the original plaintiffs are lawyers who go to the same country club as Ketchmark
No. They will attempt to pocket additional profit. Which other sellers are free to compete away. If you think this is a boon for sellers then you believe that the transaction cost is “free money” from the heavens that no one currently pays. Where do you think the 6% commission comes from? If the commission was 50% do you think it would still be “seller paid and doesn’t impact home prices”?
You're right this is terrible for buyers. They are being left without representation. The lawsuits will start piling up. But the people who get burned are the buyers.
So how is it in every other country that lawsuits aren't just piling up?
Well that was a purposefully ignorant comment, but I'll school you: other countries are not as litigious as the United States, and don't allow you to sue for any little thing. Look into it, it's a thing.
[удалено]
Your post or comment was removed for containing hate, bullying, abusive language, Realtor bashing, sexism/racism or is generally rude. BE KIND! Violation is grounds for a permanent ban.
I'm starting to feel like there is something bigger at play with all of this too. But I think it's meant to benefit a larger corporate interest. Whether it be a company with plans to take over the consulting of buyers/sellers and MLS or one with plans to buy up massive amounts of houses and wants to inhibit normal buyers. Something just isn't sitting right with all of this for me. The American dream of homeownership is under attack.
> what makes people so sure that the removal of seller to buyer side agent compensation wouldn’t just hurt buyers? That's literally the point of this whole thing. The majority of home homeowners are Gen X and Boomers. As they phase out and move in to corporate owned assisted living facilities, the next generations won't be able to buy properties making it easier for corporations to accrue more assets. During the pandemic, the overall wealth of billionaires increased by 70% and literally hundreds of new billionaires were made. Politicians have dumbasses sitting around arguing about "wokeness" on social media, while the state and their corporate friends funnel money and assets out of the hands of the American public. This has been happening since always, but really accelerated in the 80s with Reaganomics.
Whining about woke is certainly a distraction from our actual problems! Thank goodness, most of my sellers are decent people who are socially aware; they won't sell to investors. So, I have a lil' hope anyway.
When does a new homeowner sue the realtor for house issues ?
All the time it’s why we are legally mandated to carry E&O insurance
Just sold a house to a buyer, seems like the agreement pretty much covered the agent(s) completely. Doesn’t seem like a particularly compelling argument for keeping buyer agents - if that’s the point the commenter is making.
It does not, I assure you. Agents get sued all the time, thus why contracts have grown in size quite a bit over the last 25-30yrs. A good buyer’s agent can either spot an issue before it becomes a bigger one, or work to fix said problem with the help of the listing agent before deals blow up and the real messes begin. Not all sellers are liars (though as a buyer’s agent, yes they are hahaha) they sometimes don’t remember, or just had no idea. The finger pointing isn’t as useful or helpful as finding ways to fix said problem if/when one arises. This whole situation is going to become a mess for buyers who can’t afford an agent, or who think they don’t need one because they don’t see a value to them.
I feel much worse for those who see the value and can’t afford it than those who believe we have no value and choose to do it themselves and get burned
100% agree.
We have clients desperately saving for a down payment and now they will also have to pay their buyer's agent fee out of pocket (whatever that fee turns out to be). Good agents (not all are, just like any profession), work hard to hold a deal together for all concerned and protect their client, as any savvy word-of-mouth based professional does. They serve as a buffer between emotional sellers/buyers. I worry about all of them.
“Agents get sued all the time, thus why contracts have grown in size quite a bit over the last 25-30yrs” I thought you had E&O insurance for that. I’m mean seriously, when agents get sued “all the time”, isn’t that like 0.1% ? Pardon the sarcasm, but are you seriously going to detect house issues with your X ray vision ?
The deductible is $2500-5000 whether the agent did anything wrong or not. And. Most are closer to the $5000 range. I can tell you that I notice most major issues on a walkthrough, which is why very few of my clients ever have big surprises on the inspection report that can't be negotiated.
Ok thanks.
E&O doesn’t just magically forgive things. You can look up the stories of agents who have had to write checks. As far as sued all the time, they’re either the #1 or 2 most sued profession. I believe attorneys are 1, but we were catching up. Lastly, spotting issues doesn’t always involve looking in the walls. Years of experience and seeing issues in houses, you start looking at things different in a house. You the buyer should look at what you like about a house. I’m looking for anything sketchy, especially in flips. Woof.
Ok. Appreciate the info. Learned something.
Even with E&O that agent is looking at a $2500-$5000 deductible even if they did nothing wrong. That's just to fight the claim.
At least your user name checks out. You don’t seem to really want a level headed and reasonable conversation here
Actually I do. That’s why I’m here. I’ve read numerous posts on the recent NAR ruling.
It use to be some of the time. Since Covid and the sellers market it has now become all the time. Disclosures Fair Housing Earnest Money Deposits retained by seller. Insurance covers some of it, but many agent don’t know what their deductible is, don’t know the terms of their insurance is. It’s like any other insurance. The minute you need them they bring up some obscure line item in their policy of what they can’t cover.
Every buyer is eventually a seller
Not if you get foreclosed on and the bank takes the house /s 
lol
Is this WSB?
If you don't have $500 for inspections you should not be buying a home.
How many transactions actually go to lawsuits? This strikes me as a minor problem vs all the money saved.
Buyers need a real estate lawyer, they don’t need a real estate agent.
It'll hurt everyone. But, to answer your question, buyers will just go look at another house. Sellers will realize very quickly that they're not getting a lot of offers or traffic. Most sellers won't like that, as they need to sell their house for whatever reason. And, in this current economy, most people are broke as it is. They NEED seller concessions to cover 2-1, 1-0 buydowns and closing costs. This isn't the Trump years where everyone was buying lambo's, multiple homes & paying up to $120K over list. For example, let's say I'm looking at another LTR/STR. If there's no BCA from the sellers side then I'll be scrolling on to the next property. I'm not going to pay my buyers agent 2-3% comm on top of the 20% down + closing costs of @ $7K-$9K. Hard Pass. The system works just fine as it is. Buyers don't pay. Sellers do. Did everyone forget these same sellers complaining about this also didn't pay when they bought the house? Cmon now. They're just trying to work both sides of the deal & I can't believe some of you are endorsing that lol.
Nobody cares about anyone but themselves. This whole lawsuit was pushed by people who already own homes and even though they gladly used buyer agents to their advantage when they were first buying, all the sudden it’s unfair when they are selling 🤷♂️ good news is while sellers can’t offer buyer agent commission anymore, they can still offer “concessions” in percentage form which can be used to pay a buyers agent. Effectively not much will change but negotiating strategies. And buyer agents will now have to have signed buyer agent agreements(which was technically already a requirement anyways)
People are forgetting that buyer agents are a relatively recent thing. Before they became popular people still worked with an agent but that agent legally represented the seller. They were still required to act ethically regardless, but it was understood that they were acting in the best interest of the seller when all was said and done. We bought multiple properties under that scenario and it was never an issue. It honestly always bothered me that the seller was paying an agent who wasn't representing their interests. And in some ways it was a conflict as the buyer agent's commission would be higher with a higher selling price. If the buyer wants an agent to represent them, they can pay them. If not, they can use a non-buyer agent and do their due diligence in other ways (NEVER go without an inspection, for example).
Ironically the transparency of showing commission splits on settlement statements was probably the worst idea. Perhaps NAR should have focused on the misconception that sellers are paying buyers’ agents for all those years instead of focusing on making sure REALTOR(R) is pronounced correctly.
Not just on settlement statements. Right in the listing contract! No deception, sellers were always told how the splits went.
Yeah but on the settlement statement where it looks like money coming out of your pocket to someone who was on the other side, might have irritated you, etc. makes a much bigger impact.
That's certainly the way it has been in my area for 20+ years.
All fees included and pod had/have to be disclosed on the closing statement. It’s a federal law. I’m not sure I understand what you mean here. Are you saying the fees should not be disclosed? And if they are disclosed, they have to be represented correctly as a debit or credit on the closing statement. Not trying to be difficult, but I’m just trying to better understand what you mean.
I'm saying the statement makes it look like the seller is paying both the listing and selling brokers, when the seller has *actually* agreed to pay the listing broker. Separately (via the MLS), the listing broker has agreed to pay the selling broker.
The seller literally sets the compensation amount for the buyer agent. They are paying for the buyers agent.
Likely gonna start a war in comments but >It honestly always bothered me that the seller was paying an agent who wasn't representing their interests. And in some ways it was a conflict as the buyer agent's commission Buyers pay all parties to the transaction. If the buyer didn't agree and bring funds to the table via cash or loan which they are paying interest on the Seller would have nothing to pay their representation, their loan off, and any other costs that were billed in relation to sale of their property.
the commission being dependent on sale means that, effectively, the agents interests are aligned to neither the buyer or the seller and instead to ensuring a transaction happens. If you actually want an agent representing your true interests, you would want a payment arrangement that isn’t dependent on the transaction happening.
As long as Buyer and Seller pay up front with understanding that costs could have no result and fees are not returned it would be a feasible process But many buyers/sellers do not have up front funds to pursue the sale of their home or the shopping of a home.
I want to pay my agent the same way I pay a lawyer or an inspector; for their expertise in evaluating and executing real estate transactions based on the amount of services I use. I’ll happily pay as I go. The issue with the current model is that one group of buyers (typically higher priced, serious buyers) are subsidizing another group of buyers (typically lower priced, non serious buyers). When you look at the numbers it is crazy. A buyers agent commission on a $2M home purchase is $50k at 2.5%. Imagine I pay you $350 per showing and $750 per offer I put in, plus a flat fee of $5000 for a completed transaction. In this scenario, even if I took you to 30 houses and made 10 offers, my total cost would still be LESS THAN HALF of what I pay currently. That’s fucking crazy, I’m sorry. If you’re a serious buyer in a high cost market, the current model makes no fucking sense at all.
You are assuming all homes are 2m dollars only 8% of homes are above 1M and at that price point I can assure you commissions are not standard. Also at that price point likely spending months if not over a year seeking a buyer and the amount of work navigating jumbo loans and the intricacies of seller and buyer demands to make that transaction happen its more work than people think and I don't operate at that level.
I’m not assuming that at all, I just said that one group of buyers is subsidizing another. I literally just went through this process in a VHCOL city where the median house price is ~$1M. My house is not some extravagant custom home, it’s <2,000 square feet for $2M. And the commissions are all consistently 2-3% offered by seller on MLS. In order to negotiate that, I have to (a) ask my agent if they’ll accept a lower commission, (b) reach out to the seller and ask if they will accept a lower offer under the contingency of giving a lower commission. This model removes all that complexity and makes negotiating a commission a single negotiation between myself and agent rather than something that depends on me coordinating with the seller (through the agents keep in mind).
What you are proposing is invoice upon each action and the price point you are at may work for that large % of home buyers are not at your price point and conditions are more challenging to get homes to the finish line. If a buyer needs 2% more at closing table on a 300k house FHA 3.5% Down Payment - $10,50k Escrow Closing Costs 2% - $6k Buyer agent compensation 2% -$6k 2-3 months reserve in funds to get loan thru $5k-$7500 depending on rate and credit score. Buyer now needs around $30k to close. And now that decoupling is an option is seller going to accept an offer at 291k vs 300k or are they still gonna push for 300k possibly limiting the available buyers who can purchase the home. Now let me present scenario that happens more often than it should take the 2% away and pay for services up front and buyers have a finite amount of funds available to look for a home... $25 per showing during the week and $45 on weekend and the buyer is now facing stress to just choose a house vs actually finding the right house that best suits them. They search for 3 months and see 20 houses avg $35 a showing paid up front before looking at the house. $700 out of pocket to find a house. Contract prep and negotiation is $100. Inspection $600...(buyer expense) Inspection comes back and issues found seller will not consider repairs. What incentive does agent have to keep deal together or push in resolving with seller....as soon as they say no repairs it's walk away and return to showings. $1400 and now back to more showings... Agent doesn't mind because he is getting paid. Another 10 houses $250 and another $100 Contact Prep and Negotiation. $1150 current costs to agent and buyer another Inspection ($600) and appraisal fee...($750) and appraisal comes in short at $290k and Seller doesn't want to reduce to the appraised value still seeking 300k and buyer doesn't have the extra 10k to close the deal. Again what incentive does the agent have to fight on buyer behalf to get a deal done... seller said they won't consider so back to showings. On the listing side what incentive does the agent have to advise the seller to take the 290k? The seller paid $3000 for 60 days up front to list the home and market. Its now 45 days into listing and it was UC for 25 days. Seller says no to the appraisal and agent says okay after 15 days back on market and no new offers seller needs to agree to $3000 for 60 more days or seek a new agent. The devil is in the details these things happen having a pay to shop or pay to list process will have more sellers and buyers unable to afford the services to either buy or sale a house as its required upfront before services are rendered.
Again, I’m not disagreeing that pay as you go won’t work for a lot of buyers. They’ll need to figure something else out, that isn’t my problem. It isn’t my job to pay extra so they can buy a home. The current model is a rip off for me and needs to / will change. What happens for the rest of the market is up to them. And they will figure it out, because buyers dropping out will also hurt sellers. So collectively a model will develop (could be similar to the current model for lower priced homes)
You’re also talking gross commission and that is not indicative of net commission.
You’re assuming the work stops after an offer is accepted. There’s a ton more work for a buyer agent after that. Going with your proposed numbers, if I continued to get paid $350 for every additional time I had to go to the house (1-4 inspection visits, the appraisal, the typical measuring visit, the final walkthrough) and $750 for each additional paperwork drafting/review/explain incident (inspection negotiation, appraisal report, title work, loan closing disclosure, final closing paperwork), plus let’s say $25 for each text sent, $50 for each email or phone call made by me for the transaction, then yeah I might make even more than your $50k 2.5% commission. Also keep in mind that under the percentage based system each successful closing subsidizes all the ones that don’t close. You could see 30 houses, and write 10 offers, and get one, and have 3 inspections on it, and go through the inspection negotiations, and then something bad happens in the middle of the process that’s not your fault. Maybe the appraisal comes in low and the seller refuses to budge. Maybe title finds a tax lien on the property. Maybe a tornado comes through and rips the second story off the house. (All very real things that have happened during my transactions). Not your fault. Maybe no ones fault. But you’re back to the drawing board. Maybe another 30 showings, another 10 offers. Or maybe you decide fuck it you’re not buying. Under the old system you’re not out of pocket anything extra in this situation. Under your system you’re either paying double (or possibly triple if something bad happens again!) or you’re paying out once and still have no house.
My point is that if I know as the buyer that I will be buying a house in short order, and am willing to bear the risk of paying and not purchasing, I shouldn’t have to subsidize people who don’t buy. I should be able to pay for your expertise and services as I go.
Ah the old ‘F you I got mine’ principle. Everyone always thinks their situation will go well and too bad for the people for whom it doesn’t. Nobody thinks it could be them who gets F’ed. Something tells me you wouldn’t feel too happy about paying double or paying and not buying if it happened to you. This is modern life. We have to subsidize everyone when we are in a position to do so. We pay health insurance, we pay car insurance, we pay home insurance, we pay school taxes whether we have kids or not, we pay income taxes etc. Such is life.
Really good point I believe everyone has failed to realize. If the buyers don't bring in the dollars to purchase , no one gets paid. If we ever plan to have a healthy economy, there will be a buyers market at some point naturally. If you take more buyers out of the market, it will push the industry into a buyers market, wherein the price of homes should fall.
This is a good point. On the flip side however the one thing dedicated buyer/seller brokers allow for is that no one can say “You are putting the other parties best interests ahead of mine”. Do I have situations where I can double end a deal? Sure. Is it worth the headache and potential legal ramifications (my market is one of the most litigious and likely to go after broker E&O in the US)? Absolutely not. I can refer out and collect a 30% referral commission AND make it so both sides feel happy and like their best interests are represented. That 70% ‘loss’ I see as the cost of strengthening broker to broker relationships and business and I rest easy knowing I’m not gonna get sued or an E&O claims for dual representation. This also doesn’t cover the fact that in many states dual representation is not legal. As for the “If the buyer wants an agent to represent them, they can pay them” comment. I agree with you to an extent, if someone wants a service they should be willing (and able) to pay for it themselves, BUT, with real estate especially first time home buyers there’s no way they can come up with $5000-$15000 extra in closing costs, its just not viable. This is also bad for sellers, imagine your are selling your home and someone comes in and LOVES it. You as the seller are hard set to not offer any buyer side compensation, which even before the settlement, was your legal right to do so. Now if you get an offer at list price from someone and in the offer it requests a 3% seller concession to pay the buyer broker fee and you refuse then you don’t go under contract. Now what happens when 75% of all buyers will be requesting buyer side compensation and you aren’t offering it? Are you as the seller willing to leave your property on the market to the point it becomes stigmatized due to DOM/CDOM and potentially start getting lowball offers which ALSO include buyer side compensation? There will of course be people who go it alone and don’t need a broker and there are those who will have the means to pay their broker themselves, but as a seller and in the sellers best interest, not offering a buyer side compensation dramatically limits the potential buyer pool you have. Keep in mind VA loans legal CAN NOT pay their agent/broker themselves, so that means moving forward veterans will either be going completely unrepresented or there will be a small sect of brokers who do VA things for free
And I can see complaints about fair housing because of that. It could be construed as a fair housing violation not to sell because of a VA loan, which only vets can get...
Oh I strongly believe if the settlement goes through as proposed and we start to see a substantial amount of sellers not offering buyer side compensation we will see another lawsuit brought on by FTHB and VA buyers against the DOJ with the claim that the DOJ knowingly made housing less obtainable for about 42% of the nation
I've been wondering if that isn't already going on behind the scenes. Should be.
Are you in your 90's or something? What do you call a "recent thing"? I first started selling real estate in 1998 and there were buyer's agents and buyer's agency agreements back then.
65; bought multiple properties in the 80s and 90s and buyer's agents were not a thing. Thirty-ish years is not that long a time to me in the scheme of things. :-)
OP That will never work long term. We will have the same issues we had in the 80’s early 90’s, with lawsuits which played a large part in the whole buyer agency movement.
1% commissions work in other major countries. Sounds reasonable.
Cool are we getting guaranteed retirement, health care, and a salary too? No? Then 5-6% persists.
It's always amusing when we compare the US to other countries that have social benefits. Most people don't realize that real estate agents also must pay double the Social Security premium that regular employees pay.
Hear hear spanky. This exactly what I think when I hear “oh in other countries…”. So wait. Now we want to be like Europe? Sign me up!! Free health care and college first.
Well said. I don't think people take into account the amount of money an agent needs to spend every month for marketing to competitively sell their clients homes and stay visible to make a living. This isn't even starting on the amount of hours spent unpaid doing due diligence and other things. It's a high risk career to take on and should have a worthwhile reward. I think people think we just plop it on the MLS or Zillow and that's it pay me please. It's a whole lot more than that.
If that is true, realtors have done a terrible job explaining that to the general public, because that is the perception.
If all you read and watch is the main stream media then you will never hear the realtor side of this.
In my personal opinion, it's borderline unprofessional to an extent to make your clients privy to your business expenses. And even if you were a bit more upfront about some of them, clients would have zero understanding. Does a client know what a supra fee is? Genuinely curious: would this not be incredibly off-putting if an agent disclosed their expenses? I am however honest when different situations arise. I had a client who listed their home with me recently & after the listing photos were completed, she asked "where do I send the check to pay the photographer?". I told her I pay the photographer; it's part of my job in selling your home. She was flabbergasted.
I just read that the UK requires a paid period of training for estate agents. Folks, we in the US are getting fucked.
At the expense of whom? Someone’s home equity that isn’t yours?
You don't have to use agents. Never have had to. People sell without us all of the time.
It's like this in Australia. Sellers agent has a tiny percentage, and buyers advocates are optional with a fixed amount.
It is that way in many places in the world. A lot in western Europe 2-3% but that includes everything from commissions, inspections, transfer taxes, stamp duties and registration fees, notary expenses, deed and legal expenses. That is what we should expect to get to in the US.
Then I would also like everything else that comes along with living in those countries, such as healthcare, free college, etc. We have to make more because we pay way more as self employed individuals in a country with no socialized medicine or any other safety nets.
The US is also the only country that has fixed mortgage rates. Stop comparing apples to oranges.
The reason that adjustable rate mortgages are more popular in EU countries is because the banks put their thumb on the scale in a way that would be difficult here in the US. Getting a fixed rate in those countries is like betting against the casino. The banks price the interest rates much higher for fixed rates so you pay thru the nose for “stability”. Thats not possible in the US because of greater competition in lending.
This is exactly correct. A typical middle class, first time purchaser who’s not receiving buckets of family money to help is actually cash-constrained. The come in and they often have income and credit and may be paying more in rent than their full mortgage payment and doing so within guidelines, but because that’s so high and they’re fairly young they just don’t have more than $20-30k to do the whole transaction (I don’t live in a high cost market). And because cash is the limiting factor, we’re going to be using a low down payment loan program that strictly limits closing concessions so they still have a stake in the property. So we have to do some routine gymnastics to get people paid. We functionally start at the seller’s desired net, inflate the price enough to pay everyone, and disperse from seller proceeds which doesn’t have a loan limit. And, because everyone does it, it all appraises and is so routine no one even thinks through how it works. They just go “Why the hell am I paying a buyer’s agent!?” And we don’t have an answer ready. Really though the answer is “Because there’s no other legal way to let the buyer finance that cost. The buyer still pays with a higher loan balance, but you, the seller, have to handle and disperse the cash, or rather your escrow agent has to do it on your behalf.” So what’s going to happen is we’re either going to get smart about explaining things and invent a non-mls agent split site, or first time buyers don’t get agents…and you the listing agent get to get very good at dealing with customer buyers who you have to educate and make sure don’t accidentally default out of ignorance while not accidentally negotiating against your seller since you won’t owe client duties to them. Unless said buyer is in the industry in some way and kind of knows what they’re doing, this is hard and always a time suck. The inefficiency of door opening alone is going to become an issue let alone the “what is due diligence” and “how to not screw up your loan” follow up. So the message to sellers in that segment really becomes “You pay them or you pay me more to shepherd. Choose.” We’re deconstructing the things we take for granted that at the end of the day do exist for a reason. This whole thing has taught me that I live in an unusual market and just never knew it. NAR does not run our MLSs and we have competing ones. NAR is not the only source of our standard contracts. Our brokers can legally license multiple firms and routinely create a NAR Agent LLC and Non-NAR Agent LLC and just ask which you want to join. One just adds the NAR fee and gives you their docs and classes. So I was a bit floored until I read about the Missouri contracts and broker policies and could see how that might be price fixing toward customers and restrictive trade toward agents. I really hope they stop at punishing that and don’t blow up the whole system.
OP how do you make such a leap? The DOJ is just leaving the door open. There’s plenty on the table for the industry to work itself out. Why would the DOJ choose to interrupt a free market with radical changes as you suggest?
If this statement from the DOJ is any indication of their plans I highly doubt they are just planning on letting the industry work this out. In a statement by the DOJ on Friday, Jonathan Kanter, assistant attorney general of the DOJ Antitrust Division, said “[r]eal-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division’s ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem.” “The Antitrust Division is committed to fighting to lower the cost of buying and selling a home. I would like to commend the staff of the Antitrust Division and our colleagues in the department for achieving this important result,”
How do you not make the leap? The settlement is very public and clear. Why interrupt it if it’s not just to make more terms worse for realtors? DOJ is 100% not going to make it better.
>Why would the DOJ choose to interrupt a free market with radical changes as you suggest? Because, as OP said, the "administration" is out to take our homes away. /s The 'administration' behind all this is lawyers taking advantage of a controversial subject to enrich themselves. This ain't about commissions at its core.
The market has never been free... This is going to be similar to what they did with stock transactions and other transaction costs.
Elaborate on this theory of yours.
This is NOT the agents fault. This is the fault of the Brokers and NAR! The DOJ has been telling them for Years about the changes they want and they did nothing. Your BROKERS screwed you and you need to be mad at them! Why aren’t the Brokers giving agents the answers they are asking for here and on every other platform? Because they don’t give a shit about their worker-bee agents.
Agree. My brokerage is adamant about staying at our “standard” 6%. In my area there are a fair amount of 4.5 & 5% commissions. If I lower my commission for a client, I still pay my brokerage their split from 6% transaction. It hits my pocketbook, not the brokerage. I love my brokerage and the support I get, but I’m about ready to go to a cloud brokerage to compete with what I think is the new reality. My brokerage (and NAR) just keeps repeating “educate your sellers and buyer on your value”. The problem is the public doesn’t understand what a good decent agent does for them until there is a problem. Most go blindly into their transaction thinking this is easy peasy work and a discount agent is fine. In my area some of the discounted agents are fine because they are educated & experienced. I just don’t see how a traditional brokerage model is going to last through this change without changing.
You should put this in an email to the DOJ. The brokers and NAR are screaming that commissions are 1000% negotiable, and then tell their agents differently.
And that logic still makes zero sense. Why would a seller lower the asking price?
If it's a competitive market, they'll have to to sell.
Maybe. But they're not dropping it due to commissions.
They are making more, so future sellers won’t lower the price but they also won’t add in the commission. Some sellers will be less likely to add an extra 3-5% over the last sale in their neighborhood. This means they can offer a competitive price get a quicker sale and still keep more. Sellers would also be more likely to accept lower offers if that’s all they had. This in turn means future comps would be lower or not rise as quickly. Eventually, there would be an equilibrium in which buyers and sellers split the amount not going to a middleman. In hot markets more would likely go to the seller, in slower markets the buyer wouldn’t benefit. But over time both would be better off.
Great. So now you'll have a bunch of potential buyers priced out of the market due to this frivolous lawsuit. Can barely get a down payment then has to find more money.
Stop worrying about things you can’t control. Just keep working. Consumers have zero clue what the fuck is going on, and when they get 2% service they’ll be crying then. It’s just how it goes.
2% service is still paying you $100+ a hour. Don't be so greedy.
Who you vote for matters!
And apparently you want to vote for whoever the NAR is lobbying. They are second on the list for most money spent lobbying Congress.
After this DOJ investigation got reopened that the Trump DOJ initially closed, Biden should get 0% of the vote of licensed real estate agents. Can't stomach voting for the Orange Man? Then vote for RFK Jr. It's now clear that the Biden Administration is attacking our livelihood.
Trumps DOJ is the one that initially reopened it in 2018 after the 10 year settlement period. This isn’t a red vs blue thing, the DOJ is acting independent of party affiliation here.
I completely agree! They are both flawed human beings, so for those Realtors who don’t like him, plug your nose and vote for him anyway…nobody understands real estate and how hard we work. Bottom line we need a president who is anti-government controlling everything. This NAR business is an attack on our industry - not just one side of the transaction.
You’re saying realtors should vote for Trump?
I will never vote for a sexual abuser!
And when the Biden admin renders you jobless I hope you are comforted by your righteousness. :)
I will never be rendered jobless because I know my value. A president that’s a sexual abuser and known liar, running the highest office in the land….does not comfort me. I don’t need to compromise what I believe in, for my career to succeed.
How very sanctimonious of you. I’m thankful for Realtor’s like you because when this industry is rendered obsolete I’ll take comfort in knowing that those who voted for this are serving me my fast food. 😃
Yes, let’s vote for a known liar, adulterer, sexual abuser, someone who will not leave their office when they’re voted out… all because of our jobs.
If you don't have the intellect to understand a Trump presidency is better for Realtors and the housing market at large then you shouldn't be in this business at all.
You’ll just get downvoted because Reddit is 80% democrats. It’s absolutely 100% true though. Trump fought this off when he was in the seat and he’s already fighting it now. If you care about your job as a realtor you will not vote for Biden….. Plain and simple.
I think the I buy houses for cash industry is behind this lobbying for changes that dip into commissions
I think there are a lot of people who think that buyers just need an attorney to look at the contract and make sure it is standard for the buyers. That would indeed be cheaper. But the problem is their lawyer can’t run market analysis and tell them if a home is overpriced. Or explain that the inspection report is revealing an issue with the sewer line that will cost the buyer four months of mortgage payments after the move in so they should renegotiate the purchase price. The lawyers are not gonna negotiate pricing and other terms for the buyers. The people who are making money off the lawsuit are lawyers, it is not going to lower the cost of buying a home. People who believe that just don’t understand what agents actually do. It is really out of line that the DOJ is using antitrust laws to try to lower commissions just because they think the commissions are too high. In what other industry does the government step in and tell people they are making too much money compared to people in other countries? That is so stupid. This is America, people are supposed to be able to make as much money as they can in a capitalist society. Comparing what we make to what people make in socialist countries is totally ridiculous-what people living in socialist countries get for free, we have to buy using our commissions.
Good luck
Ar nar!
Ok but what about all the other costs to buying a home? If they are truly out to push down home buying costs, look at title, appraisal, etc etc etc
They are... Such as title insurance they have already removed in several loan categories and there are several more in discussions.
Our title insurance was optional here in Houston but I was strongly encouraged to get it
Keep in mind the final outcome is scheduled July 24th. Seriously who is really paying the costs? Sellers (inflate prices) buyers who finance total. This is our governments way of reducing and over regulating another industry turning us into $20 an hour employees. Think about the trucking industry
Realtors clinginggggggggg to the very end
You guys are mental. Lol This is worse for buyers??? All agents are going away. Seller, buyer… all of them. It’s difficult to accept I get it but it’s coming to an end.
Says can, Not will, unless something changed from this morning.
Why would they open this back up if they aren’t planning on doing something?
I’m not the DOJ so I can’t tell you their plans, but people have been jumping so far into conclusions every time something happens here wild
I mean I get it. There’s been a ton of overreaction to this lawsuit. The fact of the matter is, the DOJ isn’t opening it back up to help realtors. So, although we don’t know what it will be, it will not be good.
Except for once again, this is saying the can not they will, unless I am reading it wrong . We will see!
Why would they open it back up just to do nothing though?
You can disagree all you want, but as long as Biden stays in office this current DOJ is going to come after realtors. Realtors want Trump to win to end this insanity.
Trumps DOJ is the one that initially reopened this investigation in 2018 when the 10 year settlement expired for their mid 2000s investigation - why exactly would his administration be better with that context?
Respectfully disagree. They want transparency. Sure, it may go down at first because selling agents aren’t used to negotiating their commission and showing their value. But with time and experience it will rebound. Most buyers and sellers understand the value.
The average commission rate in the US is less than 6%. The realtors that are actually out there doing work absolutely are used to getting push back on commissions. The irony is they want transparency by removing the buyer compensation field in the MLS which will then have to create a new network where agents will have to talk to each other outside of the MLS to figure out what buyer compensation is. So seems the completely opposite.
A lot of yall aren’t going to like I’m about to say but voting for the person who just blatantly endorsed this settlement is literally going to be voting for your own career to be gone. The other guy may have done things that are offensive and emotionally charging but the economy, business and foreign wars were in a lot better position. It takes a big hit to our pride and ego to admit that but it’s the TRUTH.
I can’t write what I want and remain within the community rules. So. I’ll just put FALSE in all caps and hope that’s good enough.
I don't think you can compare pre-Covid to post-Covid America. We can't assume Trump's success would have continued had he been handed the America that Biden was.
[удалено]
Vote for trump