National Association of Realtors verdict.

Morgan3820

Morgan3820

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I haven’t seen any threads on this topic. As a person who occasionally dabbles in real estate, Any thoughts on how this decision will change how realtors get paid? Will FSBOs become more common. Will realtors stop selling the lower tier houses as commissions shrink. Are buyers willing to pay 3% for the buyer’s agent? Will real estate agents go the way of travel agents.

My neighbor very recently sold their house in three days. If the customary 6% stands, that’ll be like $30,000 in commission to the realtors. Seems a lot for taking some pictures and listing it on the MLS, taking an offer.

www.cbsnews.com

How real estate brokerage ruling could impact home buyers and sellers

Landmark verdict could ultimately reduce agent commissions by 30%, saving sellers a bundle, according to analysts.
www.cbsnews.com www.cbsnews.com
 
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Seems like an old model designed for one thing - protect realtors. Some argument I’m sure about protecting the public, blah, blah, blah. Similar to car dealerships, which varies by state, but in this day and age not being able to buy without a middle man is stupid. Obviously there would be transitional pains, but this is just the kind of thing that will introduce a lot of innovation into a market. Protecting guilds is generally not best for society.

And to add - I’ve always lumped real estate agents and contractors together - 90% are lazy and think it’s a way to make easy money. 10% are real professionals.
 
simie1 said:
Obviously there would be transitional pains, but this is just the kind of thing that will introduce a lot of innovation into a market.
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Then I expect a home version of Carvana to be introduced shortly. I'll post my experience of being able to buy a house from a giant clear tower.
 
I read the first few paragraphs of the posted articIe. I am not so sure that the statement that commissions are non-neogitable is accurate. Maybe the qualifier is in the 'timing' of the negotiation....I just don't know. What I DO know is that I have built, bought and sold quite a bit of real estate and have negotiated commissions routinely. If I dump a deal on an agent, I was able to pay 3-3.5%...I have paid 8% in one particular deal because lemon as simply not worth the squeeze for either of the agents without me paying more commission.

I do know that there are certainly deals that agents get paid nicely for routine work. I have also been involved in deals that were so complicated that I felt like the agent as working for minumum wage...

I want to read more into this ruling...thanks for posting it!
The vast majority — or nearly 90% — of U.S. homes are bought and sold through real estate agents affiliated with NAR. The organization, the country's largest trade association, requires home sellers to offer a non-negotiable commission before listing homes on its property database, known as the Multiple Listing Service, or MLS, which feeds into real estate sites such as Zillow. Paid by the home seller to their agent as well as the buyer's agent, the commission currently stands at around 5% to 6% of a home's sale price.
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simie1 said:
And to add - I’ve always lumped real estate agents and contractors together - 90% are lazy and think it’s a way to make easy money. 10% are real professionals.
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Your premise is accurate in my experience as well.
 
First off, don't fall into the trap. Saying "Realtor" when you mean "real estate agent" is like saying "AOPA Member" when you mean pilot.

The NAR however is much more effective at pursuing regulatory and legal aspects to protect their membership than the AOPA ever will be.
 
Morgan3820 said:
My neighbor very recently sold their house in three days. If the customary 6% stands, that’ll be like $30,000 in commission to the realtors. Seems a lot for taking some pictures and listing it on the MLS, taking an offer.

www.cbsnews.com

How real estate brokerage ruling could impact home buyers and sellers

Landmark verdict could ultimately reduce agent commissions by 30%, saving sellers a bundle, according to analysts.
www.cbsnews.com www.cbsnews.com
Click to expand...
Hell, even if it's 5% or 4%, it seems the agents are still grossly overpaid for the work they're doing.
I have a thread on here about selling my first house (in process right now) and I've been unimpressed with the candidate agents I've met. With each of the people I've sat down with so far I'm left thinking "what exactly do you provide for $50,000?". To me that's a huge avionics upgrade, the better part of a Lycoming factory engine, or aircraft opex for the next 2.5 years. So when they explain to me that it's pictures by a photographer, researching the home for a write-up, recommendations on any improvements, posting to listing service and then... Wait for an offer.

... It really leaves me wondering where the hell the other $48,000 of value comes from.
 
I have always negotiated the commission; buying or selling.

My recent transactions started with a worthless realtor and after canceling with him found a realtor who more than earned his negotiated commission.

He even paid for staging which I feel has great value.

He sold my residence three times because the first two deals fell through.

He successfully delayed my purchase because I didn’t have the money to buy until I received the money from the sale.

He negotiated a short escrow on the sale so I could complete the purchase.

I sold at my asking price and purchased below the asking despite other offers on the property.

I came out on the good side of all the negations and likely have $150,000 more than if I had stuck with the first realtor.

He still earned a nice sum and everyone involved in both transactions was happy.
 
A couple decades ago I bought and sold a house to move upmarket. Looking at 2 commissions (I paid one) I wondered WTF was the money for, so to see what the real deal is, I took a class, passed the license tests and became a realtor (now expired). Mostly it is a racket IMHO, although the individual sales agent (Realtor) is not getting much of the money.

Again, IMHO, the root of this evil is the "Realty Board" or equivalent in each state. They are political and are almost all Brokers. They have pseudo Government powers and are the source of the limited competition. Self-dealing is a real thing. They establish and enforce the self-protecting rules that make it hard to work in the system without a realtor. Think of how the Hack commissions controlling taxis fought Uber. Real Estate needs an Uber-like disruption, I hope this ruling enables that.

They are very aggressive in working to prevent individuals from representing themselves. For example, a real estate contract usually allocates part of the commission to go to the listing broker and part to the selling broker. They will fight you hard if you try to buy without a realtor. And will certainly not let the seller or buyer keep the unearned buyers share.

If both buyer and seller are operating individually, say as an individual buying a FSBO, the real estate lawyer at the closing company can do it all without drama and unreasonable fees.

Rates are absolutely negotiable. In my last transaction, I used Redfin which is much cheaper, the sales agent and staff are salaried so they aren't motivated the same, traditional Realtors do not like them.

Just my $.02
 
Here, there are a ton of discount listing agents who (net) take less than a 1% commission if/when a sale goes through. It is generally up to the owner to communicate with the discount agent what commission will go to the agent who represents the buyer, but it is typically 3%. So, net a <4% commission...

I think that is a fair breakdown, as the selling agent often earns his/her commission by taking a buyer to tour multiple homes.
 
I expect to see variations on the discount brokers, fee for service, and flat fee + bonus become more popular for selling Realtors; those who specialize as buyer’s agents only likely will be hardest hit, but around here, most of those aren’t Realtors, just licensed RE agents.
 
I never understood why a realtors fee should be based on the value of the house. Is the work not the same when selling a house worth 100k vs 1 million? I would be far more willing to use a realtor next time I buy or sell if they had a flat fee for doing all the comps, pictures, listing, etc and then another flat fee if they sold the house.
 
I get the complaints, but “they’re charging too much” seems a weak complaint.
None of us would like if it was applied to our own work.
The government setting everyone’s wages?
I didn’t read the article, I hope it’s about combines & monopolies or price-fixing.
 
Sold the house I built in 1971 this year. Either lived in it or rented it out while assigned elsewhere. Totally worth the commission I paid as I had purchased a condo already for my new home. Never had to worry about anything to do to a 50+ house as the agent had three offers and two possibles with various levels working with buyers for what items should / could be fixed, modified, etc.

OTOH, I also sold a rental property this year for my asking price to another contractor/ investor in two days without anybody else involved except the title company.

As the saying goes, horses for courses. It’s not Rocket Science but also not playing Go Fish with your grandkids. My personal opinion is the Real Estate world will morph into a universal fixed $ fee no matter the value of the property.

BTW, another great benefit is the demise of “reality tv” real estate agent shows to the betterment of humanity.
 
What do you get for the money? Somebody filling in the blanks on a canned state approved form. Like in 3rd grade, and probably getting it wrong at that. I don't hold real-estate agents in very high esteem. That said, there are so many middle people trying to carve out money from the commissions, that making a living in that world requires you to be less than honest. Too much money to not be noticed by less than honest people. It's a rotten business full of crooks! I have bought and sold more than a few properties. The only ones that went well were by owner.
 
My intent wasn’t to be a realtor bashing event. Not that that’s not a good time.
I was really looking more for, How do you think the fee structure will change given the lawsuit?
 
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Morgan3820 said:
My intent wasn’t to be a realtor bashing event. Not that that’s not a good time.
I was really looking more for, How do you think the fee structure will change given the lawsuit?
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You posted on a pilots forum… and you didn’t want there to be any complaining.

Seriously?
 
Morgan3820 said:
My intent wasn’t to be a realtor bashing event. Not that that’s not a good time.
I was really looking more for, How do you think the fee structure will change given the lawsuit?
Click to expand...

See post 12 for my on-topic thoughts.
 
Tarheelpilot said:
You posted on a pilots forum… and you didn’t want there to be any complaining.

Seriously?
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No, I’m OK with the complaining. I don’t like them anymore than anybody else. But I was curious how the fee structure is going to change and this being a diverse and educated bunch of people I thought maybe somebody would have an actual insight of how the things are going to be in the future.
 
Let'sgoflying! said:
I get the complaints, but “they’re charging too much” seems a weak complaint.
None of us would like if it was applied to our own work.
The government setting everyone’s wages?
I didn’t read the article, I hope it’s about combines & monopolies or price-fixing.
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They're charging too much for what they typically provide for the seller. Posting the listing on a couple of sites and taking some pictures/providing comps isn't more than a few hours of work, but getting $10K for it seems excessive, especially in a market where demand was incredibly high and houses were often sold within a week of hitting the market. On the buyers' side, it's a bit more work since they are dealing with multiple clients and tailoring the home search to each client needs plus chauffeuring them around. The main value in a real estate agent just comes in making sure the various parties get their crap together for inspections, finalizing contracts, escrows, title company, etc. I think it would be a much better fit on the seller-side to just have a flat fee.
 
SoonerAviator said:
They're charging too much for what they typically provide for the seller. Posting the listing on a couple of sites and taking some pictures/providing comps isn't more than a few hours of work, but getting $10K for it seems excessive, especially in a market where demand was incredibly high and houses were often sold within a week of hitting the market. On the buyers' side, it's a bit more work since they are dealing with multiple clients and tailoring the home search to each client needs plus chauffeuring them around. The main value in a real estate agent just comes in making sure the various parties get their crap together for inspections, finalizing contracts, escrows, title company, etc. I think it would be a much better fit on the seller-side to just have a flat fee.
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Maybe there should be just a listing service or person who gets paid a flat fee to put pictures on an MLS but not a realtor. And then the buyer pays the commission for the realtor to find the house and handle the purchase.
 
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We have some flat fee agents/groups around here.
Most ask for $3000.
Below is an ala carte style that's a bit newer. For what you normally get with a flat fee style, the platinum is still around 3k.

1706550349937.png

The 'typical' workload for the realtors I have seen for the last few years is; 1) sign their listing agreement 2) they put a lockbox on the door and list it on a website 3) the other realtors show the house to buyers 4) phone call/email to you with contracts 5) come to closing to get the check (sometimes..covid changed that too)

Not complaining, but it's a basic process anymore, which I believe is just one of the reasons for the above article to exist in the first place.
 
Before knowing anything else, I view a broker-listed aircraft ad on Controller very differently than an ebay listing from boats-planes-cars or whoever that one flat-rate idiot in Florida is. I'm the same with FSBO houses vs. brokered houses.

If I'm looking for something very specific, and it's boats-planes-hos who is selling it, well, I'll be getting in touch. :)

I don't think the bulk of house transactions will be affected by any fee wrangling. It's an emotional process for both sides and the bobble-headed sherpas in the middle get their fee to buffer it all. The fee is outsized and outrageous for the effort, training, expertise, and intelligence put forward in the middle of the deal -- but I don't see it changing.
 
Morgan3820 said:
No, I’m OK with the complaining. I don’t like them anymore than anybody else. But I was curious how the fee structure is going to change and this being a diverse and educated bunch of people I thought maybe somebody would have an actual insight of how the things are going to be in the future.
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Sarcasm doesn’t require a response.

Thank you for the thoughtful response but I was pulling your leg.
 
Morgan3820 said:
My intent wasn’t to be a realtor bashing event. Not that that’s not a good time.
I was really looking more for, How do you think the fee structure will change given the lawsuit?
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To your point about fee structure changing (rather than my bashing post :)), I've heard the phrase "decoupling" and "unbundling" used several times by industry analysts to describe the direction the system is heading after this lawsuit (and all the follow-on lawsuits).
The thought is moving to a system where buyers pay their agent directly, via their own negotiations, rather than paying indirectly via the total purchase price. Whether that's a flat fee or a percentage, TBD.

There are of course the heads of NAR, and CEOs of major industry players like ReMax, Redfin, etc claiming they expect nothing significant to come out of this. More than a few tenured analysts in the industry have called these individuals delusional. The amount of money at stake, the near universal disdain of the profession by the public, and the average financial impact to an ordinary homebuyer gives an enormous incentive to overhaul the industry and make it more financially efficient and fair (and generally less monopolistic).
 
Normally, we can rely on market forces to drive prices (realtor fees) down to some lower, stable rate.
Why haven’t more people gotten their license, gone after these easy bucks?
 
Let'sgoflying! said:
Normally, we can rely on market forces to drive prices (realtor fees) down to some lower, stable rate.
Why haven’t more people gotten their license, gone after these easy bucks?
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I think the article said 1.55 million people in the NAR, so a bigly group. According to NAR their median income for agents was $54.3 in 2021, a 25% increase over 2020. Not bad considering the average agent is a part-timer.

I suspect that trade groups that operate as cartels (and now are beginning to get in trouble for that w/lawsuits) disrupt the functioning of normal free market dynamics.
 
Got to see the other side of it a bit...recently purchased a vacant lot to do a build and after one deal that we pulled out of at the 11th hour and scrambling for deal #2 my relator busted her arse for a not very heft commission...as did the selling agent...made the comment "thanks for all the work even though the commission is a fraction of an actual house sale"...she said "yeah, thanks for acknowledging that but hopefully it all works out in the end of the year!"

So yeah, there are plenty of cases were a seller can FSBO and move the property in a few days but a GOOD agent SHOULD be able to recover their commissions in getting the best deal negotiated for the seller...but problem is there are a lot of NOT good agents out there!

But I also had to be aware that even my broker's objective was to close a deal which may or may not have been in MY best financial interest and even though I was the buyer I was also being sold.

Does not matter if seller or buyer pays buying agent...it is all gonna get negotiated into the same outcome financially.
 
ArrowFlyer86 said:
… Not bad considering the average agent is a part-timer….
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You know the deal, income is only part of the equation. Besides, the real money is made with the broker’s license; all those part-timers aren’t doing enough business to justify the overhead of an agency…
 
Good article in WSJ on this today.

There are at least some major executives in the industry that can read the tea leaves and see which direction this is going. Others who clearly think NAR is negligent in failing to grasp the severity of all these lawsuits.

Main beneficiary of all this is buyers.
 
A welcome announcement today on the NAR settlement.
More work to do -- but a good start. And with effects taking place in July it should start having a tangible impact quickly.

If I'm a buyer in the market right now I'm using this to rework my deal with the agent.
Flat rates or hourly charges where I select an a la carte menu of services. No need for them to collect a hefty % of the home value.

EDIT: I mention flat rates and hourly charges because that's what a few of the articles I read had suggested the market may likely shift to on the buyer side.
 
Real estate agents even fill out the canned forms wrong, or they don’t know how to best represent your interests. For example as a seller, who holds the deposit and when, same thing for the buyer.

People are not experienced in real estate so agents and brokerages can get away with anything. On top of 6%, pay a document fee of $295-$995, it’s ridiculous. I negotiate commissions all the time and I tell them there is no transaction fee. If your agent cannot negotiate with you, then how would they negotiate when representing you? The answer is poorly.

A normal deal might be 6%, but in larger cities this is definitely 4-5%. You can find agents to get half the commission or more rebated to you as a buyer, and as a seller it doesn’t involve much work for the sellers agent so they don’t might taking little.

You as a customer pay what you want to. Some pay more and some pay less. Good for all.
 
The last several real estate deals I have done, the agents couldn't fill in the blanks on a canned, state approved real-estate form. I had to correct it for them. Simple things like the wrong price, or the wrong legal address were well over their head. So what am i getting for my money?????????????
 
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