Selling a home and the related commisions

[Cullenator]

https://www.nytimes.com/2023/10/31/realestate/nar-antitrust-lawsuit.html

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A federal jury ruled on Tuesday that the powerful National Association of Realtors and several large brokerages had conspired to artificially inflate the commissions paid to real estate agents, a decision that could radically alter the home-buying process in the United States.

The realtors’ group and brokerages were ordered to pay damages of nearly $1.8 billion. The verdict allows the court to issue treble damages, which means they could swell to more than $5 billion.

 

Quote

But under the verdict, the sellers would no longer be required to pay their buyers’ agents, and agents would be free to set their own commission rates, which could be slashed in half or less. For example, a home seller with a $1 million home can now pay as much as $60,000 in agent commissions — $30,000 to their agent and $30,000 to the buyers’ agent.

 

 

Any thoughts from our resident agents?

 

Sounds good for sellers - why am I paying a buyers agent that's working against my best interests?

[Stuart Smith]

8 hours ago, Cullenator said:

https://www.nytimes.com/2023/10/31/realestate/nar-antitrust-lawsuit.html

 

 

 

Any thoughts from our resident agents?

 

Sounds good for sellers - why am I paying a buyers agent that's working against my best interests?

In my humble opinion I suspect that is one reason national firms such as “Open Door” and others have been successful at penetrating the home buying market. People see another way than paying high commissions to their local real estate sales people when they have other options. 

[Stuart Smith]

On 4/18/2023 at 8:38 PM, LinvilleGorge said:

Try to sell your house without one. You'll gonna be fielding calls and emails all day everyday from real estate agents just wanting the listing.

That can be true, but in some markets demand is so high that your circle of friends can help find you a buyer without ever listing it. 

[toldozer]

On 11/3/2023 at 11:50 AM, Cullenator said:

https://www.nytimes.com/2023/10/31/realestate/nar-antitrust-lawsuit.html

 

 

 

Any thoughts from our resident agents?

 

Sounds good for sellers - why am I paying a buyers agent that's working against my best interests?

Yeah the thing is the sellers agent sets the commission and it's negotiable.  I think a lot of sellers don't realize that.  If you push back and it's a good listing most agents will bring commission down. Ive done as high as 7% and as low as 3.5%. Then they usually split that with the buyers agent. The firms are really the ones making the money. They get between 10-65% of the actual agents commission.  If the firm didnt take so much the average agent could do the job for less.  What this is going to lead to is more people not having buyer representation and getting screwed. As a seller you don't have to pay 6% and there is plenty of information out there to inform you of that but most people are lazy. As a buyer if you sign a buyers rep agreement now it's going to be for 3% and agents are going to make sure you make up the difference for whatever the seller isn't paying. Just makes it even more of a sellers market and more difficult for buyers in my professional opinion.  I never wanted to have my buyer pay me a dime when I was working residential.  Now I focus on working with investors buying wholesale and my commission comes from the buyer anyway so this doesn't affect people with money (the ones buying up everything and making us a nation of renters)

Edited November 4, 2023 by toldozer

[LinvilleGorge]

45 minutes ago, toldozer said:

Yeah the thing is the sellers agent sets the commission and it's negotiable.  I think a lot of sellers don't realize that.  If you push back and it's a good listing most agents will bring commission down. Ive done as high as 7% and as low as 3.5%. Then they usually split that with the buyers agent. The firms are really the ones making the money. They get between 10-65% of the actual agents commission.  If the firm didnt take so much the average agent could do the job for less.  What this is going to lead to is more people not having buyer representation and getting screwed. As a seller you don't have to pay 6% and there is plenty of information out there to inform you of that but most people are lazy. As a buyer if you sign a buyers rep agreement now it's going to be for 3% and agents are going to make sure you make up the difference for whatever the seller isn't paying. Just makes it even more of a sellers market and more difficult for buyers in my professional opinion.  I never wanted to have my buyer pay me a dime when I was working residential.  Now I focus on working with investors buying wholesale and my commission comes from the buyer anyway so this doesn't affect people with money (the ones buying up everything and making us a nation of renters)

I don't think anything changes other than the buyer's agent sales pitch. "You don't pay me anything, the seller pays my commission!"

Uh... when you're the only one bringing money to the table, YOU'RE the one actually paying. 

[toldozer]

1 hour ago, LinvilleGorge said:

I don't think anything changes other than the buyer's agent sales pitch. "You don't pay me anything, the seller pays my commission!"

Uh... when you're the only one bringing money to the table, YOU'RE the one actually paying. 

That's already changed. You weren't allowed to use that phrasing anymore as of last year or maybe end of 2021.

 

But saying there is a chance you'll owe me commission is going to cause a lot of buyers to go it alone. Again this is positive for sellers and for sellers agent running a 6% commission that may be more likely to get an unrepped buyer.  Does nothing of value for buyers imo

Edited November 4, 2023 by toldozer

[Cullenator]

https://www.cnn.com/2024/03/15/economy/nar-realtor-commissions-settlement/index.html

Quote

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.

 

Quote

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.

 

As someone who is about to sell a home this is music to our ears.  The wife and I have done this enough to come to accept that as the seller we're paying someone working directly against our best interest but I've never liked it.

 

 

We mused about how great it would be to simply pay our agent (on either side of the transaction) an hourly rate like we do our lawyer and accountant.

 

I'd think that would be better for the agent as well as the clients who are hard to please and burn much of their time will actually pay for it where an easy client isn't giving up 10s of thousands of dollars for a single showing that leads to a simple sale.

 

[LinvilleGorge]

Hourly rate makes no sense for a salesperson. You're not paying them for their time and effort, you're paying them for the end result. If they do a great job with the listing, pictures, targeting buyers, etc. and it sells in a day that's a fantastic result for everyone involved... except for the salesperson being paid by the hour. Part of being a good salesperson is efficiency but being paid by the hour creates direct disincentives for being efficient.

Honestly, hourly pay is just an idiotic and inefficient system in general for most jobs IMO but that's an entirely different conversation.

[Cullenator]

I pay many professionals for an outcome, both personally and professionally.

 

I also pay them on a T&M basis.

[toldozer]

On 4/2/2024 at 8:25 AM, Cullenator said:

https://www.cnn.com/2024/03/15/economy/nar-realtor-commissions-settlement/index.html

 

 

As someone who is about to sell a home this is music to our ears.  The wife and I have done this enough to come to accept that as the seller we're paying someone working directly against our best interest but I've never liked it.

 

 

We mused about how great it would be to simply pay our agent (on either side of the transaction) an hourly rate like we do our lawyer and accountant.

 

I'd think that would be better for the agent as well as the clients who are hard to please and burn much of their time will actually pay for it where an easy client isn't giving up 10s of thousands of dollars for a single showing that leads to a simple sale.

 

A first time homebuyer in a tough market can't afford to pay an agent by the hour for 3 months worth of work and 100+ showings 15 offers written up on lower end inventory.  Anyone that doesn't already own a home is being put at an even bigger disadvantage in my opinion.  Any non investor buyers I have now will be paying a retainer and will get it credited back if/when we secure them a home provided the home seller is willing to provide appropriate compensation. 

[Cullenator]

52 minutes ago, toldozer said:

A first time homebuyer in a tough market can't afford to pay an agent by the hour for 3 months worth of work and 100+ showings 15 offers written up on lower end inventory.  Anyone that doesn't already own a home is being put at an even bigger disadvantage in my opinion.  Any non investor buyers I have now will be paying a retainer and will get it credited back if/when we secure them a home provided the home seller is willing to provide appropriate compensation. 

What market are you working in that your looking at 3 months and 100+ showings and 10+ offers for a buyer?

 

We just bought with one "showings" (our agent did the walk through and sent us videos) wrote a single offer and closed in 30 days

Edited April 19 by Cullenator

[toldozer]

4 hours ago, Cullenator said:

What market are you working in that your looking at 3 months and 100+ showings and 10+ offers for a buyer?

 

We just bought with one "showings" (our agent did the walk through and sent us videos) wrote a single offer and closed in 30 days

In Charlotte in the lower price points it's still tough. 300 and under I'd say. Granted I haven't worked with a residential buyer other than 1 friend looking at expensive new builds in about a year so I could be out of touch but if rates Dip down again that would be a likely scenario