Jury Finds Realtors Conspired to Keep Commissions High (1 Viewer)

[Zegras11]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

 

[Runkle]

Our house goes on the market next Wednesday. My agent put us on a Pre-MLS blast for other agents to see a coming soon listing. We have two visits already scheduled for next week. Two more people stopped at our garage sale last weekend to tell us they are going to visit the house.

I'll happily pay the commission because I don't wanna **** with this. I don't want to do all the legwork and all the photos and all the professional advice. I don't wanna sift through any offers that come and I'll take the advice of the professional I hired.

I KNOW I could probably sell this myself. I could negotiate a lower rate. But I wouldn't be getting this agent we hired. I would be getting someone less thorough and professional. To me it's the same reason pay for any professional to come to my house to fix things. Or whatever.

No one's saying they don't deserve to be paid something. What people are objecting to is being charged $30,000+ for that service. That does seem a bit excessive for the amount of legwork we're talking about.

 

[Zegras11]

The average buyer and seller know very little about real estate. Almost every first timer knows NOTHING. And they are going to get ****ed by this ruling not being represented properly

 

[Zegras11]

Buyers are going to get so ****ed by this decision. They won't be represented properly. Unless lenders allow the commission to be financed, the vast majority will not have the cash to pay commission.

And then they will hire some idiot that will do it for a low fee. I have yet to see a low fee service provide value to a client. They all suck and many of those models collapsed badly recently.

 

[ghostguy123]

Buyers are going to get so ****ed by this decision. They won't be represented properly. Unless lenders allow the commission to be financed, the vast majority will not have the cash to pay commission.

And then they will hire some idiot that will do it for a low fee. I have yet to see a low fee service provide value to a client. They all suck and many of those models collapsed badly recently.

I missed something and don't wanna read through it all.
What decision was made?

 

[Zegras11]

Average commission per side has been under 3% for a long time nationwide.

 

[Terminalxylem]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

Purchased my home without a realtor, and learned a lot. Negotiated commission for seller down to 4%, as there still was a sellers agent involved.

But to be fair, my gf at the time was a lawyer.

 

[fruity pebbles]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

I wouldn’t trust a realtor with any complex legal issues.

 

[Zegras11]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

Purchased my home without a realtor, and learned a lot. Negotiated commission for seller down to 4%, as there still was a sellers agent involved.

But to be fair, my gf at the time was a lawyer.

Lawyer involved is fine for sure.

ANyone that has some real estate knowledge, go for it. The vast majority don't have that.

 

[ghostguy123]

As a side note, I don't think buyers should be represented by a real estate agent. I'd much rather have someone who actually has knowledge of the condition of the house (bones, roof, systems, drainage......).
Those crummy home inspectors are a sham though. I've had experience with a couple that proved to be completely clueless and was just a money grab for them.
Perhaps inspected that are employees directly by lenders to protect their investment by making sure clients aren't buying money pits

 

[Zegras11]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

I wouldn’t trust a realtor with any complex legal issues.

And that's why we all go to our broker for advice when needed. There is always someone with a good answer within 30 minutes.

The answer to this issue is to educate buyers on a national level at a much higher degree.

 

[Zegras11]

As a side note, I don't think buyers should be represented by a real estate agent. I'd much rather have someone who actually has knowledge of the condition of the house (bones, roof, systems, drainage......).
Those crummy home inspectors are a sham though. I've had experience with a couple that proved to be completely clueless and was just a money grab for them.
Perhaps inspected that are employees directly by lenders to protect their investment by making sure clients aren't buying money pits

this reminds me when appraisers were hired directly by lenders. That was a part of the 2008 crash.

Almost impossible for inspectors to find everything. Like anything, do homework before choosing one.

 

[The Z Machine]

The average buyer and seller know very little about real estate. Almost every first timer knows NOTHING. And they are going to get ****ed by this ruling not being represented properly

Why don't they hire a buyers agent that works for them, and gets paid for their time and effort? The first time home buyer is unlikely to get screwed by the process but will have to bring more cash to the table so they can pay their agent.

 

[thecatch]

Our house goes on the market next Wednesday. My agent put us on a Pre-MLS blast for other agents to see a coming soon listing. We have two visits already scheduled for next week. Two more people stopped at our garage sale last weekend to tell us they are going to visit the house.

I'll happily pay the commission because I don't wanna **** with this. I don't want to do all the legwork and all the photos and all the professional advice. I don't wanna sift through any offers that come and I'll take the advice of the professional I hired.

I KNOW I could probably sell this myself. I could negotiate a lower rate. But I wouldn't be getting this agent we hired. I would be getting someone less thorough and professional. To me it's the same reason pay for any professional to come to my house to fix things. Or whatever.

If you have a great agent and you want to pay for it, awesome. But now I’ll get to avoid paying my buyer’s agent tens of thousands to do nothing, which is also awesome.

 

[DevilDog919]

My wife is a realtor. I wouldn’t say we are living the life of luxury that some seem to think realtors are living.

Buyers agents can show 10-20 houses sometimes and not get a dime, sometimes driving up to 50 miles. Then the buyer stops looking, finds a for sale by owner, or is just uneducated on how the process works and clicks “contact me” on realtor.com to be contacted by another realtor for the sale. That is why, in my opinion, buyers agents deserve what they eventually get in a sale.
So when does this stop? Can we get rid of car salesmen? What about those annoying guys in every electronics department? Medical sales? Heck, just all salesman in general.

Yes, the housing boom lately has been great for realtors. Right now though, it’s currently much slower and not so great. It eventually evens out.

 

[The Z Machine]

Can we get rid of car salesmen? What about those annoying guys in every electronics department? Medical sales? Heck, just all salesman in general.

OK. I'm game for that.

 

[FreeBaGeL]

My wife is a realtor. I wouldn’t say we are living the life of luxury that some seem to think realtors are living.

Buyers agents can show 10-20 houses sometimes and not get a dime, sometimes driving up to 50 miles. Then the buyer stops looking, finds a for sale by owner, or is just uneducated on how the process works and clicks “contact me” on realtor.com to be contacted by another realtor for the sale. That is why, in my opinion, buyers agents deserve what they eventually get in a sale.
So when does this stop? Can we get rid of car salesmen? What about those annoying guys in every electronics department? Medical sales? Heck, just all salesman in general.

Yes, the housing boom lately has been great for realtors. Right now though, it’s currently much slower and not so great. It eventually evens out.

And in the new model she would get paid for doing all of that even if the buyer doesn't buy.

Which is part of the problem with the current system. Because of exactly the reasons you've listed, agents are incentivized to convince the buyer to close a deal even if it is not a good deal for the buyer. And in that sense, the buyer becomes the mark of their own agent. The agent is a sales person, trying to make a sale on the buyer, whom they're supposed to be representing as a fiduciary.

When the system is designed such that a buyer's best interests and a buyer's agent's best interest are often at odds with each other, that's a terrible system. Because while some realtors may be great people that truly act in their buyer's best interest as their supposed to, there are far more that realize if they don't convince the buyer to buy something then they don't get paid.

And for the love of god yes, can we please get rid of car salesmen? I can't remember the last time I went shopping for a car and knew less about the car I wanted to buy than the salesman did.

 

[DevilDog919]

Can we get rid of car salesmen? What about those annoying guys in every electronics department? Medical sales? Heck, just all salesman in general.

OK. I'm game for that.

That would be a huge hit on unemployment. Brokers as well. Wasting money paying them, why do they deserve to get paid?

The biggest issue with this whole thing was selling agents being able to determine what to give a buyers agent. Yes, some shady realtors won’t even mention a house to someone because the selling agent set the commission at just $1000 for them. And I really don’t think this is going to make anything cheaper, at least right now in this sellers market. You just screwed lots of peoples out of a job, that’s about all that will be accomplished.

 

[fruity pebbles]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

I wouldn’t trust a realtor with any complex legal issues.

And that's why we all go to our broker for advice when needed. There is always someone with a good answer within 30 minutes.

The answer to this issue is to educate buyers on a national level at a much higher degree.

How does this ruling affect your business at an agent?

 

[culdeus]

Judging by comments in here I can get aaq degree with 40 hrs of night school and manage complex real estate litigation. Lol.

I get it. We gotta eat. But don't come in here acting like you are getting OJ off because some guest bath popped a leak after closing.

 

[Capella]

I just love people not in the industry and their idealistic views of what they think actually goes on. Sorry, but you guys at best comment on only about 25% of all the things that can happen in a transaction.

LOL at looking up complex, legal issues that come up all the time on google. That's ****ing hilarious

Sorry man I am simply not handing over thousands of dollars of my hard earned equity to a real estate agent. I’m sure you are good at your job and I mean no disrespect but that isn’t even a possibility. Maybe some people who are dumb or lazy or just don’t want to deal with it (which is fine!) can pay the crazy fees.

And LOL at a real estate agent handling complex legal issues.

 

[Capella]

So when does this stop? Can we get rid of car salesmen?

Yes. Tell me the price of the car and have somebody show it to me. I would be thrilled to never deal with a car salesman again.

 

[the moops]

Buy stock in real estate attorneys

 

[the moops]

@Zegras11 there are definitely complicated issues for some real estate transactions that are not something the average person, even with a Google search, could navigate.

However, many, many transactions are smooth as can be. There is some haggling over price and what gets fixed by buyer after inspection, but otherwise it is pretty damn straightforward.

 

[IvanKaramazov]

Looks like an opportunity for title companies to offer more direct services. Short term I see this as slowing down the process. Buyers are thinking houses should be cheaper without commissions and sellers want to keep the money they were paying. Not sure who will be there to move the process along.

Houses should be cheaper, why wouldn't they be?

Sellers don’t think their homes are worth any less today than yesterday. They are looking at this as a 6% raise.

Doesn't really matter what the sellers think.

I could be wrong about the specifics of the RE industry, but it seems to me that the supply of housing is a lot less elastic than demand, at least in the short run. If that's true, then realtors' fees were always being paid (in practice) by sellers. Having those fees go away would therefore be a small windfall for sellers, not buyers.

Edit: And like moops said, I kind of doubt that this has a huge effect on the housing market. It will certainly have a large effect on the job market for realtors.

Interesting points, which make sense.

But as a general rule, how has removing obsolete middle people/arbitrary fees impacted price in other industries?

It would depend on the industry.

What would be really amazing is if something like this happened to auto dealerships. I'm pretty sure those still exist almost entirely because of lobbying, but somebody who works in the industry might be able to comment more knowledgeably.

 

[BeTheMatch]

Looks like an opportunity for title companies to offer more direct services. Short term I see this as slowing down the process. Buyers are thinking houses should be cheaper without commissions and sellers want to keep the money they were paying. Not sure who will be there to move the process along.

Houses should be cheaper, why wouldn't they be?

Sellers don’t think their homes are worth any less today than yesterday. They are looking at this as a 6% raise.

Doesn't really matter what the sellers think.

I could be wrong about the specifics of the RE industry, but it seems to me that the supply of housing is a lot less elastic than demand, at least in the short run. If that's true, then realtors' fees were always being paid (in practice) by sellers. Having those fees go away would therefore be a small windfall for sellers, not buyers.

Edit: And like moops said, I kind of doubt that this has a huge effect on the housing market. It will certainly have a large effect on the job market for realtors.

Interesting points, which make sense.

But as a general rule, how has removing obsolete middle people/arbitrary fees impacted price in other industries?

It would depend on the industry.

What would be really amazing is if something like this happened to auto dealerships. I'm pretty sure those still exist almost entirely because of lobbying, but somebody who works in the industry might be able to comment more knowledgeably.

There are no-haggle dealerships all over Minnesota. I'll never shop anywhere else. Here's the price. Take it or leave it.

 

[McBokonon]

Can we get rid of car salesmen?

This is Tesla’s entire model.

 

[IvanKaramazov]

Looks like an opportunity for title companies to offer more direct services. Short term I see this as slowing down the process. Buyers are thinking houses should be cheaper without commissions and sellers want to keep the money they were paying. Not sure who will be there to move the process along.

Houses should be cheaper, why wouldn't they be?

Sellers don’t think their homes are worth any less today than yesterday. They are looking at this as a 6% raise.

Doesn't really matter what the sellers think.

I could be wrong about the specifics of the RE industry, but it seems to me that the supply of housing is a lot less elastic than demand, at least in the short run. If that's true, then realtors' fees were always being paid (in practice) by sellers. Having those fees go away would therefore be a small windfall for sellers, not buyers.

Edit: And like moops said, I kind of doubt that this has a huge effect on the housing market. It will certainly have a large effect on the job market for realtors.

Interesting points, which make sense.

But as a general rule, how has removing obsolete middle people/arbitrary fees impacted price in other industries?

It would depend on the industry.

What would be really amazing is if something like this happened to auto dealerships. I'm pretty sure those still exist almost entirely because of lobbying, but somebody who works in the industry might be able to comment more knowledgeably.

There are no-haggle dealerships all over Minnesota. I'll never shop anywhere else. Here's the price. Take it or leave it.

Even still, it's a double-markup -- the manufacturer marks up the car for the dealer, and dealer marks it up for you. This is a place where getting rid of a middleman would help both carmakers (debatably) and consumers.

Haggling definitely sucks though. I purchased a new car recently, and the dealer was pretty scummy. Can't imagine doing that for a living. (Sorry if we have any car salesmen here.)

 

[culdeus]

Can we get rid of car salesmen?

This is Tesla’s entire model.

I mean not the entire model. But it is refreshing. And states have fought it as anti competitive because car salesmen might have to handle a complex legal issue.

 

[Stoneworker]

The answer to this issue is to educate buyers on a national level at a much higher degree.

The answer to this issue is for buyer's agents to educate buyers at the transaction level. That's part of what they are being paid for.

 

[the moops]

Haggling definitely sucks though. I purchased a new car recently, and the dealer was pretty scummy. Can't imagine doing that for a living. (Sorry if we have any car salesmen here.)

Yea must be a tough job to feel good about what you accomplished in a day or week

 

[Sand]

What am I missing?

You're missing the fact that an educated buyer can tell the seller to pound sand...

I'm not in RE, GB.

 

[krista4]

Unlike most, it seems, I'm not sure what to make of this and what will happen. Here's what I do know, though, having bought and sold a house or two:

1. Like any profession, there are realtors who add value and many who don't. Unfortunately for their reputations, the killer housing market in the last several years has flooded the profession with inept people, so weeding through to find the good ones is harder than ever. I think Zegras gave some good advise here or in another thread (and I'm too lazy to search) about how to find a good one.

2. Holy crap, if a realtor is giving legal advice, you should run! That is not only not their job, but downright scary to me. In the last purchase I did, my realtor advised me at one point to get a lawyer (forgetting I, um, am one), and I appreciated that he didn't overstep his qualifications and knowledge.

Anyway, I'm going to be both a buyer and a seller again soon, because of course I am, so I'll be interested to see how this shakes out. I almost feel like buying right now and doing the sale later might be in my interest, since as of now buyers still pay nothing directly, and I don't see the sellers lowering their prices to accommodate the 3% rather than 6% right away.

 

[Capella]

@Zegras11 there are definitely complicated issues for some real estate transactions that are not something the average person, even with a Google search, could navigate.

However, many, many transactions are smooth as can be. There is some haggling over price and what gets fixed by buyer after inspection, but otherwise it is pretty damn straightforward.

Yes and if you find yourself stepping into a complex situation, guess what, hire a lawyer. Chances are you still won’t be paying them THIRTY FREAKING GRAND

 

[Ilov80s]

Can someone give me the very simple 1 liner on what happened here. TIA

 

[ChiefD]

Can someone give me the very simple 1 liner on what happened here. TIA

Normal people are too dumb to understand they can negotiate real estate work.

 

[DA RAIDERS]

Unlike most, it seems, I'm not sure what to make of this and what will happen. Here's what I do know, though, having bought and sold a house or two:

1. Like any profession, there are realtors who add value and many who don't. Unfortunately for their reputations, the killer housing market in the last several years has flooded the profession with inept people, so weeding through to find the good ones is harder than ever. I think Zegras gave some good advise here or in another thread (and I'm too lazy to search) about how to find a good one.

2. Holy crap, if a realtor is giving legal advice, you should run! That is not only not their job, but downright scary to me. In the last purchase I did, my realtor advised me at one point to get a lawyer (forgetting I, um, am one), and I appreciated that he didn't overstep his qualifications and knowledge.

Anyway, I'm going to be both a buyer and a seller again soon, because of course I am, so I'll be interested to see how this shakes out. I almost feel like buying right now and doing the sale later might be in my interest, since as of now buyers still pay nothing directly, and I don't see the sellers lowering their prices to accommodate the 3% rather than 6% right away.

I don’t see prices coming down, in desirable areas, because the seller no longer pays the buyers agent. It certainly won’t affect prices where I am.

 

[fruity pebbles]

Thinking there's going to be a lot of real estate agents going out of business/ changing careers. Used to be two agents for nearly every transaction. Now there's going to be one.

 

[Angry Beavers]

What I never understood is how the buyer's agent makes more money when you spend more. It ought to be, the more you saved me, the bigger your commission. The interests of the buyer and the buyer's agent clearly are not aligned when negotiating purchase price.

 

[SoBeDad]

What I never understood is how the buyer's agent makes more money when you spend more. It ought to be, the more you saved me, the bigger your commission. The interests of the buyer and the buyer's agent clearly are not aligned when negotiating purchase price.

The difference between making a sale and not making a sale is the biggest conflict for a buyer's agent. To make a sale, the agent needs to convince the buyer that the price is good.

 

[Stoneworker]

A case study on brokerages offering lower buyers agent fees from today's WSJ, featuring one seller who saved $57,500.

DeLeon Realty in Palo Alto, Calif., began advertising in January that sellers could list their homes for a total commission of 3.5% or less, which would include 3% for the listing agent. That compares with the 5% to 6% typical commission nationwide, which is split between the seller’s agent and the buyer’s agent.

Many of its sellers were able to save money by offering lower commissions to buyers’ agents than what was typical in Silicon Valley, said Chief Executive Michael Repka.

Of 20 sellers who used the firm in January and February, nine chose to offer the buyer’s agent $10,000. Another chose $20,000. The other 10 offered compensation ranging from 0.5% to 2.5% of the sale price.

Despite the discounted commission rates, Repka said, demand for the listings was strong. One Palo Alto home that listed at just under $2 million and offered a $10,000 buyer’s commission got 17 offers, he said.

The home sold for $2.7 million. That means if the seller paid a more typical 2.5% commission to the buyer’s agent, the fee would have come to about $67,500.

“If we had buyers’ agents being paid by buyers, I think buyers would be well-served, because they would put more thought into which agent they want to work with,” Repka said.

 

[Nugget]

A case study on brokerages offering lower buyers agent fees from today's WSJ, featuring one seller who saved $57,500.

DeLeon Realty in Palo Alto, Calif., began advertising in January that sellers could list their homes for a total commission of 3.5% or less, which would include 3% for the listing agent. That compares with the 5% to 6% typical commission nationwide, which is split between the seller’s agent and the buyer’s agent.

Many of its sellers were able to save money by offering lower commissions to buyers’ agents than what was typical in Silicon Valley, said Chief Executive Michael Repka.

Of 20 sellers who used the firm in January and February, nine chose to offer the buyer’s agent $10,000. Another chose $20,000. The other 10 offered compensation ranging from 0.5% to 2.5% of the sale price.

Despite the discounted commission rates, Repka said, demand for the listings was strong. One Palo Alto home that listed at just under $2 million and offered a $10,000 buyer’s commission got 17 offers, he said.

The home sold for $2.7 million. That means if the seller paid a more typical 2.5% commission to the buyer’s agent, the fee would have come to about $67,500.

“If we had buyers’ agents being paid by buyers, I think buyers would be well-served, because they would put more thought into which agent they want to work with,” Repka said.

Would this not be illegal if the new proposal stands up? I was under the impression that a listing can’t offer compensation to a buyers agent.

 

[Jobber]

Our house goes on the market next Wednesday. My agent put us on a Pre-MLS blast for other agents to see a coming soon listing. We have two visits already scheduled for next week. Two more people stopped at our garage sale last weekend to tell us they are going to visit the house.

I'll happily pay the commission because I don't wanna **** with this. I don't want to do all the legwork and all the photos and all the professional advice. I don't wanna sift through any offers that come and I'll take the advice of the professional I hired.

I KNOW I could probably sell this myself. I could negotiate a lower rate. But I wouldn't be getting this agent we hired. I would be getting someone less thorough and professional. To me it's the same reason pay for any professional to come to my house to fix things. Or whatever.

This is a great post.

I specialize in the lower end first time buyers. After my divorce is August, had to sell our 7 bedroom, 4 bath 4000 sq foot house.

I hired the #1 agent for this type of sale at 5%. Best money I ever spent. I was too attached to the house. No way could I make an objective decision. Her marketing was off the charts. Tons of many little extra things also.

It turned out to become a very complicated, three house domino sale. Being able to bounce ideas off her to fully protect me in that situation was invaluable. Instead of getting $10K earnest money non refundable, we negotiated $10k EM non refundable EVERY month on her advice until the buyers home sold. There was no way they were ever going to back out after I had $40k in my account. They could have easily backed out months later over $10k if they found a better deal, and I would have been ****ed badly with no home sale or new home purchase.

But it could have been 2% for the exact same service from the exact same realtor.

 

[Stoneworker]

A case study on brokerages offering lower buyers agent fees from today's WSJ, featuring one seller who saved $57,500.

DeLeon Realty in Palo Alto, Calif., began advertising in January that sellers could list their homes for a total commission of 3.5% or less, which would include 3% for the listing agent. That compares with the 5% to 6% typical commission nationwide, which is split between the seller’s agent and the buyer’s agent.

Many of its sellers were able to save money by offering lower commissions to buyers’ agents than what was typical in Silicon Valley, said Chief Executive Michael Repka.

Of 20 sellers who used the firm in January and February, nine chose to offer the buyer’s agent $10,000. Another chose $20,000. The other 10 offered compensation ranging from 0.5% to 2.5% of the sale price.

Despite the discounted commission rates, Repka said, demand for the listings was strong. One Palo Alto home that listed at just under $2 million and offered a $10,000 buyer’s commission got 17 offers, he said.

The home sold for $2.7 million. That means if the seller paid a more typical 2.5% commission to the buyer’s agent, the fee would have come to about $67,500.

“If we had buyers’ agents being paid by buyers, I think buyers would be well-served, because they would put more thought into which agent they want to work with,” Repka said.

Would this not be illegal if the new proposal stands up? I was under the impression that a listing can’t offer compensation to a buyers agent.

My understanding is the requirement to include an upfront offer to buyer's agents (as a condition to be on MLS) will go away. But sellers will still have the option. I could be wrong but that is my interpretation.

NAR agreed to abandon long-standing rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. - WSJ

 

[Nugget]

.

My understanding is the requirement to include an upfront offer to buyer's agents (as a condition to be on MLS) will go away. But sellers will still have the option. I could be wrong but that is my interpretation.

NAR agreed to abandon long-standing rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. - WSJ

Thanks. It seems like having the option to list will still allow for “steering”, which I thought was the main basis for the lawsuit. If I’m selling, I would rather pay my selling agent a minimal amount and then offer a buyers agent 3.5% to encourage them to bring all their clients to my house and press them to pay top dollar.

Long term I see smaller commissions, but seems like there could be market friction short term.

 

[FreeBaGeL]

.

My understanding is the requirement to include an upfront offer to buyer's agents (as a condition to be on MLS) will go away. But sellers will still have the option. I could be wrong but that is my interpretation.

NAR agreed to abandon long-standing rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. - WSJ

Thanks. It seems like having the option to list will still allow for “steering”, which I thought was the main basis for the lawsuit. If I’m selling, I would rather pay my selling agent a minimal amount and then offer a buyers agent 3.5% to encourage them to bring all their clients to my house and press them to pay top dollar.

Long term I see smaller commissions, but seems like there could be market friction short term.

But this would once again put the buying agent's interest at odds with the person they're representing (they are then motivated to push that property on their buyer whether it's actually in the buyer's best interest or not), which would violate the spirit of the change.

 

[culdeus]

Isn't the spirit of this you can find a house online and not have to pay 3% for someone to send a few emails(And conduct complex litigation to the supreme court)? The seller doesn't automatically pocket the full commission in that case?

 

[BassNBrew]

Isn't the spirit of this you can find a house online and not have to pay 3% for someone to send a few emails(And conduct complex litigation to the supreme court)? The seller doesn't automatically pocket the full commission in that case?

Problem is our Real Estate Commission expects a level of expertise from the buyer's agent such that the buyer doesn't get stuck. You're expected to let the buyer know about local zoning changes and construction issues. You're expected to tell them there's a airport near by You're expected to find somewhat obvious material facts prior to the offer to purchase the the buyer parting with earnest money. You're expected to research the CCRs for anything that might be at odds with what the buyer wants to do with the property. You're expected to get them to do a perc test on vacant land. You're expected document all of this just in case there's an issue down the road. It's a little bit more complicated than finding a house online.

 

[BassNBrew]

Our local association stated the compensation field is going away on July 1. I'm so curious what happens in May to June as agents have to thread that needle. I can't imagine any buyer's agent working with a client in May/June for a house that closes after June 30 and I could see listing agents pushing for post June 30 closings to keep the full pre-July 1 commission.

 

[Runkle]

I hope the Freakanomics podcast does an episode on this. IIRC, there was a chapter in the first book that discussed how real estate agents are not incentivized to help their clients... A buyer's agent, for example, who knows he can save his client $25,000 only costs himself $750 by helping, so likely won't. Meanwhile, a seller's agent that knows he can get an improved offer for an extra $25,000 for his client is only making $750 more but is likely costing himself another weekend of work, another open house, etc. when they'd rather get the deal done today and get another client on the hook for next weekend and make $30,000 off them on a different house. Neither end has incentive to do anything but get the fastest deal done, and while marginally improving a deal would be huge for the client, doesn't do jack for the agent.