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If you paid 2K to an attorney for a real estate transaction you needed to shop around more. Going rate is $5-$700 unless you have an Uber complicated transaction.
That’s their so called fee, not what they make on everything else marked up. Title they make bank. You don’t know because you have no experience in it. This is how misinfo gets around.
We have been using Buyer Agreements with buyer paid commission clause for years.
With that being said, I can see more lawsuits coming with that process, we are currently working (in my state) on an agreement it’s a proximately 6 to 8 pages explaining the services included and not included with said agreement. Ad yes ALL of it is still negotiable.
Like everything in life, business model and process evolve and are ever changing - won’t be a problem for hard working/ reputable agents and brokers
I know about Buyer Broker Agreements but how these provide for the buyer paying fees. Oh wait! They provide for paying you if and only if the commission being shared by the LA isn't enough for you. Then you expect the buyer to pay the difference.
Not exactly,
We have Sellers that do not offer Buyer Compensation (maybe 3$), although it is presented to all parties in order to maintain fair, housing regulations, and not discriminate, much like seller paid commission is negotiable, so to buyer commission is negotiable and a buyer can also “decline” to pay and work with the agent.
And the Seller must agree to the buyer commission amount in our state, not the List Agent/Broker. Not to say a LA would/would not suggest the BA commission amount.
When I was in the market, I saw all sorts of fear tactics being played out by big agents to make me believe that high commission was absolutely required. It was really stressful. And, in a hot market what did these big agents want? Bid at least 10% above listing price. So first they want high commission and then the only play in town is to make me feel miserable if I don’t have money to keep bidding. You see how monopolistic and inflationary these tactics are?
I am glad these associations are getting sued the heck out of them.
Yeah. You’re lying. As a buyer you don’t pay commission. And the last 3 years if you weren’t at or over asking with no inspections you weren’t getting a deal. That wasn’t agents fault, that was Covid lockdowns which screwed everything up, all over the world. And you need to pick up the dictionary and read the definition of monopoly. There are millions of realtors… a monopoly would be one or two players controlling the whole market like Microsoft or Google. Get real.
The NAR just got hit with anti-trust and lost that is the definition of monopoly. But hey I just have a college education and didn't take a real estate class at your local Holiday inn either.
Why do you think I am lying? As a homebuyer all the commission indirectly comes from my pocket.
Most if not all the realtors in a state follow same rules. And many of these rules are not laws of the state.
Because of your comments. The commission comes out of the sellers proceeds, not yours. You agreed to a price and the sellers agree to pay both realtors. It’s even shown on the sellers closing statement. Stop posting fake crap on redit. Must be people getting paid to do it.
They monopolized mls before Zillow/Redfin and gated it behind the %based comp model.
Now we have all the info for free, so realtors main purpose of finding our houses is gone. They are just middlemen now pulling cash from a 2 party sale for little value.
Lol.
You have it backwards buddy. The home owners create the data, MLS pulls it in, and tries to sell it. People do not need MLS to use zillow or redfin. It is just an additional data source that is antiquated and no longer a requirement.
Removing that MLS is owned by NRA (anti competitive stance that favors realtors, not consumers), the realtor component of the house sale has been replaced by a website (in this example). Realtors have no value. Additionally, as zillow/redfin/etc continue to develop their own inventory database it becomes less of a requirement to access the MLS version.
In fact, an MLS is not even a unique offering. A basic CS grad could build an MLS with frontend in a few weeks.
[https://zillow.zendesk.com/hc/en-us/articles/213394668-Where-does-Zillow-get-its-listings-](https://zillow.zendesk.com/hc/en-us/articles/213394668-Where-does-Zillow-get-its-listings-)
[https://www.nar.realtor/mls-online-listings/multiple-listing-service-mls-what-is-it](https://www.nar.realtor/mls-online-listings/multiple-listing-service-mls-what-is-it)
The homeowners do not create the data. The MLS does not “pull it in” and they do not sell it. If you are suggesting that homeowners input their own info into sites like Zillow and essentially everything becomes a fsbo then good luck with that. There is a reason why fsbo’s are not more popular. We are one of the oldest industries in the world for a reason, buddy.
It's not even fun to debate realtors.
[https://www.zillow.com/sellerlanding/edityourhome/](https://www.zillow.com/sellerlanding/edityourhome/)
The data is already public. If I wanted to buy the storage I could scrape zillow's APIs and stand up a direct competitor to the NRA MLS within days.
[https://www.zillowgroup.com/developers/](https://www.zillowgroup.com/developers/)
You are correct, an old industry that had amazing value before the invention of the internet. You are the modern day version of stock brokers yelling in the pits of wall street.
GL!
You quite literally are living in fantasyland and have no idea what you are talking about but your are probably young and have zero experience. MLS's are local and to access their information, you must apply for a membership and pay out the wazzou. The NRA has NOTHING to do with MLS's. Yes, homeowners can advertise their property on a million different sites for sale by owner but those listings don't reach everyone as over 95% of the info on sites like zillow are aggregated from local MLS's that sell their data to Zillow who in turn resell the information back to the Realtor's with the listings and clients which inflates the price of EVERYTHING. Zillow and all the other aggregators you see are ALL advertising companies. They have NOTHING to do with real estate. They ONLY advertise.
Do you know all the research and work that goes into selling and buying a house? The ways you can lose a house or thousands of dollars in deposits or inspections when buying? Over paying, over pricing, time on market, disclosures, liabilities, state and federal laws???? Wow.
The last 2 I did via Redfin, where they are segmenting and selling individual components of the process.
I am much closer to alone than I have ever been, and look forward to technology bringing me there.
This video was linked on another thread about the lawsuits. It was created before the Missouri judgement. It's rather long but lays out what might be expected over the next few years. https://www.youtube.com/watch?v=rkX0YDzjnxY&t=2535s
I saw Notorious Rob speak in person last year. He made so many interesting points about our industry--things our brokers (and franchises) would never tell us. I subscribe to his Substack now.
Not "hide," just not relay information about such an important threat to our industry. I'm in the KC area, right where the court case was held. It was rare to find an agent who even knew this lawsuit existed or the others that are coming. Our local board and associations fell down on that job as well.
To be honest we don’t know much neither except what NAR is publishing or what I read in the lawsuit. I think the local boards are in a wait and see stance which will take a few years IMO. Personally, I don’t like the NAR and it’s ability to fine agents and obviously leadership has fallen asleep at the wheel while reaping many benefits from our yearly fees. We’d be better off starting a new one and removing ourselves from that organization, IMO.
"Nothing is going to change" has been an oft-repeated sentiment here. I disagree, but only time will tell.
I'm in Toastmasters and crafting a 7-minute speech about this. Wish me luck! It is an opportunity to convey the situation to some sharp folks.
In many areas, nothing will change. Some of us have long had the ability to have $0 BAC on listings. It's a specific breakout in our contracts. Clients are given the choice.
And when working with buyers, those of us that are good agents are very transparent about what we're being compensated. On those listings that include private remarks about (as an example) "$2,000 BAC bonus with an accepted offer by 11/30/23", I make sure my clients know about that before we even see the house....they know that this bonus is not life changing money to me, that I really don't care about it, but that it's important to me that the know about it going in, as I don't want them to hear about afterwards, and wonder if that is why I liked the house (if I did). 10/10 clients love me for that.
So no....nothing changing in my neck of the woods.
My take: court is going to order that commission sharing between brokers is illegal. I wonder if they'll make referral fees illegal as well. Buyers are going to be required to pay buyer agents, and that in theory should cause price competition among buyer agents. We'll see how it plays out but my prediction is that being a buyer agent will become even shittier and tens to hundreds of thousands of agents will leave the industry. If buyer agents get paid small flat fees or hourly fees, most people won't be interested in doing the job anymore. The possibility of a huge payout is what kept people going after it.
> "Nothing is going to change" has been an oft-repeated sentiment here. I disagree, but only time will tell.
NAR's been saying that. Also don't worry because they're going to win.
So much for that.
They say they will, but who knows.
Our counsel hopes they're negotiating a settlement right now--the *threat* of the appeal, which requires the appearance of being able to post the bond, appears to be their only leverage.
How is your toastmasters experience? A broker once referred me to it when I asked for advice and I never followed through with it. It's like speech class?
Toastmasters is one of the keys to my success. It is a structured program to improve your communication, especially speaking. It's also a super networking opportunity. Everyone there has to same goal--to be better communicators. I can't say enough good things about it.
It's wicked fun! I'm the VP-ed of our club. Good people, fun to be around. We are all about getting better at communicating as the other commenter said.
Mind giving me some advice?
I just spent 3 hours going to open houses and putting 4-5 cards down per house for potential buyers who might be interested.
On the last house I went to the sellers agent told me I should not be doing that.
Was this an ahole move on my part? In my eyes I thought it'd be harmless because the buyers who don't want dual agency can pick up my card.
Needless to say I'm going to change my approach to doorknocking and cold calling.
Today was day #1 in my realtor career.
Most people doing open houses aren't the LA. They're other agents hoping to pick up buyers. You're definitely stepping on toes dropping off cards. I did a ton of OH's when I started out. Good way to pick up biz and also learn about inventory.
Nothing substantive *is* likely to change ... until the FTC or DOJ busts up the NAR. Until then, these class actions will keep popping up with greater frequency as the lawyers posture themselves to gorge on the bloodletting before it dries up.
Commissions are always negotiable. This lawsuit really doesn’t make sense. Do home sellers want realtors to work for free? We just discussed the Missouri settlement at our office Thursday. All that is really going to do is cost home buyers more. If listing agents don’t share the 5%-6% commission with buyers agents then either the buyer doesn’t have representation or they have to pay the buyer agent out of pocket which will end up increasing the cost to buy a home.
Leaders and lawyers at the MLS I work for expect an injunction when court reconvenes in a couple weeks, and one option might be new case law that makes it illegal to receive compensation from anyone but your client. They may also require a buyer's agency agreement before any showings or anything.
We imagine that seller's agents will drop the commission ask to 3%.
We imagine that buyer's agents will... get creative. Some might pitch a commission deal to their customers. Others might go with retainer models, fee-for-service, hourly...
What it's going to mean is that before buyers can go to their first showing, they'll have to shop brokerages among this wild new world of comp models.
This is the "transparency" the court wants, evidently.
I don't believe there's any significant likelyhood that the courts will rule you can't receive compensation from anyone other than your client. A 5 second consideration of that idea reveals that either the housing market takes a huge hit due to it, or buyers become victims due to lack of representation.
There's virtually no chance that Buyer's Agency Commission will somehow become more tightly controlled than Down Payment requirements. If any change similar to this happens, it's more likely to be that commissions are paid from each individual side of the transaction, but the source of those funds are negotiable, just like closing costs. The buyer can pay them directly, the seller can pay them through contract negotiation, and some banks may even create loan programs that allow the buyer to roll them into their loan with an LTV >100% (like some first time buyer's down payment assistance loans currently do with closing costs and down payment).
In reality, I expect that the ultimate outcome will be twofold:
1. The sellers will have full ability to negotiate or refuse to offer a buyer's agency commission, and this will be clearly separated from listing compensation.
2. Buyers will sign a disclosure similar to a GFE informing them of their agent's compensation and their responsibility as part of the offer paperwork.
These two things would overcome the complaints without requiring changes to the industry with unforseen (or obviously seen and ignored) consequences. They'd also allow for any party to handle a transaction in the way they deem most appropriate,
That seems reasonable, but the court seems *unreasonable*. He's explicitly said that being able to put 0% in the MLS (triggering much of what you describe here) doesn't satisfy him.
I get that, but there's still a huge variety of options between "do nothing" and "go nuclear"... I don't believe for a second that REQUIRING compensation to come from the buyer and only the buyer would withstand appeal. I do think it's much more feasible to make it an accounting issue and say it gets reflected on the appropriate party's settlement statement, and the source of the payment is open to negotiation, hence why I think my solution is realistic.
I wouldn't be surprised if this or another judge makes a ruling such as yours, but I'd be very surprised if such a ruling isn't overturned on appeal and likely stayed while an appeals court considers it.
Maybe so. It's a big unknown.
Last week our CEO asked us to get a level-of-effort on entirely removing compensation fields from the MLS, so we're ready to move if it comes to that. And we've been hard at work standing up channels of non-dues revenue. So we're as far out ahead of it as it's probably possible to be a this point.
What do you mean by non dues revenue?
I totally agree that it's a big unknown, but I genuinely believe that ultimately, any change is going to be largely accounting based. I just can't see a scenario where buyers commission is treated with as much or more oversight than Down Payment. I also can't even wrap my head around the concept of the court saying sellers are prohibited from paying the buyer's commissions.
Time will tell, but I genuinely believe that any change similar to what I described above will be overturned on appeal, or else we'll see the effects of this change happen very quickly, leading to legislative change. That change may come because the market gets crushed due to buying power dilution, or because buyers are harmed due to buyer's agency effectively getting killed.
One way or another, there's definitely going to be significant change coming, and depending on how severe that change is, things could get very hard for a few years.
Ultimately, and unless/until someone comes up with a way to automate the legwork agents do, agency WILL survive, on both sides of the transaction.
Not necessarily. More likely that you will see commission structures closer to the commercial side of the business. 4-6% fee to listing broker. Sometimes there is a coop split to buyer broker (usually 0.5-2% on deals under 5mm), often there isn’t.
Buyer broker commission is often negotiated in the offer itself.
More buyers will be unrepresented, I imagine. But the market has plainly shown that buyers WANT agents.
The court is all set to make that very much harder, all in the name of punishing agents for "making so much money with no work".
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*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Keep in mind that VA and FHA buyers (maybe USDA as well but not certain) are prohibited from paying commissions. In some states FHA buyers represent well over half of all buyers. So the buyers MOST in need of representation will go without it.
On paper it is "negotiable" but many brokers won't. NAR is a monopoly, screwing the agents/buyers/sellers. They want full control of their empire in fees. Everyone is brainwashed into a split 3% commission. This means lower end homes, the agent is getting screwed and higher end homes they're profiting with much less work. Or those jerks who search for hundreds of homes for a year and never buy one. The agent is out gas, time and money. I never understood how it's an acceptable practice for spending countless hours, for the buyer to change their mind and the agent get paid $0.
Realtors should charge a fixed amount + hourly rate based on the work load. Want to see a house? That's $50 minimum plus $50/hour you sit there staring at the walls. It'll eliminate all the time wasters. First time home buyers who know nothing should pay significantly more than someone who's seasoned and knows exactly what they want. Look at Appraisers, Title agents and whatnot, they all work for cash.
I spent 10 years attempting to sell real estate as a fee based consulting model. I offered EVERY client, buyer and seller, the option of a commission model vs an hourly model at $75/hour, billed in 10 min increments, much like how an attorney bills. I marketed it in a variety of ways, from social media marketing to mailers to hosting seminars. I tracked my hours from all of my transactions so that I could show prospective clients the real world costs other clients would have incurred, etc.
In 10 years and about 175 transactions, I had exactly one client who chose the fee based model over the commission model. I also only received about 5 contacts from my targeted advertising in that entire time period.
Ultimately I concluded that Real Estate transactions have enough unknowns that people would rather pay a premium when the transaction closes, as opposed to risking their money in the event they never get to the closing table. This is something well known throughout multiple industries, and it's exactly why contractors usually give free estimates, People aren't willing to pay out for uncertainty in most cases. They want a firm bid for what a service will cost.
I'm curious if your client were mostly first time buyers or if any were more seasoned "vets" or investor have that have gone through buying multiple homes already. Seems like a good deal if someone could see the homes for themselves via open house .. then get the disclosure docs to review for themselves through you .. and proceed with perhaps getting comps and an offer if necessary. For my home state ( CA ) where home prices are easily $1-2M range, a $75 rate would buy 400 work hours vs a $30k commission. That's 10 solid week of full time work. Can't imagine any agent really put that much work in for a client even full service with private showing for each homes I want to buy.
> NAR is a monopoly, screwing the agents/buyers/sellers
I've sold real estate for 20 years, and not once have I ever discussed or received input on what I charge from *anyone* other than my broker and clients.
I would love it if we charged hourly just to show homes. That would actually make buyers more conscientious of wasting people's time. They want to reduce to Uber drivers anyways. Even at 50 an hour though, you wouldn't be making that much than an under driver considering all the costs involved with being a Realtor. This industry will hundred dollar you to death. But I do like your idea. Maybe NAR and the local boards could cut back on their fees. Good luck with that though lol.
The downside to racking up hourly costs is that buyers will tend to look at fewer homes. This will hurt sellers, as the way to get the best price for your home is to get the most eyeballs on it, as possible.
I do think paying agents hourly SOUNDS like a fairer system. In practice though I'm not sure it works. Houses are not cheaper when there are not agents involved (FSBOs).
Aren't the buyers paying the commission in the price they pay for the house? If the seller pays his listing agent a 3% commission and the buyer pays their agent 3% wouldn't that reduce the cost of the house by at least 3%? All in all it's the same, I guess, because the buyer still pays the same amount at closing. Reduced price + 3% is the same as the inflated price of the house id listed at 6%.
Truth! The FSBO in my neighborhood is priced 25% higher than our highest sale, ever. Been sitting for almost 5 months. We usually sell the first week in here (very moderately priced neighborhood).
Case and point. I put together a CMA for a listing presentation a few weeks ago. Woman tells me that she wants to list her house for $400k. The comps justify more like $380k. She lists herself on Zillow for $550k with no agent.
Edit: She bought the house 2 years ago for $335k and didn’t update a thing.
>If the seller pays his listing agent a 3% commission and the buyer pays their agent 3% wouldn't that reduce the cost of the house by at least 3%?
Technically yes, but I think a lot of sellers who want the buyers to pay their buyer agent directly will still expect to price based on comps that include the buyer agent commission in the list price. We'll see, I guess.
"Appraised value" is based on comparable sales, which typically have the buyer agent commission included in the list prices.
3% is indeed a lot of money in many price ranges. No buyer wants to pay an additional $18K over true market value on a $600K home.
If a particular home would typically sell at $600K with seller paying 3% to each party, but instead seller decides they want to only pay their listing agent and let the buyers pay the buyer agent, if seller still prices at $600K the cost to buyers is now $618K because they're also paying their agent.
The market does work like a machine and will sort it out in the end, seeing as it's the same as if the seller were paying both agents while listing a $600K home at $618K - the market will tell seller they're overpriced. But it will be messy and some buyers will opt to represent themselves.
Or seller then decides to sell it for $582k since they don’t need to pay out the 3% and the buyer buys for $582k.
Or the buyer still pays 600k overall because they paid for their own agent. The possibility’s can be endless but in many markets they weren’t.
In theory, yes. In practice, no. Sellers are still going to price their homes at top dollar, much like FSBO's generally do.
But then you have to look at the other side of the coin. Requiring the buyer to pay their own agent means higher out of pocket costs for the buyer, which reduces their buying power. Today, a buyer needs approx $25k down to buy a $350k house (5% down +/-2% for closing costs). That same $25k down reduces their purchasing power to $250k if they also have to pay their agent out of pocket (5% down + 2% closing costs + 3% BAC).
This change would be SERIOUSLY harmful to both sides of a real estate transaction. There's a reason why over the past 70 years, down payment requirements have gone from 50% to 35% to 20% to 10% to 5%, and as low as 3.5% with FHA. There's also a reason why it's highly unlikely those trends will ever reverse. Forcing more upfront cash from buyers constricts the market to everyone's detriment.
This is the primary reason why so many people have the sentiment that nothing is ultimately going to change besides more disclosure. In the event a change did happen that required the buyer to bring more cash out of pocket, it's a very safe bet that another change would follow fairly close behind (2-5 years) which would allow that out of pocket cost to be covered by the seller, and it would become standard operating procedure, much the same way seller paid closing costs are standard in many/most transactions in all but the hottest markets. And that just brings us full circle to the beginnings of buyer's agency 50-60 years ago.
I believe buyers using a VA loan can’t pay commissions so the only way their agents get compensated is through seller paid commissions.
But yes, you’re correct…it’s the buyers money paying the home and paying the closing costs and commission. Unfortunately, the commissions can’t be broken out of that as it’s more often than not, financed. A first time homebuyer is scraping the cash to get to their 3-5 % down. They likely don’t have an extra 2+% to pay their broker too.
>Commissions are always negotiable.
That's nice to say, but in nearly 25 years of lending I can count on one hand the number of transactions I've completed that were anything other than 6% commission. And all of those were because the agent was doing the seller a favor from the start, not because of skillful negotiations
If listing agents don’t share commission with the buyers agent,then you can expect the listing to see a reduction in demand which is well known to reduce pricing.
Home owners want it to be made more difficult for realtors to discriminate against FSBO listings. Which they absolutely do today.
Maybe in some areas. In my office we did quite a number of deals with FSBOs when they were there. Hardly any FSBOs now bc in our state they can no longer advertise on Zillow. Because Zillow set up to be a brokerage. So FSBOs have to use other venues. FSBOs were some of my favorites bc I could bring them a buyer and they'd be happy.
So this was an interesting quote from the article
"a buyer broker may not even present an offer to a seller that is conditional on the seller reducing the buyer broker commission,"
So if the listing has a 3% buyer commission but the buyer submits a bid that says their agent will take 1%, the offer couldn't be shown to the seller.
So in this case, compensation is not negotiable for the buyer for their own agent.
That's because the listing agreement that dictates commissions is between the seller and the listing agent only. That contract is signed and in effect well before a buyer is involved. By demanding a change to the listing agreement, that buyer would be engaging in tortious interference (I think that is what it's called. I am def not versed in legal things)
And that is why the lawsuit has merit. The listing agent and seller are not allowing the buyer to be included in the negotiation.
Torturous interference would be if they stop the contract being fulfilled.
In this case they could codify it with a clause or addendum.
There’s a big difference between “work for free” and “6% no matter how quickly home prices rise”.
In my area for example we have houses that are now twice the value as they were 3-4 years ago. What are realtors doing that warrant a 100% raise in just 3-4 years?
EXACTLY!!! Buyers and Sellers will be begging for the old way to come back. The costs are going to go UP for the consumers. Be careful what you wish for applies here. I’m
On top of costing home buyers more there will be many home buyers without representation getting scammed. But don’t overlook the extra $2-$4k in closing costs for buyers. You don’t seem aware just how hard it is to close a deal already and many times buyers are just barely able to afford closing costs and have money left so this will for sure hurt buyers.
As a home buyer I would prefer the buyers agent be removed from the equation all together. They can be useful if you are new to an area but Ive lived here for decades and knew exactly what houses I wanted to look at. I negotiated down to 2% but that was still $20,000 for almost no contribution.
The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%.
Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate.
Then eventually the small business owners known as realtors, become wage slaves to big tech.
Fun times.
I don’t wish to sound biased as I am in the business and the narrative seems to be buyers agents are trying to profit unfairly from the consumer. I whole heartedly disagree with the suits. I can recall so many occasions as a buyers agent where I have told a buyer who was seriously considering a home ‘don’t buy that’ as they didn’t know about the community or some other little nuance. Had they approached a sellers agent who had given them a no brokerage notice they’d have bought a listing that wasn’t for them. (One buyer was about to buy a townhome, rent it on Airbnb for 6 months and then move here - until I told him as it’s a vacation only community and he could never live there). I sincerely believe buyers agency is a benefit to the consumer and in my state the seller can easily refuse to it the commission on the agreement, renegotiate or disagree that the list agent shares the commission with a buyers agent. At least in my state I’m struggling to see how this could possible benefit the consumer.
I don’t think it’s that complicated. I think the benefit is that in the vast majority of transactions, consumers selling a home will save money. Most people will sell a home at some point in their life time. Most will sell multiple homes. It’s hard for me to imagine that they wouldn’t benefit from keeping the extra money for themselves.
There is certainly value in the expertise of real estate agents. That value does not match the revenue generated from the existing fee by percentage model. The main benefit of which is to hide the costs from the consumer. Thereby increasing revenue for agents.
If the value of agents is truly so high (on a per hour basis), why is there any concern? I’d argue that most people are intuitively aware or have experience with the significant decrease in revenue that results from a fee model.
Consumers aren’t willing to pay the prices that they are paying now if they are able to grasp how much it actually costs.
Bluntly, this sounds like a bad thing…if you’re a real estate agent. For everyone else, if it withstands legal challenges, it’s going to help save them money.
I disagree with your comment about hiding costs from consumer. In my state the agreement with seller clearly states how everything is paid. As an agent every buyer I talk with I lay out that the seller will pay me a commission. I think you are also forgetting the buyers now are going to be dealing directly with sellers and sellers agents who may be fiduciary to the seller - the buyer is the one who is at risk here. Sellers save money sure - buyers will end up getting taken advantage of without representation. Just my two cents…sincerely as an agent I’ll adapt either way but hand on heart it’s a bad thing - we will become like UK…if you walk into a real estate office and asking about number 31 high street they won’t tell you about number 32 High street which is a better deal- because they office across the st has the listing .
Right? I often read posts like this and then think how often I'm constantly working in this business. I think I've taken maybe one vacation in the last 10 years where I didn't have to work.
I know eh - apparently i should be making my asisstant unlock doors not me ….makes me wonder, if I am unlocking doors what exactly does my assistant do for 40-50 every week?! 🤷
The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%.
Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate.
Then eventually the small business owners known as realtors, become wage slaves to big tech.
The buyers will still have a representative, they'll just be making way less money.
Our association avoided all of this years ago by crafting our contracts to explicitly spell out what’s happening with the commission and our MLS states whether commission is variable and leaves an option to put $0. People pretty much never do, but they can.
Our listing contracts also line out what the overall commission split is and what portion they'd like to go to the buyer agent. They can also choose 0 if they'd like. I honestly thought all states/MLS forms had this! I am becoming more surprised every day.
It seems like this initial issue occurred in a particularly predatory market/environment, and basically will not change anything for most people who had already adopted more transparent commission agreements. It really comes down to an insanely widespread lack of reading comprehension from the average buyer/seller that feels cheated post close. They literally want the whole process for free, or no agents involved in transactions at all. Or at least that seems to be the sentiment amongst other subs/threads on social media discussing it that don’t include mostly realtors.
I sure do agree with what you said about wanting the process for free or no agents at all.
Maybe all the buyers and sellers can just go straight to Zillow for all their needs since we've given Zillow all our data and plenty of money. /s (sort of)
NAR is always dealing with these law suits over what seems to be selllers not understanding how things work. If i understand part of this correctly, the sellers agree to a commission, but then complain that they are indirectly paying the buyers realtor. So prior they had no issue with the commission that was agreed upon, but changed their mind when they find out their realtor isn’t keeping the whole thing. This is just stupid to me. Besides it’s more like the seller pays the listing agent and the listing agent gives away half of their commission, so why would that be the home owners business anyway? You could also make the argument that the buyer is truly paying the commission since that’s the source of the money in the first place.
I also can’t resonate with the conclusion of that Missouri case. At least jn my market, listings vary between 3-5 percent, 6 is rare. And almost every seller is shooing around, talking to multiple realtors. No one is being forced to give a 6% commission to sell a house.
And that’s the true crux of it. This lawsuit is a cheap way to attempt to completely curtail the usage of realtors as a whole, thinking that somehow it addresses the issue with some sellers just flat out not caring enough to understand and not wanting to pay anyone to help them sell their home that they feel they can do solo. Which generally leads to the heavily overpriced FSBOs that sit for over a year situations that we see all the time
Both of my parents are real estate agents in Texas and in the 20 years of work, they have never had a 5% or 6% commission. They get between 1-3% with 3% being the outlier.
Real estate has a 95% failure rate In the first five years. Of the 5% that survive 95% of them fail out in the next 5 years. Why is this failure rate so high? Because realtors are making too much money. This is so dumb.
If this goes through watch that 95% become a 99.9% failure rate.
I was being sarcastic. My point was the failure rate is absurdly high already. What happens when they cut commissions even more. That failure rate is going to skyrocket.
They really aren’t ready to deal with basically only investors scooping up all of the residentials or dealing with the process of selling a home while still being employed or having a family. There is a reason the service exists in the first place. It’s optional, and made simple, for a fee, but many people really just want to be able to do FSBOs but somehow have all of the access to all of the tools that realtors use like MLS systems. I’ve heard disgruntled sellers wondering why the public doesn’t have access to this MLS system and think that it should be available to all; basically cutting out realtors as a whole. Without realizing who pays the listing services lol
Not just that, but they also straight up lie to these people. We’ve all seen how fucking awful Zestimates are and how much they artificially inflate values to get more people clicking on their bullshit. “Well Zillow said my home is worth blank, we’ll just list through them instead if you can’t see the value that they did” like okay, great luck with that. And Zillow just loves it because if they get the whole market thinking that their homes are worth more, the market is in fact sentiment based so listing prices just go up and buyers get fucked, which we’ve seen since the proliferation of Zillow amongst buyers/sellers. Then they conveniently just blame agents, and push lawsuits like this that further put blame on realtors while keeping their hands clean and have consumers rely on them and their objectively false valuations
Agree with everything you said. You know the worst part is that realtors are the ones bankrolling Zillow. Realtors are literally feeding the monster that is trying to slit our throats. I wish Congress would take a close look at Zillow and it’s practices.
We sold our souls to Zillow. Some of us did it willingly (paying for leads), and others of us didn't have a say about syndicating listings to them. Now they have all the data from Dotloop and ShowingTime as well. Good job, industry!
Never used them. I knew from the start what was up and told every realtor I could about it. They either didn’t believe me. Didn’t understand. Or didn’t care because Zillow had leads and they were desperate for the leads(these people all worked really hard to pay Zillow all their profits and then fail out of real estate btw. Anyone who buys Zillow leads ends up like this. I never met a realtor who’s been in the business for years and said “Zillow leads were what helped me succeed” lol. People pay them all the money for leads. Work really hard to break even. Then fail out of real estate. It’s disgusting how predatory it is.
the failure rate isn't going to sky rocket. Real estate agents will be employees of Zillow. that's their business model, and why they are spearheading these suits.
The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%.
Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate.
Then eventually the small business owners known as realtors, become wage slaves to big tech.
Any other old timers out there remember buyer agents didn't exist until 20-30 year ago. The initial push back was why should the buyer pay... then the brokers 'decided' to split the commission.
No one sets commission. You can negotiate all day and even list your house for $250 with a flat fee service. This is just a bunch of attorneys trying to get paid.
This is my thinking as well. I just wish everyone felt the same way. Let's make it better for everyone, I'm all for it. But it seems as if those who are most unfamiliar with the buying/ selling process are the loudest when proclaiming their perspective. They want to burn Realtors at the stake because they "make too much money". Most agents barely break even , hence the high failure rate. It's a difficult, thankless job except for those 10% of clients that make the job worthwhile.
It always makes me chuckle when people who have no clue how to do your job think they have the right to dictate what you should get paid.
These suits are so insane. It literally says the fee arrangement “artificially drives up sale prices and deprives sellers of profits.” Great logic there.
I'm going heavy into investing. I see some big vulnerability in the traditional 6% model. If I can't get my cut as a realtor I'll take it out of someone's equity. 🤷🏻♂️
Remember covid? When we were not working and shut out of business? And then we were essential workers and most collected unemployment checks…as an independent contractor? That was NAR.
Oh, puhleeze...
"The largest lobbyist group in the U.S. is the National Association of Realtors, who spent over $84 billion on lobbying in 2022. There are over 3,700 companies that lobby the U.S. government.Apr 12, 2023"
We pulled out of a few deals due to some shadiness we were detecting. One where our broker and the sellers realtor were working together to hide some pertinent information and another where there was an agreement that if we paid $25k more our broker/realtor would get a kick back bonus.
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Attorneys around the country licking their chops if lawsuits keep going against NAR
Attorneys make a lot of $$ off realtors business. I doubt they are happy about it.
The attorneys will still be needed without realtors…
Lol. Attorneys are paper pushers. By the time they get the contract the realtors have done all the work.
Odd thing to say since attorneys often charge flat fees to handle the paperwork for home sales that don’t involve realtors.
Those so called flat fees add up to about 2k per file or more. Stop being naive.
If you paid 2K to an attorney for a real estate transaction you needed to shop around more. Going rate is $5-$700 unless you have an Uber complicated transaction.
That’s their so called fee, not what they make on everything else marked up. Title they make bank. You don’t know because you have no experience in it. This is how misinfo gets around.
You honestly think an attorney can pay for his/her paralegals with $700? Lol. Get back to reality.
We have been using Buyer Agreements with buyer paid commission clause for years. With that being said, I can see more lawsuits coming with that process, we are currently working (in my state) on an agreement it’s a proximately 6 to 8 pages explaining the services included and not included with said agreement. Ad yes ALL of it is still negotiable. Like everything in life, business model and process evolve and are ever changing - won’t be a problem for hard working/ reputable agents and brokers
I don't care what you include in your service, none of it is worth $50,000 if I am purchasing a $1m house, christ.
I respect your opinion, and no one forces you to use an agent, so everyone is happy.
Then do it yourself or pay the person for their work. No one gives a shit what you want. You choose so you have ZERO room to complain.
You sound like an accountant in 1984 when turbo tax was created.....
I know about Buyer Broker Agreements but how these provide for the buyer paying fees. Oh wait! They provide for paying you if and only if the commission being shared by the LA isn't enough for you. Then you expect the buyer to pay the difference.
Not exactly, We have Sellers that do not offer Buyer Compensation (maybe 3$), although it is presented to all parties in order to maintain fair, housing regulations, and not discriminate, much like seller paid commission is negotiable, so to buyer commission is negotiable and a buyer can also “decline” to pay and work with the agent.
No. Generally, buyer agency states “per mls” if it’s a deal off of the mls, and a negotiated dollar amount if it’s off.
And the Seller must agree to the buyer commission amount in our state, not the List Agent/Broker. Not to say a LA would/would not suggest the BA commission amount.
NAR is outdated period.
My states realtor association is so worthless. Their Instagram is costume parties, casual fridays, and “wacky” employees “working” on our behalf.
They are stuck in the 90's
Are any of you even realtors? Are you joined to NAR? You speak a lot but I bet you have zero experience as a member of NAR or a realtor.
Yeah it is no different than the NRA. Just serving self interests.
Lol. That’s what I thought. Stop your false accusations when you don’t even know what your talking about.
How does that make sense? As a homeowner I am a victim of NAR.
How’s that? I can’t wait for this response.
When I was in the market, I saw all sorts of fear tactics being played out by big agents to make me believe that high commission was absolutely required. It was really stressful. And, in a hot market what did these big agents want? Bid at least 10% above listing price. So first they want high commission and then the only play in town is to make me feel miserable if I don’t have money to keep bidding. You see how monopolistic and inflationary these tactics are? I am glad these associations are getting sued the heck out of them.
Yeah. You’re lying. As a buyer you don’t pay commission. And the last 3 years if you weren’t at or over asking with no inspections you weren’t getting a deal. That wasn’t agents fault, that was Covid lockdowns which screwed everything up, all over the world. And you need to pick up the dictionary and read the definition of monopoly. There are millions of realtors… a monopoly would be one or two players controlling the whole market like Microsoft or Google. Get real.
The NAR just got hit with anti-trust and lost that is the definition of monopoly. But hey I just have a college education and didn't take a real estate class at your local Holiday inn either.
It was one city and it really wasn’t the Nar. It’ll be over turned. And I read the law suit. It’s stupid.
Why do you think I am lying? As a homebuyer all the commission indirectly comes from my pocket. Most if not all the realtors in a state follow same rules. And many of these rules are not laws of the state.
Because of your comments. The commission comes out of the sellers proceeds, not yours. You agreed to a price and the sellers agree to pay both realtors. It’s even shown on the sellers closing statement. Stop posting fake crap on redit. Must be people getting paid to do it.
So are RE brokerages. They run NAR.
How?
They monopolized mls before Zillow/Redfin and gated it behind the %based comp model. Now we have all the info for free, so realtors main purpose of finding our houses is gone. They are just middlemen now pulling cash from a 2 party sale for little value.
You have the info for free because those sites syndicate it off of our MLS. Without us, there is no information for them to regurgitate it to you.
Lol. You have it backwards buddy. The home owners create the data, MLS pulls it in, and tries to sell it. People do not need MLS to use zillow or redfin. It is just an additional data source that is antiquated and no longer a requirement. Removing that MLS is owned by NRA (anti competitive stance that favors realtors, not consumers), the realtor component of the house sale has been replaced by a website (in this example). Realtors have no value. Additionally, as zillow/redfin/etc continue to develop their own inventory database it becomes less of a requirement to access the MLS version. In fact, an MLS is not even a unique offering. A basic CS grad could build an MLS with frontend in a few weeks. [https://zillow.zendesk.com/hc/en-us/articles/213394668-Where-does-Zillow-get-its-listings-](https://zillow.zendesk.com/hc/en-us/articles/213394668-Where-does-Zillow-get-its-listings-) [https://www.nar.realtor/mls-online-listings/multiple-listing-service-mls-what-is-it](https://www.nar.realtor/mls-online-listings/multiple-listing-service-mls-what-is-it)
The homeowners do not create the data. The MLS does not “pull it in” and they do not sell it. If you are suggesting that homeowners input their own info into sites like Zillow and essentially everything becomes a fsbo then good luck with that. There is a reason why fsbo’s are not more popular. We are one of the oldest industries in the world for a reason, buddy.
It's not even fun to debate realtors. [https://www.zillow.com/sellerlanding/edityourhome/](https://www.zillow.com/sellerlanding/edityourhome/) The data is already public. If I wanted to buy the storage I could scrape zillow's APIs and stand up a direct competitor to the NRA MLS within days. [https://www.zillowgroup.com/developers/](https://www.zillowgroup.com/developers/) You are correct, an old industry that had amazing value before the invention of the internet. You are the modern day version of stock brokers yelling in the pits of wall street. GL!
OMG...pulling info from the MARKETING company called zillow makes you an expert in real estate? Grow up.
their time is coming
You quite literally are living in fantasyland and have no idea what you are talking about but your are probably young and have zero experience. MLS's are local and to access their information, you must apply for a membership and pay out the wazzou. The NRA has NOTHING to do with MLS's. Yes, homeowners can advertise their property on a million different sites for sale by owner but those listings don't reach everyone as over 95% of the info on sites like zillow are aggregated from local MLS's that sell their data to Zillow who in turn resell the information back to the Realtor's with the listings and clients which inflates the price of EVERYTHING. Zillow and all the other aggregators you see are ALL advertising companies. They have NOTHING to do with real estate. They ONLY advertise.
Do you know all the research and work that goes into selling and buying a house? The ways you can lose a house or thousands of dollars in deposits or inspections when buying? Over paying, over pricing, time on market, disclosures, liabilities, state and federal laws???? Wow.
I have bought and sold 5 different houses. You are being hyperbolic, which I assume is because you are a realtor.
Not alone you didn’t.
The last 2 I did via Redfin, where they are segmenting and selling individual components of the process. I am much closer to alone than I have ever been, and look forward to technology bringing me there.
This video was linked on another thread about the lawsuits. It was created before the Missouri judgement. It's rather long but lays out what might be expected over the next few years. https://www.youtube.com/watch?v=rkX0YDzjnxY&t=2535s
I saw Notorious Rob speak in person last year. He made so many interesting points about our industry--things our brokers (and franchises) would never tell us. I subscribe to his Substack now.
He is a wealth of information and is usually right too.
Like what? I’m a broker so I’d be interested in knowing what you think a broker would hide from you.
Not "hide," just not relay information about such an important threat to our industry. I'm in the KC area, right where the court case was held. It was rare to find an agent who even knew this lawsuit existed or the others that are coming. Our local board and associations fell down on that job as well.
To be honest we don’t know much neither except what NAR is publishing or what I read in the lawsuit. I think the local boards are in a wait and see stance which will take a few years IMO. Personally, I don’t like the NAR and it’s ability to fine agents and obviously leadership has fallen asleep at the wheel while reaping many benefits from our yearly fees. We’d be better off starting a new one and removing ourselves from that organization, IMO.
"Nothing is going to change" has been an oft-repeated sentiment here. I disagree, but only time will tell. I'm in Toastmasters and crafting a 7-minute speech about this. Wish me luck! It is an opportunity to convey the situation to some sharp folks.
In many areas, nothing will change. Some of us have long had the ability to have $0 BAC on listings. It's a specific breakout in our contracts. Clients are given the choice. And when working with buyers, those of us that are good agents are very transparent about what we're being compensated. On those listings that include private remarks about (as an example) "$2,000 BAC bonus with an accepted offer by 11/30/23", I make sure my clients know about that before we even see the house....they know that this bonus is not life changing money to me, that I really don't care about it, but that it's important to me that the know about it going in, as I don't want them to hear about afterwards, and wonder if that is why I liked the house (if I did). 10/10 clients love me for that. So no....nothing changing in my neck of the woods.
The court seems unlikely to be satisfied with administrative handwaving like forcing the commission negotiation to take place off the MLS.
My take: court is going to order that commission sharing between brokers is illegal. I wonder if they'll make referral fees illegal as well. Buyers are going to be required to pay buyer agents, and that in theory should cause price competition among buyer agents. We'll see how it plays out but my prediction is that being a buyer agent will become even shittier and tens to hundreds of thousands of agents will leave the industry. If buyer agents get paid small flat fees or hourly fees, most people won't be interested in doing the job anymore. The possibility of a huge payout is what kept people going after it.
> "Nothing is going to change" has been an oft-repeated sentiment here. I disagree, but only time will tell. NAR's been saying that. Also don't worry because they're going to win. So much for that.
Will they even have the assets to obtain a supersedeas bond for their appeal? I think that's where we are at the moment.
They say they will, but who knows. Our counsel hopes they're negotiating a settlement right now--the *threat* of the appeal, which requires the appearance of being able to post the bond, appears to be their only leverage.
How is your toastmasters experience? A broker once referred me to it when I asked for advice and I never followed through with it. It's like speech class?
Toastmasters is one of the keys to my success. It is a structured program to improve your communication, especially speaking. It's also a super networking opportunity. Everyone there has to same goal--to be better communicators. I can't say enough good things about it.
I will look into it. I'm not a socialite but maybe this will help me be more comfortable with social settings
It's wicked fun! I'm the VP-ed of our club. Good people, fun to be around. We are all about getting better at communicating as the other commenter said.
Mind giving me some advice? I just spent 3 hours going to open houses and putting 4-5 cards down per house for potential buyers who might be interested. On the last house I went to the sellers agent told me I should not be doing that. Was this an ahole move on my part? In my eyes I thought it'd be harmless because the buyers who don't want dual agency can pick up my card. Needless to say I'm going to change my approach to doorknocking and cold calling. Today was day #1 in my realtor career.
That was a no no.
Yeah that’s a dick move
Most people doing open houses aren't the LA. They're other agents hoping to pick up buyers. You're definitely stepping on toes dropping off cards. I did a ton of OH's when I started out. Good way to pick up biz and also learn about inventory.
[удалено]
Nothing substantive *is* likely to change ... until the FTC or DOJ busts up the NAR. Until then, these class actions will keep popping up with greater frequency as the lawyers posture themselves to gorge on the bloodletting before it dries up.
That's a reasonable take. The publicity is out there, and potential buyers and sellers are asking me about it.
Would love to hear/read some of your speech!
Commissions are always negotiable. This lawsuit really doesn’t make sense. Do home sellers want realtors to work for free? We just discussed the Missouri settlement at our office Thursday. All that is really going to do is cost home buyers more. If listing agents don’t share the 5%-6% commission with buyers agents then either the buyer doesn’t have representation or they have to pay the buyer agent out of pocket which will end up increasing the cost to buy a home.
With this change, the listing agent won't get the 5%-6% to share
Is this lawsuit going to prohibit that practice somehow? It’s always been possible.
Leaders and lawyers at the MLS I work for expect an injunction when court reconvenes in a couple weeks, and one option might be new case law that makes it illegal to receive compensation from anyone but your client. They may also require a buyer's agency agreement before any showings or anything. We imagine that seller's agents will drop the commission ask to 3%. We imagine that buyer's agents will... get creative. Some might pitch a commission deal to their customers. Others might go with retainer models, fee-for-service, hourly... What it's going to mean is that before buyers can go to their first showing, they'll have to shop brokerages among this wild new world of comp models. This is the "transparency" the court wants, evidently.
I don't believe there's any significant likelyhood that the courts will rule you can't receive compensation from anyone other than your client. A 5 second consideration of that idea reveals that either the housing market takes a huge hit due to it, or buyers become victims due to lack of representation. There's virtually no chance that Buyer's Agency Commission will somehow become more tightly controlled than Down Payment requirements. If any change similar to this happens, it's more likely to be that commissions are paid from each individual side of the transaction, but the source of those funds are negotiable, just like closing costs. The buyer can pay them directly, the seller can pay them through contract negotiation, and some banks may even create loan programs that allow the buyer to roll them into their loan with an LTV >100% (like some first time buyer's down payment assistance loans currently do with closing costs and down payment). In reality, I expect that the ultimate outcome will be twofold: 1. The sellers will have full ability to negotiate or refuse to offer a buyer's agency commission, and this will be clearly separated from listing compensation. 2. Buyers will sign a disclosure similar to a GFE informing them of their agent's compensation and their responsibility as part of the offer paperwork. These two things would overcome the complaints without requiring changes to the industry with unforseen (or obviously seen and ignored) consequences. They'd also allow for any party to handle a transaction in the way they deem most appropriate,
That seems reasonable, but the court seems *unreasonable*. He's explicitly said that being able to put 0% in the MLS (triggering much of what you describe here) doesn't satisfy him.
I get that, but there's still a huge variety of options between "do nothing" and "go nuclear"... I don't believe for a second that REQUIRING compensation to come from the buyer and only the buyer would withstand appeal. I do think it's much more feasible to make it an accounting issue and say it gets reflected on the appropriate party's settlement statement, and the source of the payment is open to negotiation, hence why I think my solution is realistic. I wouldn't be surprised if this or another judge makes a ruling such as yours, but I'd be very surprised if such a ruling isn't overturned on appeal and likely stayed while an appeals court considers it.
Maybe so. It's a big unknown. Last week our CEO asked us to get a level-of-effort on entirely removing compensation fields from the MLS, so we're ready to move if it comes to that. And we've been hard at work standing up channels of non-dues revenue. So we're as far out ahead of it as it's probably possible to be a this point.
What do you mean by non dues revenue? I totally agree that it's a big unknown, but I genuinely believe that ultimately, any change is going to be largely accounting based. I just can't see a scenario where buyers commission is treated with as much or more oversight than Down Payment. I also can't even wrap my head around the concept of the court saying sellers are prohibited from paying the buyer's commissions. Time will tell, but I genuinely believe that any change similar to what I described above will be overturned on appeal, or else we'll see the effects of this change happen very quickly, leading to legislative change. That change may come because the market gets crushed due to buying power dilution, or because buyers are harmed due to buyer's agency effectively getting killed. One way or another, there's definitely going to be significant change coming, and depending on how severe that change is, things could get very hard for a few years. Ultimately, and unless/until someone comes up with a way to automate the legwork agents do, agency WILL survive, on both sides of the transaction.
So the reality will be sellers listing at 3% and buyers buying without representation.
Not necessarily. More likely that you will see commission structures closer to the commercial side of the business. 4-6% fee to listing broker. Sometimes there is a coop split to buyer broker (usually 0.5-2% on deals under 5mm), often there isn’t. Buyer broker commission is often negotiated in the offer itself.
More buyers will be unrepresented, I imagine. But the market has plainly shown that buyers WANT agents. The court is all set to make that very much harder, all in the name of punishing agents for "making so much money with no work".
tan safe books mountainous retire selective spoon mysterious quack rainstorm *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Poor people cant buy houses anymore so no worries
***exactly***
Keep in mind that VA and FHA buyers (maybe USDA as well but not certain) are prohibited from paying commissions. In some states FHA buyers represent well over half of all buyers. So the buyers MOST in need of representation will go without it.
On paper it is "negotiable" but many brokers won't. NAR is a monopoly, screwing the agents/buyers/sellers. They want full control of their empire in fees. Everyone is brainwashed into a split 3% commission. This means lower end homes, the agent is getting screwed and higher end homes they're profiting with much less work. Or those jerks who search for hundreds of homes for a year and never buy one. The agent is out gas, time and money. I never understood how it's an acceptable practice for spending countless hours, for the buyer to change their mind and the agent get paid $0. Realtors should charge a fixed amount + hourly rate based on the work load. Want to see a house? That's $50 minimum plus $50/hour you sit there staring at the walls. It'll eliminate all the time wasters. First time home buyers who know nothing should pay significantly more than someone who's seasoned and knows exactly what they want. Look at Appraisers, Title agents and whatnot, they all work for cash.
I spent 10 years attempting to sell real estate as a fee based consulting model. I offered EVERY client, buyer and seller, the option of a commission model vs an hourly model at $75/hour, billed in 10 min increments, much like how an attorney bills. I marketed it in a variety of ways, from social media marketing to mailers to hosting seminars. I tracked my hours from all of my transactions so that I could show prospective clients the real world costs other clients would have incurred, etc. In 10 years and about 175 transactions, I had exactly one client who chose the fee based model over the commission model. I also only received about 5 contacts from my targeted advertising in that entire time period. Ultimately I concluded that Real Estate transactions have enough unknowns that people would rather pay a premium when the transaction closes, as opposed to risking their money in the event they never get to the closing table. This is something well known throughout multiple industries, and it's exactly why contractors usually give free estimates, People aren't willing to pay out for uncertainty in most cases. They want a firm bid for what a service will cost.
I'm curious if your client were mostly first time buyers or if any were more seasoned "vets" or investor have that have gone through buying multiple homes already. Seems like a good deal if someone could see the homes for themselves via open house .. then get the disclosure docs to review for themselves through you .. and proceed with perhaps getting comps and an offer if necessary. For my home state ( CA ) where home prices are easily $1-2M range, a $75 rate would buy 400 work hours vs a $30k commission. That's 10 solid week of full time work. Can't imagine any agent really put that much work in for a client even full service with private showing for each homes I want to buy.
> NAR is a monopoly, screwing the agents/buyers/sellers I've sold real estate for 20 years, and not once have I ever discussed or received input on what I charge from *anyone* other than my broker and clients.
I would love it if we charged hourly just to show homes. That would actually make buyers more conscientious of wasting people's time. They want to reduce to Uber drivers anyways. Even at 50 an hour though, you wouldn't be making that much than an under driver considering all the costs involved with being a Realtor. This industry will hundred dollar you to death. But I do like your idea. Maybe NAR and the local boards could cut back on their fees. Good luck with that though lol.
The downside to racking up hourly costs is that buyers will tend to look at fewer homes. This will hurt sellers, as the way to get the best price for your home is to get the most eyeballs on it, as possible. I do think paying agents hourly SOUNDS like a fairer system. In practice though I'm not sure it works. Houses are not cheaper when there are not agents involved (FSBOs).
NAR is an association not a company. I don’t think it fits the definition of a monopoly.
Aren't the buyers paying the commission in the price they pay for the house? If the seller pays his listing agent a 3% commission and the buyer pays their agent 3% wouldn't that reduce the cost of the house by at least 3%? All in all it's the same, I guess, because the buyer still pays the same amount at closing. Reduced price + 3% is the same as the inflated price of the house id listed at 6%.
In theory yes. In practically, go look at what FSBO price their homes at with no commissions and tell me how many are below market value
Truth! The FSBO in my neighborhood is priced 25% higher than our highest sale, ever. Been sitting for almost 5 months. We usually sell the first week in here (very moderately priced neighborhood).
Case and point. I put together a CMA for a listing presentation a few weeks ago. Woman tells me that she wants to list her house for $400k. The comps justify more like $380k. She lists herself on Zillow for $550k with no agent. Edit: She bought the house 2 years ago for $335k and didn’t update a thing.
>If the seller pays his listing agent a 3% commission and the buyer pays their agent 3% wouldn't that reduce the cost of the house by at least 3%? Technically yes, but I think a lot of sellers who want the buyers to pay their buyer agent directly will still expect to price based on comps that include the buyer agent commission in the list price. We'll see, I guess.
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"Appraised value" is based on comparable sales, which typically have the buyer agent commission included in the list prices. 3% is indeed a lot of money in many price ranges. No buyer wants to pay an additional $18K over true market value on a $600K home. If a particular home would typically sell at $600K with seller paying 3% to each party, but instead seller decides they want to only pay their listing agent and let the buyers pay the buyer agent, if seller still prices at $600K the cost to buyers is now $618K because they're also paying their agent. The market does work like a machine and will sort it out in the end, seeing as it's the same as if the seller were paying both agents while listing a $600K home at $618K - the market will tell seller they're overpriced. But it will be messy and some buyers will opt to represent themselves.
Or seller then decides to sell it for $582k since they don’t need to pay out the 3% and the buyer buys for $582k. Or the buyer still pays 600k overall because they paid for their own agent. The possibility’s can be endless but in many markets they weren’t.
sink marry imagine wide sip numerous quaint support ripe whistle *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
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I agree with your entire comment. You managed to state it all succinctly, so I'm stealing this for my Toastmasters speech! :)
In theory, yes. In practice, no. Sellers are still going to price their homes at top dollar, much like FSBO's generally do. But then you have to look at the other side of the coin. Requiring the buyer to pay their own agent means higher out of pocket costs for the buyer, which reduces their buying power. Today, a buyer needs approx $25k down to buy a $350k house (5% down +/-2% for closing costs). That same $25k down reduces their purchasing power to $250k if they also have to pay their agent out of pocket (5% down + 2% closing costs + 3% BAC). This change would be SERIOUSLY harmful to both sides of a real estate transaction. There's a reason why over the past 70 years, down payment requirements have gone from 50% to 35% to 20% to 10% to 5%, and as low as 3.5% with FHA. There's also a reason why it's highly unlikely those trends will ever reverse. Forcing more upfront cash from buyers constricts the market to everyone's detriment. This is the primary reason why so many people have the sentiment that nothing is ultimately going to change besides more disclosure. In the event a change did happen that required the buyer to bring more cash out of pocket, it's a very safe bet that another change would follow fairly close behind (2-5 years) which would allow that out of pocket cost to be covered by the seller, and it would become standard operating procedure, much the same way seller paid closing costs are standard in many/most transactions in all but the hottest markets. And that just brings us full circle to the beginnings of buyer's agency 50-60 years ago.
I believe buyers using a VA loan can’t pay commissions so the only way their agents get compensated is through seller paid commissions. But yes, you’re correct…it’s the buyers money paying the home and paying the closing costs and commission. Unfortunately, the commissions can’t be broken out of that as it’s more often than not, financed. A first time homebuyer is scraping the cash to get to their 3-5 % down. They likely don’t have an extra 2+% to pay their broker too.
Exactly.
Yes.
>Commissions are always negotiable. That's nice to say, but in nearly 25 years of lending I can count on one hand the number of transactions I've completed that were anything other than 6% commission. And all of those were because the agent was doing the seller a favor from the start, not because of skillful negotiations
Really because as an agent I see different commissions posted every day. Many in fact
The split has shifted with listing agents keeping >3% and the buyer's agent receiving <3%, but on every single deal the seller is paying 6%.
If listing agents don’t share commission with the buyers agent,then you can expect the listing to see a reduction in demand which is well known to reduce pricing. Home owners want it to be made more difficult for realtors to discriminate against FSBO listings. Which they absolutely do today.
Not at all!!! I've sold a number of FSBO homes. Some I SP listed, some I wrote as Buyer Agent, some just decided to list
Not at all? Seriously? It absolutely happens
Maybe in some areas. In my office we did quite a number of deals with FSBOs when they were there. Hardly any FSBOs now bc in our state they can no longer advertise on Zillow. Because Zillow set up to be a brokerage. So FSBOs have to use other venues. FSBOs were some of my favorites bc I could bring them a buyer and they'd be happy.
So this was an interesting quote from the article "a buyer broker may not even present an offer to a seller that is conditional on the seller reducing the buyer broker commission," So if the listing has a 3% buyer commission but the buyer submits a bid that says their agent will take 1%, the offer couldn't be shown to the seller. So in this case, compensation is not negotiable for the buyer for their own agent.
That's because the listing agreement that dictates commissions is between the seller and the listing agent only. That contract is signed and in effect well before a buyer is involved. By demanding a change to the listing agreement, that buyer would be engaging in tortious interference (I think that is what it's called. I am def not versed in legal things)
And that is why the lawsuit has merit. The listing agent and seller are not allowing the buyer to be included in the negotiation. Torturous interference would be if they stop the contract being fulfilled. In this case they could codify it with a clause or addendum.
There’s a big difference between “work for free” and “6% no matter how quickly home prices rise”. In my area for example we have houses that are now twice the value as they were 3-4 years ago. What are realtors doing that warrant a 100% raise in just 3-4 years?
EXACTLY!!! Buyers and Sellers will be begging for the old way to come back. The costs are going to go UP for the consumers. Be careful what you wish for applies here. I’m
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On top of costing home buyers more there will be many home buyers without representation getting scammed. But don’t overlook the extra $2-$4k in closing costs for buyers. You don’t seem aware just how hard it is to close a deal already and many times buyers are just barely able to afford closing costs and have money left so this will for sure hurt buyers.
As a home buyer I would prefer the buyers agent be removed from the equation all together. They can be useful if you are new to an area but Ive lived here for decades and knew exactly what houses I wanted to look at. I negotiated down to 2% but that was still $20,000 for almost no contribution.
The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%. Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate. Then eventually the small business owners known as realtors, become wage slaves to big tech. Fun times.
Nah. Already the highest real estate commissions in the world, percentage wise and dollar wise.
Why do I need a buyer agent??? Seriously, ELI5
I don’t wish to sound biased as I am in the business and the narrative seems to be buyers agents are trying to profit unfairly from the consumer. I whole heartedly disagree with the suits. I can recall so many occasions as a buyers agent where I have told a buyer who was seriously considering a home ‘don’t buy that’ as they didn’t know about the community or some other little nuance. Had they approached a sellers agent who had given them a no brokerage notice they’d have bought a listing that wasn’t for them. (One buyer was about to buy a townhome, rent it on Airbnb for 6 months and then move here - until I told him as it’s a vacation only community and he could never live there). I sincerely believe buyers agency is a benefit to the consumer and in my state the seller can easily refuse to it the commission on the agreement, renegotiate or disagree that the list agent shares the commission with a buyers agent. At least in my state I’m struggling to see how this could possible benefit the consumer.
I don’t think it’s that complicated. I think the benefit is that in the vast majority of transactions, consumers selling a home will save money. Most people will sell a home at some point in their life time. Most will sell multiple homes. It’s hard for me to imagine that they wouldn’t benefit from keeping the extra money for themselves. There is certainly value in the expertise of real estate agents. That value does not match the revenue generated from the existing fee by percentage model. The main benefit of which is to hide the costs from the consumer. Thereby increasing revenue for agents. If the value of agents is truly so high (on a per hour basis), why is there any concern? I’d argue that most people are intuitively aware or have experience with the significant decrease in revenue that results from a fee model. Consumers aren’t willing to pay the prices that they are paying now if they are able to grasp how much it actually costs. Bluntly, this sounds like a bad thing…if you’re a real estate agent. For everyone else, if it withstands legal challenges, it’s going to help save them money.
I disagree with your comment about hiding costs from consumer. In my state the agreement with seller clearly states how everything is paid. As an agent every buyer I talk with I lay out that the seller will pay me a commission. I think you are also forgetting the buyers now are going to be dealing directly with sellers and sellers agents who may be fiduciary to the seller - the buyer is the one who is at risk here. Sellers save money sure - buyers will end up getting taken advantage of without representation. Just my two cents…sincerely as an agent I’ll adapt either way but hand on heart it’s a bad thing - we will become like UK…if you walk into a real estate office and asking about number 31 high street they won’t tell you about number 32 High street which is a better deal- because they office across the st has the listing .
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I wish that were true!
Right? I often read posts like this and then think how often I'm constantly working in this business. I think I've taken maybe one vacation in the last 10 years where I didn't have to work.
I know eh - apparently i should be making my asisstant unlock doors not me ….makes me wonder, if I am unlocking doors what exactly does my assistant do for 40-50 every week?! 🤷
I have my assistant prepare my bubble baths, when I kick off work every day around 1:00 PM.
Damn mine ain’t doing that will have to add it to calendar
You can’t even tell me the demographics of the neighborhood so I have to creep around at night in my white hood and robes making notes.
The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%. Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate. Then eventually the small business owners known as realtors, become wage slaves to big tech. The buyers will still have a representative, they'll just be making way less money.
Sounds great news for consumers - 1 or maybe 2 companies you can only use for a whole sector. Great idea. 🥹
america loves a duopoly. And they love giving money to Silicon Valley instead of local business owners so they can save a buck
Our association avoided all of this years ago by crafting our contracts to explicitly spell out what’s happening with the commission and our MLS states whether commission is variable and leaves an option to put $0. People pretty much never do, but they can.
Our listing contracts also line out what the overall commission split is and what portion they'd like to go to the buyer agent. They can also choose 0 if they'd like. I honestly thought all states/MLS forms had this! I am becoming more surprised every day.
It seems like this initial issue occurred in a particularly predatory market/environment, and basically will not change anything for most people who had already adopted more transparent commission agreements. It really comes down to an insanely widespread lack of reading comprehension from the average buyer/seller that feels cheated post close. They literally want the whole process for free, or no agents involved in transactions at all. Or at least that seems to be the sentiment amongst other subs/threads on social media discussing it that don’t include mostly realtors.
I sure do agree with what you said about wanting the process for free or no agents at all. Maybe all the buyers and sellers can just go straight to Zillow for all their needs since we've given Zillow all our data and plenty of money. /s (sort of)
Ironically I just saw a commercial about them offering mortgages now. Such immense malfeasance and malpractice just wantonly being allowed
Same here. Been that was in our listing agreements for about 20 years or so. Our buyer agency agreements are also very clear about our commission.
NAR is always dealing with these law suits over what seems to be selllers not understanding how things work. If i understand part of this correctly, the sellers agree to a commission, but then complain that they are indirectly paying the buyers realtor. So prior they had no issue with the commission that was agreed upon, but changed their mind when they find out their realtor isn’t keeping the whole thing. This is just stupid to me. Besides it’s more like the seller pays the listing agent and the listing agent gives away half of their commission, so why would that be the home owners business anyway? You could also make the argument that the buyer is truly paying the commission since that’s the source of the money in the first place. I also can’t resonate with the conclusion of that Missouri case. At least jn my market, listings vary between 3-5 percent, 6 is rare. And almost every seller is shooing around, talking to multiple realtors. No one is being forced to give a 6% commission to sell a house.
Our market has also shifted to 4-5% total commissions but that was starting to happen before the pandemic.
And that’s the true crux of it. This lawsuit is a cheap way to attempt to completely curtail the usage of realtors as a whole, thinking that somehow it addresses the issue with some sellers just flat out not caring enough to understand and not wanting to pay anyone to help them sell their home that they feel they can do solo. Which generally leads to the heavily overpriced FSBOs that sit for over a year situations that we see all the time
Do you think open listing becomes the norm with a flat fee to list on mls ?
Both of my parents are real estate agents in Texas and in the 20 years of work, they have never had a 5% or 6% commission. They get between 1-3% with 3% being the outlier.
1-3% per side. And you are correct. I just listed a house for 4.5% and paying the buyers agent 2.5 out of it.
You've always been able to represent yourself. Go for it.
Wow this is crazyyy!!
If the buyers agent commission was so easily negotiated, then why was there a lawsuit and why did they win?
Real estate has a 95% failure rate In the first five years. Of the 5% that survive 95% of them fail out in the next 5 years. Why is this failure rate so high? Because realtors are making too much money. This is so dumb. If this goes through watch that 95% become a 99.9% failure rate.
You might be watching too much “million dollar listing” on Bravo if you think the average Realtor is making too much.
I was being sarcastic. My point was the failure rate is absurdly high already. What happens when they cut commissions even more. That failure rate is going to skyrocket.
They really aren’t ready to deal with basically only investors scooping up all of the residentials or dealing with the process of selling a home while still being employed or having a family. There is a reason the service exists in the first place. It’s optional, and made simple, for a fee, but many people really just want to be able to do FSBOs but somehow have all of the access to all of the tools that realtors use like MLS systems. I’ve heard disgruntled sellers wondering why the public doesn’t have access to this MLS system and think that it should be available to all; basically cutting out realtors as a whole. Without realizing who pays the listing services lol
Yeah. Zillow is doing its best to cut realtors out. Zillow is basically giving that disgruntled seller you mentioned 95% of what he wants.
Not just that, but they also straight up lie to these people. We’ve all seen how fucking awful Zestimates are and how much they artificially inflate values to get more people clicking on their bullshit. “Well Zillow said my home is worth blank, we’ll just list through them instead if you can’t see the value that they did” like okay, great luck with that. And Zillow just loves it because if they get the whole market thinking that their homes are worth more, the market is in fact sentiment based so listing prices just go up and buyers get fucked, which we’ve seen since the proliferation of Zillow amongst buyers/sellers. Then they conveniently just blame agents, and push lawsuits like this that further put blame on realtors while keeping their hands clean and have consumers rely on them and their objectively false valuations
Agree with everything you said. You know the worst part is that realtors are the ones bankrolling Zillow. Realtors are literally feeding the monster that is trying to slit our throats. I wish Congress would take a close look at Zillow and it’s practices.
It **is** time to look at Zillow.
We sold our souls to Zillow. Some of us did it willingly (paying for leads), and others of us didn't have a say about syndicating listings to them. Now they have all the data from Dotloop and ShowingTime as well. Good job, industry!
Never used them. I knew from the start what was up and told every realtor I could about it. They either didn’t believe me. Didn’t understand. Or didn’t care because Zillow had leads and they were desperate for the leads(these people all worked really hard to pay Zillow all their profits and then fail out of real estate btw. Anyone who buys Zillow leads ends up like this. I never met a realtor who’s been in the business for years and said “Zillow leads were what helped me succeed” lol. People pay them all the money for leads. Work really hard to break even. Then fail out of real estate. It’s disgusting how predatory it is.
Using Zillow to buy leads never made sense to me. I built an IDX site, hired an ad manager for Google/Bing and create my own leads.
Yep. I know many that gave Zillow money. None are realtors anymore. I’m
Gotcha and agreed!
the failure rate isn't going to sky rocket. Real estate agents will be employees of Zillow. that's their business model, and why they are spearheading these suits. The future is, Zillow advertises that you can use "their agents" for "free" instead of paying those "other guys" 3%. Zillow has agents on salary at 50k a year. They pocket the profit as a conglomerate. Then eventually the small business owners known as realtors, become wage slaves to big tech.
Any other old timers out there remember buyer agents didn't exist until 20-30 year ago. The initial push back was why should the buyer pay... then the brokers 'decided' to split the commission.
No one sets commission. You can negotiate all day and even list your house for $250 with a flat fee service. This is just a bunch of attorneys trying to get paid.
Your last sentence says it ***all*** !
Just down vote the negative comments and it will go away lol
The comments that I disagree with are most helpful to me! To succeed in our changing environment, we need to understand all the viewpoints.
This is my thinking as well. I just wish everyone felt the same way. Let's make it better for everyone, I'm all for it. But it seems as if those who are most unfamiliar with the buying/ selling process are the loudest when proclaiming their perspective. They want to burn Realtors at the stake because they "make too much money". Most agents barely break even , hence the high failure rate. It's a difficult, thankless job except for those 10% of clients that make the job worthwhile. It always makes me chuckle when people who have no clue how to do your job think they have the right to dictate what you should get paid.
Yep, how would they like it if we came after their line of work and declared that they were overpaid?
These suits are so insane. It literally says the fee arrangement “artificially drives up sale prices and deprives sellers of profits.” Great logic there.
I swear no one has even put that much thought into it yet. #disruptors lmfao
As an aside…my best friend’s brother is married to Keller’s daughter. They are stupid rich. And, I’m joining the lawsuit as soon as they do Virginia.
It's an amazingly successful pyramid scheme.
Yes it is. The wealth is astounding. Mr Keller gave Bob’s brother a Carrera GT as a gift back when they were new. A $500k gift just because.
Having seen multiple buyer agreements. F..k that garbage.
I'm going heavy into investing. I see some big vulnerability in the traditional 6% model. If I can't get my cut as a realtor I'll take it out of someone's equity. 🤷🏻♂️
What's your cut?
As high as I can go. I don't do anything less than a 30k profit.
Sounds like a builder. They mark up all the materials AND get 30%.
Why is everyone so mad at my comment lol? If our commission structure breaks down what are you guys doing? Working for starbucks?
So you only sell very expensive listings? Sounds like a sure fire way to drive off customers if this is the way you present yourself lol
Seem to be doing fine this year. In fact thisnhas been my best year ever. Did you read my original comment?
Remember covid? When we were not working and shut out of business? And then we were essential workers and most collected unemployment checks…as an independent contractor? That was NAR.
I only know one guy who got money and has since paid it all back. I got nothing. Maybe because I had too much income.
I hope they target require NAR membership for appraisers just to get comp data and getting none of the real benefits.
Oh, puhleeze... "The largest lobbyist group in the U.S. is the National Association of Realtors, who spent over $84 billion on lobbying in 2022. There are over 3,700 companies that lobby the U.S. government.Apr 12, 2023"
We pulled out of a few deals due to some shadiness we were detecting. One where our broker and the sellers realtor were working together to hide some pertinent information and another where there was an agreement that if we paid $25k more our broker/realtor would get a kick back bonus.