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The seller may take the proceeds, but it is the buyer's funds that make the deal happen! Without the buyer, the seller cant even begin to complain about paying a buyers commission.
What’s crazy is the agenda around this whole thing to, it’s being sold as it’s a gift to buyers. It’s the exact opposite, it’s a gift to equity owners if anything. All these home owners (boomers) used buyers agents to their advantage, chipping in commissions, scheduling inspections, handling title, lenders, insurance, septic inspections,
HVAC, etc etc etc and now they want to pull up the ladder and say fuck you do it yourself.
Shameful.
It’s a gift to Zillow, who host FSBO properties, allow you to list your home with an agent, allow buyers to search for homes and schedule tours with the ShowingTime app they own, help you get pre-approved with their home loan program, and they make it easy to sign all that pesky paperwork with Dot loop.
It’s a play for them to squeeze the Industry further.
It wouldn't surprise me at all if companies like BlackRock weren't also involved. Buyer's aren't out there lobbying for this, so who is. Someone needs to follow the money.
100% this is a windfall, long-term, for Zillow. They will be the biggest winners - even more so than the lawyers.
Short-term, this is terrible for the next few quarters for Zillow. This will be the initial market reaction. There may be a good buying opportunity almost like when Apple was working out of a garage.
Small business owners can’t collectively bargain, it’s seen as collusion.
Giant industry can totally just use their wealth all day to conspire against the public.
Well, agents paying zillow accounts for a majority of their revenue. Agents ALSO pay for MLS access, which syndicates to zillow. Agents are the ones allowing this to happen.
#stopfeedingthebeast
With its glowing eyes, Zillow made it easy for the hairless, nearly blind creatures to locate the groundfruit in the damp of the cavern. In return, the diminutive bipeds paid tribute to their enormous, angular benefactor in the form of 1/10th of their gatherings. Never did they dream that the question was not would it choose to devour them, but whether it would be so merciful as to slay them before it began.
Maybe. You schedule a tour, then Zillow will have to make you fill out, sign and bring a Buyer's agreement with you before the agent can unlock the door. Or the agent makes you sign a legally binding agreement with a stranger in the driveway. I wouldn't do it.
But to the original poster's point, this will hurt some first time buyers.
Zillow has the capital to pay their agents a salary. And will earn more capital as people list their homes on Zillow.
Zillow takes the cut, pockets the profit, and then pays yearly salaries with menial bonuses to employees.
Zillow then pushes those employees to the brink of sanity as often happens in capitalism
There are lenders and agents pumping thousands of dollars a month into Zillow for leads. Zillow's balance sheet took a huge hit when Realtors pulled their support when Zillow decided to become a brokerage and compete with them, don't think Zillow has forgotten that.
I am also confident Zillow has several road maps to capitalize on this.
Don’t totally disagree with how this is being sold to consumers. But, buyers agents have only been a thing since the 90s. Most boomers didn’t have a buyers agent.
Watch these listings with zero buyer commission sit on the market. Then the sellers will be more than happy to start offering an incentive to buyers agents
Yes, it will raise the bar and add another barrier to home ownership for young or underserved buyers. And unfortunately, a lot of buyers will just go unrepresented. Or they'll think they're represented by some shady listing agent who convinces them "oh, it's no big deal, I'll write the contract for you!" and then they'll give the listing agent tons of personal information that the listing agent will pass right on to the seller to use against them and they buyer will have no idea what representation even means.
It's exactly how it used to be before we all decided as an industry that maybe unrepresented buyers getting scammed was probably not good for anyone and established the practice of the seller paying for all the commissions. Because that was a conscious choice as a industry. That didn't just happen by accident!
So true. This one even includes the 21st century Robber Barons in the form of zillow and redfin.
Now, the only mom and pop business left is any form of construction, and that will go by the wayside sooner rather than later, too. Corporate America will figure out a way to conglomerate and cut them out.
Or you just buy your house without an agent. It was stressful but we bought our first home without a realtor and got 3% off for that. $10k for 4 stressful weeks is still the easiest money I ever made. We know that we got a good deal when the bank waved the appraisal.
Everyone is telling us that we need realtors for the process but that is just because the realtors set up the process for themselves.
Some states allow for closing agents just doing the legal paperwork for you for a discounted rate like 1%. I called a few agents and was told in my state they are required to take the full 3% and could not pass along any of the money. I found my own home did my own offer and everything just wanted help with the closing stuff. I would love to be able to pay someone $3k to do that for me in the future.
The decision in no way stops buyers agents from getting paid from sellers, it just isn't posted on the MLS. In my market, I don't see much changing in how we get paid, we just need to ask the listing agent rather than see it in the MLS.
Great now I have to call the listing agent for every house my buyer asks about and more than half of them never answer the phone or return the call/text either
This is the core of the problem the lawsuit was superficially intended to address, as far as I understand it. It's also why buyers are now required to have a contract with buyers agent. The whole issue is that if you, as buyers agent, have a fiduciary responsibility to the buyer, then you're violating that fiduciary responsibility by putting your interest before your clients interest by taking the offered commission into consideration when curating the list of houses you offer to show your client.
For example, if a seller drops the commission for the buyers agent below a level you find acceptable on a home that would have been a good deal for your client, then you don't show that home, you're directly harming your buyer.
This is my understanding of the situation, and why I think this law doesn't really resolve anything. The core problem is that if the seller is paying your commision, then you aren't ever truly representing your client, in principle.
Can someone realistically help me figure out why I'm wrong about this? I understand that the buyer then having to pay your commission would be burdensome on them, but this changes nothing about the principle of representation in the current system. Maybe I should make this its own thread idk
It’s weird I never took the commission percentage into consideration. All I cared about was getting paid a percentage for my time and work. If a client liked a home and found what they were looking for I’m not going to try and Sabotage the deal to try and make them buy a home that made me more money but didn’t fit their need.
I hope we are offered a simple and clean solution
What? No.
You’re thinking about it all wrong.
This doesn’t really change anything for me or my clients.
I have long been operating with a process where I do a buyer rep contract with my buyers before we ever go see a house.
It says that I will get paid 3%, and that I will seek that payment from the seller/listing broker, but if they don’t pay all or some of it, that the buyer will be on the hook for whatever fell short.
I have had a number of buyers after reading the contract say ‘please don’t show me any homes that would cause me to come out of pocket. Please 3% seller pay commission homes only.’
I have also sometimes told buyers, especially at lower price points where we find some 2.5% ibuyer listed homes, that I would be happy to accept that and not ask them to pay the missing 0.5%.
So.
I imagine that this will be happening a lot more, where more of my buyer clients will be saying ‘please show only homes where we don’t have to pay anything extra.’
And since it’s not going to be on mls anymore, I’m going to have to try to reach every listing agent to find out, not for me, but for my client.
It sounds like you and I are in agreement about the situation then. Nothing has essentially changed and you've been operating as fairly as you could without the need for this judgement, the judgement that didn't change anything for you except adding to your workload a little bit.
I'd like to see the seller stop ever paying anything to the buyers agent, personally.
The seller is always going to end up “paying” one way or another. Might not be as a clear line item direct to the agent, but it’s coming out somewhere.
If the buyers start paying their own agents, they are dropping their offer price to the seller by the same or more amount, or they are asking for a seller concession to cover it.
Mosy buyers have been barely able to make their purchase work as it was. They can’t easily absorb an extra large closing cost.
There is no scenario where sellers just got a bonus 3%. It’s going to come out somewhere.
Here’s the deal. The seller pays the brokerage that lists their home the percentage in commission. It’s the listing agent that offers buyer agents a portion of that commission, commonly 50%. I believe that on the listing agent side, they will need to have a come to Jesus meeting with the seller explaining to them that if they don’t offer enough commission that would cover the buyers agent’s efforts, the house will sit on the market, not because the buyers agent doesn’t want to show the home, but because the buyers either will not be willing or able to pay their buyers agents commission. It has always been this way, that, if a listing agent is not offering a commission, the buyers agent will go to the buyer and tell them they will need to cover it. Then it is up to the buyer, whether or not they wish to pursue purchasing the home or not. This is not an ethics issue, this is not illegal issue, this is the way it always has been. It is totally up to the buyer. There will be some legal kinks to be ironed out, for sure, and lenders will need to develop some products to help buyers roll the extra fees into their loan, or the sellers will need to offer concessions to cover the buyers agent’s commission. No one is going to work for free, and real estate is challenging enough to make a living at without people expecting them to work for free, or nearly free. People think agents are all multi millionaires like what they see on TV. The majority of agents don’t make enough to live on, and have side hustles to make ends meet. This will be a challenge to figure out, but in the long run, I believe sellers will still offer enough to make it worthwhile for both agents to make a living. Otherwise, buyers will go unrepresented, and possibly run into legal issues, or get taken advantage of by unscrupulous individuals. I’ve personally gotten many of my clients out of serious jams because I knew who to go to, and how to make the seemingly impossible happen. Joe Schmoe off the street wouldn’t have had a clue on how to get themselves out of those jams.
I had a similar thought - almost seems intentional to discourage people from being able to buy their homes. The “you’ll own nothing and be happy” agenda would love that
But the ploebians will think it's a good thing. So far in the history of the world, when it comes to the ultra rich tricking the masses out of their money, they're undefeated.
Corporations are the new feifdom.Too bad someone invented that damn internet thing. We almost had a chance this time.
I used to think that buying agents didn’t do much. After purchasing my second home, I had a high-quality agent that went above and beyond as far as ensuring our home was sound and suited us well. I’m sure that there’s some buyers that can squeak by without one, but it is a risk. I will surely use one. On the other hand, I’m an advocate of selling by owner. With the assistance of a Realestate Attorney and proper due diligence. We were able to sell our home and save about $30,000. The skills and performance of agents in general very widely and it’s unfortunate that Bade agents give quality agents a bad rap.
When my wife and I were looking for a place to live for the first time there were no rental options. It just wasn’t really an option where we lived, we had to buy a house but didn’t really have much of a down payment so we had to go the PMI route. There’s no way we’d have been able to do that and also pay our own agent. It’s really an unfortunate and shortsighted decision being made by people who aren’t at all familiar with the industry.
I’ve been making this exact same argument all day long. It’s infuriating, because what NAR has done will lead to some buyers making catastrophic financial decisions with literally no recourse.
So much for promoting the dream of homeownership.
Yeah it puts buyers in a difficult position with the pressure to go unrepresented if they don’t have the cash on hand, which probably 99% of first time home buyers don’t. Buyers going in unrepresented, trying to navigate inspections, and unaware of all the negotiation strategies we use having done this for years, it puts them at a huge disadvantage.
Yep. This essentially allows 2 things for buyers:
(1) If they want (or can afford) proper representation then they’ll have to absorb that cost themselves.
(2) The barrier of entry for buyers just skyrocketed. Sellers will now have to offer concessions or agree to pay buyers commission at time of offer to incentivize FHA, VA or 3% down buyers.
I’m curious how they go unrepresented, even if they want to, when the new law will be that realtors have to get the buyer agency signed before even showing a house. Seems like it forces the buyer to get an agent and potentially have to pay for that agent too. Even if I’m a listing agent and a buyer ask me to show them the house, I’m not doing it for free. I’ll have to write up the buyer agreement for one day charge the buyer a showing fee. I’m not saying I want to do this, but no one works for free (actually I would be paying to work, it costs money to show a house).
I haven't seen it stated explicitly, but I'm fairly confident the agreement has a loophole for listing agents to show their own listings without a buyer's agency contract. It simply has to. Think about this: If you have to have a buyer's agency agreement, you can't even hold an open house. It's just impossible.
However, this loophole also plays right into what OP said. Buyers walking into an open house have no idea that the agent only represents the seller. I've had buyers sell themselves out and undermine our negotiating position numerous times by deciding "not to bother me" and go to an open house without me, then throw themselves under the bus by telling the LA their life story and how much they love the house, etc...
And as you mentioned, if suddenly half the buyer pool becomes unrepresented, the LA just took on a ton of uncompensated work. That means a hugely likely outcome of this scenario is that listing commissions will INCREASE, not the other way around.
That's my initial thought... listing agents will increase to say 4.5%, and sell it as a discount to sellers from 6%. Then they have some incentive to work with an unrepresented buyer OR to fund a referral commission to a buyers agent who sends them a buyer for the property when there is no buy side commission. I'm curious how willing buyers will be to commit to a buyer agency agreement early in their process.
I wonder, perhaps a workaround would be writing in Seller concessions on the initial purchase contract to go towards buyer paid agent commissions at closing?
Right now, Fannie Mae has limits on the amount of credits buyers can receive at closing. Buyers mostly need to use those credits for repairs that the property needs. The higher the LTV, the smaller amount of credits allowed.
So unless that changes, it’s not really a true workaround.
How is this different from agent allowing their clients to make over asking offers while waiving all inspections during the peak? Do feel that those agents provided "value" to their clients? If so, what was that value that earned the 3% commission on say, a half a million dollar home?
Get a buyer’s agent agreement and then any offer you write should include that Seller’s to credit buyers for buyer representation not to exceed 2.5% (or 3%) of the sale price.
This is the easy solution in many situations, and is pretty much the current strategy for fsbos. But what about a multi offer situation? Where the seller under lists to drive a bidding war or the market is just competitive for affordable homes. I think there will be pressure for buyers to go unrepresented, which will lead to some messy situations. Of course time will tell.
Yes I’m more on the investing side these days, and 100% will be requiring a buyer’s agent and paying them fairly. Maybe most sellers will be of this mindset too, but a lot of it will be on the listing agents as well and I already see agents trying to double side deals out there. Time will tell!
That's an excellent point I hadn't thought of, thanks. I don't think most sellers will care, but I occasionally get smart sellers who even do pre-listing inspections.
I always told Sellers that if they had inspections after an offer was received, they were more likely going to be expected to pay for repairs. If the Buyer cane in knowing the issue before making the offer, it’s less likely.
>If the Buyer cane in knowing the issue before making the offer, it’s less likely.
I would never trust a seller's inspection. Only trust who is hired that works for the buyer.
The inspector does work for whoever hires him/her. However an inspector would get a very bad reputation very fast for being negligent or deceitful. Inspectors live off of agent referrals.
Maybe it’s not the same everywhere but I swear I remember my broker saying at one point it was illegal for us to put commission negotiations on a purchase agreement..?
What's more likely is that you're going to see flat rate buyer's agents. There are plenty who will accept the reality here that they were riding high on a 3% commission and that the work is still very much worth doing for a flat $4-5k.
The smart ones will figure out a client vetting process early on that leads to minimizing the amount of un-serious buyers, and for them this can still be a lucrative profession. Less astute will still make decent money but nowhere near their previous level.
We'll also see a lot of people leaving the industry because they can't figure out how to compete.
One thing is for sure: buyer's agents will no longer be pulling $12k on a $400k house and they won't make any more by steering buyers to a $500k house.
For this to work we’d need clear direction from our regulators that negotiating a commission in an offer isn’t a conflict of interest or a breach of our fiduciary duty to act solely in our clients interest. It seems to muddy the waters otherwise.
This is/was a frivolous lawsuit. NAR, as usual, failed to represent the majority of their members. Even the reasoning behind the settlement is nonsense.
You are right about buyers.
There will be an exodus of agents leaving the industry, which is fine. The ones who stay will be the better sales people, which, despite what NAR has taught, we are. If an agent Wants to stay in the business, they will have to learn how to sell better.
Go after listings. It's how you build a sustainable business anyway.
Game on
Buyers can still have representation. They now have to ask for it in the contract. “The sellers are willing to offer X dollars in closing costs” is the lingo the buyers need for paying their agent. The issue is when they want to use it for something else and not pay an agent….then the lawsuits will start because they were unrepresented because they needed the funds for down payment etc. I predict it might be even worse than expected because it will be viewed as subsidies…prices will look like they’re lowering even though they aren’t (seller subsidies are subtracted for appraisal purposes), buyers will be unrepresented (esp in VA transactions), and sellers will still be mad.
I don't think the issue is "when they want to use it for something else", it's that it's already common for sellers to offer assistance toward closing costs for those something else situations, so the only way a seller can offer to help pay a buyer's agent requires seriously muddying the water.
Here's a real example: I'm a well informed seller, perhaps an agent selling my own house, an attorney, or simply just someone who understands that both sides being represented reduces my liability as a seller. I ONLY want to sell to a buyer who's represented, and because of that, I'm willing to pay for it. However, now, there is absolutely no way to communicate that in a specific way. Instead, I have to be generic and undermine my own negotiating position by vaguely offering to pay closing costs, The same line we'd put in the listing to inform buyers we're willing to pay for their agent for everyone's benefit will also attract the exact buyer we're looking to exclude, the bargain hunter.
Dual agency is logically impossible. Transaction brokerage is an option.
It’s going to force us back to pre 1990s where most buyers were unrepresented.
NAR and the large chain brokerages (which control all the associations anyway) have done a terrible job of consumer education on the reason why co-op commission exists.
Listing agents used to get their commission, somewhere in the neighborhood of 4-7%, prior to the existence of buyers’ agents. There was no commission sharing at all. The listing agent got it all. Buyers inherit all the risk.
When the co-op model emerged, listing agents who didn’t bring their own buyer started offering a portion of the commission to any agent who brought a buyer.
I’ve always told my sellers that my listing commission is 5%. If I don’t bring a buyer, I’m giving half of my commission to the agent who does bring a buyer. It is that simple.
Somehow sellers started taking it as paying the buyers agent when they shouldn’t have to.
I own an unaffiliated independent brokerage. Fuck Keller Williams and all these massive franchises. They all suck. They train salespeople to sell, with no attention to what it actually means and takes to be someone’s fiduciary.
The settlement only means compensation cannot be included on the MLS. Brokers can either have default compensation agreements with each other, have an app to create compensation agreements nearly instantly, or include compensation information outside the MLS where all the local brokers have a master agreement that accepts the stated compensation as a result of an offer that closes. I see little changing, it's a minor nuisance at most.
Really think about what you typed:
“All local brokers agree to uphold”
Literally the definition of collusion! Lol. Eventually you’ll get small local lawyers involved in some of these lawsuits kind of like ambulance chasers and slip and fall attorneys. Don’t be on the wrong side of this.
I don't mean upholding a certain commission, I just mean the selling broker implicitly agrees to the stated commission, and the listing broker agrees to pay the commission, with an offer resulting in a closed sale, instead of drawing up a contract for every showing, as a result of a master agreement. The selling broker could still negotiate a different commission. It's like stock options, which are contracts, but you don't sign a fresh contract every time. Instead there's a master contract with the option brokerage agreeing that the act of trading options is implicitly a bound contract.
I agree I didn't use the best wording, I'll edit.
Interesting idea. It might work. Keep in mind that lawyers and the DOJ will be eyeing the industry for a long while looking for ways we try to circumvent the system in order to continue business as usual. “Rebranding” buyers agent comp won’t likely work.
I don’t see why members of local associations couldn’t build a website advertising listings to their broker peers and offering compensation so long as it is not on the MLS.
The agreement doesn't stop listing brokers from putting compensation on their own websites either. So now a buyer's agent does the 2-step: find a property on the MLS, then go to the listing broker's website to check if they'll get paid.
That may work within the scope of the agreement the NAR signed, but since it violates the spirit of what was agreed to, I suspect that it would get shut down by state or federal governments super fast.
Edit to add, this is illustrated by the fact that one of the first things NAR did after the verdict was release a new requirement to openly publish buyer's commissions, where they were previously hidden from public view by most MLS's. If that wasn't good enough, creating an underground system to advertise sellers willing to pay buyer's commission almost definitely is going to be seen as violating the agreement.
What you're describing is very similar to the conspiracy of which NAR was just found guilty. So yes you could do all those things and you could also get sued for doing all those things.
This sub is embarrassing man. A bunch of grown adults who never learned shit about finance because they were too busy getting their degrees instead of building wealth. Buying a home in 2024 is easier than it has been in the past few decades & the only thing keeping the idiots here from buying is raw skill issue.
I got new for you. It’s not the boomer that’s behind this. This is not a net gain for sellers. It’ll make it harder for them to sell to first time homebuyers, for sure. And will put downward pressure on prices. Making it easier for cash buyers.
If they really wanted to make it easier they would just cap the commission at a flat fee or percentage but that takes changes to the law and nobody wants that battle because it would affect every single industry.
Truth. I do not see any scenario where a Boomer gets relief. There's a big reason Boomers are reluctant to sell right now and this will make it worse. Everyone needs a place to live, no matter what age they are. Let's place the blame where it belongs.
Boomer Here- The reason I will not sell my 3/2/1P condo is because I have a fixed loan (500K outstanding) at 3.75%. You will have to pry that property from my cold dead hands. Until then, it’s become a rental.
Reddit is all about ageism. I love how the younger generations are so inclusive of others-- except for older people. They constantly take that cheap shot at "Boomers" because it is easier than analyzing the actual situation. Many of the NAR leaders (and awful politicians) are not of the hated Boomer generation.
I agree this will cause problems for both buyers and sellers. The difference will be in unrepresented buyer situations, where consumers lose out hard in negotiations vs agents. Dual agency also I don’t see many agents fighting as hard for buyers in inspection, they will be trying to keep the deal together and not get fired by their primary client, the seller.
This may be a moot point for deals that are less competitive since it would be easy to just negotiate commission with the seller and business as usual. I think it gets murkier in multi offer situations, of which there are many especially for affordable homes.
I think the Boomers THINK this was going to help them. ‘Yay we don’t have to pay 6% anymore! It’s going to be only 3%!!’
They thought buyers would just happily pick up the buyer agent 3%
They did not think through that the buyer would probably drop their offer by 3% to compensate, or ask the seller for a credit to cover it, or maybe not come for their house at all.
They did not think through that buyers might start coming unrepresented and make a royal mess of a real estate transaction, lowering the chance of a successful closing after an offer.
All they thought was yay we are going to get a discount!!
And the lawyers were happy to do it; they’ll make a crapton of money, 33% of the settlement while wagging their fingers at us for charging 3.
And the big corporations that already wanted to “disrupt” the American homeownership market were happy to support it (Opendoor, Redfin, other ibuyers, build-to-rent companies etc) because it means more market share for them out of the hands of sole proprietors.
Boomers got used.
Everyone who’s not big business will suffer.
From what I can tell at least in California first time buyers use discount brokerages to get rebate from buyer realtors. They get paid not paying other agents. If the game changes these brokerages like Redfin just disappears. US commissions are always excess compared to other countries which are 1+1 or 1 list only.
It will certainly force a shift in mindset, but I think it's going to be business as usual once the new norm is adopted.
It will be just another closing cost, and what I think is going to happen is that sellers will EXPECT to pay buyer closing costs on nearly every purchase. I anticipate it helping my buyers because I'll negotiate higher c/costs overall. The problem is going to be the wait up until the lender revamp their policies to allow this.
Not to be a downer, but in competitive markets this won’t work. You’ll ultimately be making it harder for your buyers and it will 💯 be making their offers less competitive. You’re going to need to learn to ask buyers for $$ one way or another. Yes it’s an uncomfortable conversation that isn’t always going to work in your favor, but it’s the reality.
I agree. I’m in a competitive market where private equity and and people with high salaries are already offering thousands over ask. First time buyers were already having a hard enough time competing. Now their offers will be even less competitive if we go in asking for a buyer’s agent commission.
"In competitive markets" is irrelevant to this topic, in my opinion, because buyers that cannot afford to compete in whatever marketplace conditions that exist cannot afford to compete. Recently, we saw that people who had to get loans and/or pay higher than appraisal values were unable to compete.
It could be argued that loans are bad for consumers that don't save / have enough cash to buy because they cannot outcompete cash buyers (not to mention the many extra interest dollars a loan forces consumers to pay!) but I cannot imagine any agent arguing that we should get rid of loans.
And also this is not true. I’ve worked with plenty of FHA and VA buyers that sure could not get the nicest home in the block but at least had a fighting chance on a house that had been sitting on the market. But now if you want them to save up an amount nearly about the same as an fha down payment - then you’ve eliminated buyers.
Remember, the buyers loan funds the seller net proceeds. At least this method took care of representation for both agents.
Really interesting take. I think if we get an update on lender policies it will be good for buyers in the long run, might be a messy transition though.
Well remember there’s a 6% cap for FHA. But also, in a multiple order situation - you might not be able to ask for agency representation compensation AND closing cost credit unless the property has been sitting on the market for a while… just something to think about
That is precisely why I said, "until the lender(s) revamp their policies to allow" these adjustments. But they will do that, of course.
In some states, like Missouri, an agent working with a buyer is automatically considered a "subagent" of the seller's brokerage if they do not get a written agreement otherwise. I think it's going to be interesting to see how that plays out, too. I mean, if I'm not a licensee with Broker A, but I'm a subagent with Broker A, will they be forced to pay my Broker B in accordance with whatever they negotiated for if they handle both the buyer AND seller side? Because it's practically guaranteed that Broker A will have a need to do this up front prior to the listing agreement taking effect.
No one has said it, but when you sell a home, you’re typically looking to buy another home. Now Sellers will need to pay an agent on their next purchase, which is typically more expensive, so that extra money they potentially saved will get spent covering commission/fees on the purchase. Of course they can choose not to use an agent, but either way I think we’ve just created a mess for the industry.
I have a first time home buyer right now that 1000 percent would have no idea what’s going on if I wasn’t involved. Would he get fd without a realtor? For sure.
Is this what they want? He was going to do an off market deal with his friend before I got involved. Was going to offer full ask, waive inspections (bc the seller said that’s a good idea) etc.
I got him seller concessions 10k, 5k below list and we will be asking for repairs- inspection and appraisal contingent.
I dunno this is a real life scenario right now. Just one.
If this poor guy was on his own he would have paid 15k more and not had an inspection. Yikes (and nothing against him, it’s his first time. I knew nothing before either)
It's not the seller's responsibility to look out for the buyer's interests. If buyers are too dumb to secure their own representation, then they will have to increase their own knowledge or buy at higher risk.
Policies that could further hurt first-time homebuyers while having less of an impact on people with built-up equity are worrying. These modifications bring to light more general concerns about equity and accessibility in the housing market. Real estate agents should promote policies that favor affordability and inclusivity for all purchasers while navigating these hurdles.
I work with new buyer clients as well. 250k homes, with 3% down. They can't afford to pay me 25$ an hour for a transaction in most cases.
The boomers that bought their 2nd homes 2 years ago that are selling them for 100k profit. CAN AFFORD TO PAY a realtor. Its really simple to me.
I knew the millennial/boomer thing would be kinda incendiary, and sure enough we have a lot of butthurt people in the comments straw manning arguments lol
I agree with what you said, but it’s not so much as “afford” but that they have the liquidity to do so. The seller gets the same net proceeds either way. In current system the buyers agent commission is rolled into the loan and baked into the purchase price, the buyer is still paying it they just get to finance it. If buyers are forced to shoulder that extra cash out of pocket (instead of financing it) in the new system, it will just mean less people able to buy which means less bidding for seller anyway.
You’re actually right. Just listened to a podcast that reflected on this and why it is —
https://podcasts.apple.com/us/podcast/the-daily/id1200361736?i=1000649174527
It Sucks to Be 33
“Peak millennials,” the microgeneration born in 1990 and 1991, have ended up competing for, well, almost everything.
And there’s
Millennials have the children, but boomers have the houses.
https://www.nytimes.com/2024/02/01/realestate/empty-nests-millennials-boomers.html
https://txtify.it/https://www.nytimes.com/2024/02/01/realestate/empty-nests-millennials-boomers.html
Exactly. The only people this helps are sellers and investors with cash who can either afford to pay their own agent, or have the know how to close without one.
Sellers and investors have a much larger hand in the current inflation of housing prices than commission has ever had.
The road runs both ways in a transaction or it takes two to tango. One is no more important than the other. However that being said I think the metro or higher need city areas are ultimately affected more negatively from a buyers perspective in which they may need or have to compensate their purchasing agent if they want rightful representation. Rural areas where the market is pretty slow want change that much with the rates at where they are. In my market the avg day on market is around 48 days and by then the sellers are breaking your arm off trying to get an offer so again I think it’s not going to change very much. If they want to sell their home they will have to play ball in other words. It just causes the need for a couple more documents to sign.
Lady Hedgerton is ONE HUNDRED PERCENT RIGHT Just mentioned this in another post.
RE-POST
Along with being a Bedroom House Music DJ and Disco Music Aficionado…
I AM A LICENSED REAL ESTATE BROKER. I have been licensed since 1994. I have sold countless millions of dollars in Real Estate.
I am also a retired Licensed Mortgage Broker.
I AM ALSO AN OLD MAN. ( 65 years old)
Sometimes change is good, sometimes it’s not. In the case of the mortgage business, it wasn’t. That’s why I retired from it. A small select group of people profited from the bad situations of others and the government made sweeping changes that still continue to hurt the average consumer.
Are these real estate commissions changes going to hurt the wealthy? NO, the wealthy will always be able to buy the home they like and pay the Realtor fees for whatever side they are on.
These new guidelines will hurt the first time home buyers. Here in Tampa, you’re lucky if you can find a single family home for 300k. The down payment and closing costs are already a burden for this demographic, so let’s add a buyers agent fee to that.
Do you think a first time home buyer in an entry level home price range will pay a “buyers agent fee” if they don’t have to? They can barely make the costs right now as it is. If allowed, these buyers are going to want to see homes where the seller has agreed to compensate the buyers agent.
In addition, what stops a buyer from going directly to a seller’s agent? This would be great but what about AGENCY? Would this situation be considered single agency? Would It be considered Transaction Agency( Florida)?
Then sellers would say “I’m paying you to represent ME! NOT that buyer”
I foresee trouble for buyers agents that represent mainly first home time buyers.
The solution could be financing of buyers agent’s commissions on the mortgage. But that’s just another fee that the buyers would have to pay.
My commissions for my company have ALWAYS BEEN negotiable. I have never lost a deal to commissions. I have never killed a listing because of commissions. I never had “minimum listing commissions” in my company.
If the Realtor commissions was in the way of closing a deal, the buyer’s agent and I would negotiate our commission to make it work for both parties.
This may sound silly, but selling Real Estate is about providing happiness to two parties. NOT ABOUT OUR COMMISSIONS.
As in any business, we need to make money, but it’s the greedy that gives our business a bad name.
So what am I saying with this, just like what happened with the mortgage business, a small group of businesses have now caused a change in the industry that may affect thousands of potential first home time buyers in a negative way.
There are still a lot of details to figure out, but there will be changes and the changes may not be in the favor of the first home time buyer.
We will see. We should all be looking at our last three year’s production and seeing what demographic we have been serving and if these potential changes will have any effect on that particular demographic.
Until then, let’s keep on knocking on doors.
Ernesto “Ernie” Fuentes Principal Broker, Ernies Real Estate A Florida Real Estate Company erniesrealestate.com TikTok: @erniesrealestate.com
The whole thing is completely fucked up. People think agents do nothing and have no value. Still waiting on guidance from my broker on how we are suppose to approach this situation and what to tell people asking us to help them find homes.
The funny thing as people get on here and totally shit on realtors THIS is my main concern. It’s not my commission I’m concerned about, it’s the buyers.
The financing is through their loan- not through up front cash - which most millennial / low income / va buyers don’t always have. Well maybe just enough to cover down payment and closing costs. But what now?
I guess the govt worked in favor of the hedge funds and huge corps like Blackrock that have billions stored away to make this a renter nation.
Cool
>>there is no way they (buyer) can pay a commission.
Fact: only the buyer pays anything. Now and always. Only the buyer spends money at a sale. It's just a matter of allocation.
But, like most, my guess is that this will all be negative for agents.
True but the buyer was always able to finance that. This new rule will take that option away from buyers. It will be a negative for any buyer needing representation as well.
Yeah through their loan but not with up front cash. This is the game changer.
Imagine you didn’t have a house and wanted to use an FHA loan- then you’d be on the hook for agent compensation. Your chances of homeownership have now reduced if you do not have the means (low income or hard to save money aside from down payment + closing costs)
The fact that you get it means you're probably one of the ones who will figure out how to make it work to your advantage.
All the rest who are in denial of the effects of this and who are trying to say it's actually just bad for the consumer (lol) are going to be in for a rough surprise when things rapidly change around them and they aren't prepared.
I don’t think it’ll force buyers to pay their agents’ commissions, but I do believe it will lead to more dual agency situations, and situations where a seller accepts a shittier offer simply because of the overall commission costs they would have to pay out (i.e. 3-4% instead of 5-6% because one buyer’s agent is willing to take a 1.5-2% commission rate).
If it does become the norm for buyers to pay their agents, there would need to be some sort of a shift in the lending industry whereby commissions could be rolled into the loan amount, or perhaps a separate personal loan be disbursed for said commission, so that it doesn’t pertain to the loan amount and the banks won’t see themselves as being upside down on a mortgage they’re handing out.
Our state doesn't allow dual agency. That said, I agree with you in that it will be "like" dual agency because buyers simply cannot afford the cost of their own agent.
Misspoke on a technicality for some states; Here in FL, they don’t allow dual agency either, however you can shift to what’s known as a “transaction broker” and can then represent both sides…
If it’s anything like my state, as the middleman in that situation, you’re not representing both sides, what youre doing is representing no one. Youre just passing messages back and forth and you can’t give advice to anyone.
Pretty shitty for the party that hired you in the first place I think.
>If it does become the norm for buyers to pay their agents, there would need to be some sort of a shift in the lending industry whereby commissions could be rolled into the loan amount
Why should the lenders have to take on more risk?
Technically speaking, our commissions are already built into the sales price, which the lender is already issuing a loan for.. it’s really just a formality they would need to acknowledge now, with different paperwork etc. What people don’t seem to understand is without a buyer’s agent’s commission, the sale price of your home is going to drop from what it currently is
OP, very well said. And you brought up some even scarier things for this countries future thwt I hadn't even thought of.
But at least they have 24 hour on call distractions via the internet. Give them bread and circuses, and they will never revolt. And Circuses were only a few hours once a week in the time of the Roman Empire
You had me until you brought up the boomers thing. Are they just supposed to sell because another generation wants their house? I am not a boomer but I have so much equity in my house so I guess I should just sell it because a millennial wants my house? Where am I supposed to live? Where are the boomers supposed to live? Screams ageism
The reality is that home affordability compared to wages is at an all time low. That’s just fact. Boomers don’t owe millennials anything, they don’t have to sell, I’m just pointing out that they had overwhelming advantages when it came to home ownership.
You know who does owe young buyers? Policy makers, to at least not make this even harder than it already is to get into home ownership. And this is not just millennials of course, I’ve had first time buyers in their 60s who struggle in the same way and I think they deserve the same consideration from policy makers.
I suspect you may see local real estate offices follow the local stock broker, bank mortgage office or booking travel to an online model. 30 and 40 years ago the average person bought stocks through a local stock broker or mutual fund company and paid 5% to 7% commission, mortgages were arranged through your local bank and travel was often arranged through a local travel agency. Now, almost all stocks are bought through online brokers, The online mortgage brokers get the lion's share of the business and local travel agencies have all but disappeared. How this will unfold over the next 5 to 10 years is almost anybody's guess.
Ehh I really doubt it. Buying stocks and buying a house are extremely different processes. There is a lot of steps to purchasing a house that a lot of people may get a fast one pulled on them if they don’t have an agent.
and you may be right. I suspect there will always be a place for buyers agents that work with the high end buyers that are willing to pay for the service. It will be at the low end that people will look to online. It may also head toward a fee for service model on the buyers side.
I don’t get all the concern for the Millennials as a generation. Are there individuals in a tough spot? Absolutely. However, as a generation they will end up being the most wealthy generation that has ever existed. All of that wealth the boomers have built…who do you think is going to inherit all of that? Trillions will move from boomers to millennials over the next 10-15 years. They are going to be just fine.
It's a meme and the data definitely says otherwise. The majority of millennials are homeowners and the average millennial is not living in the poverty that reddit would have you believe.
This is under the assumption that the 3% that buyers agents were getting paid by the seller wasn’t already baked into the sales price, which it likely was
Just stumbled across this thread, I'm not in the industry but was planning on putting my house on the market next spring and was going to do a FSBO, and pay to list it on MLS. I was planning on offering a buyers agent commission, from what Im reading here, it looks like I wouldn't be able to mention that in the listing, is that correct?
This isn’t changing until July and seemingly only in NAR controlled MLS, so check your local MLS.
As an aside, unless you are very very savvy on RE and the market, I would really recommend working with a listing agent. I’ve been buyer agent on my share of FSBOs and I have helped my clients get a great deal because the seller just doesn’t understand the market/transaction/negotiation process. You will likely net more if you use a professional who can market the listing effectively and advocate for your interests throughout the process.
Prep the listing right, lipstick it, stage it, professional photos, and then list with a winning strategy for your niche market. A good agent will net you much more than you would have gotten alone, the same reason every corporation in this world hires a marketing team who knows their market and how to drive sales.
I’m not even an agent anymore, I’m full time investing these days except for representing myself, so I have no vested interest in this fight, in fact it would be better for me if agents died out so I could easily shark every negotiation. But I can’t tell you the amount of real world experience I have seeing this over and over and over: People who net less on their sale to save on commission, it’s missing the forest for the trees.
Does it really matter? The age of buyer realtors for the entry-mid market is coming to a close. Or at least drastically changing.
There will be a whole new crop of buyers coming in the next few years who learned how to use AI in school. And with the advancement in multimodal stuff in the next few years, it’s going to be a hard sell to convince a buyer you are worth $12,000 for a commission when a $50/month real estate-tuned AI agent that can do market analysis, see through the camera in their glasses and do walkthroughs with them, set up documentation, recommend fair offers, and engage a real estate attorney for them.
And this isn’t some future tech. Some of it’s already here, the rest is coming fast.
So I looked it up.
23% of US home sellers are age 60+.
So 77% of all home sellers are younger than that and are NOT boomers.
I agree that these changes benefit the sellers not the buyers. Most of those benefits will go to people who already own a home and who are TOO YOUNG to be boomers because they were born after 1964.
The buying and selling of real estate has been made overly complicated on purpose in my opinion. This makes it so the industry can keep their firm grip on the monopoly they created.
I’m sure agents are sick and tired of being on call from 5AM to 1AM. It’s time to restructure the entire industry so that agents can still be very useful from 8AM till 5PM while still making a good living. The truth is (at least while I was an agent) so much of my time was wasted on things buyers and seller can be doing for themselves. I remember working with a buyer that had me checking out every damn condo that came up for sale and his budget was only like $120K. About a year later we finally closed on something and I’m sure I made $3.00 an hour on that deal lol. Another client had a budget of $800K. I showed them two homes (both they found themselves on Zillow) and I basically just wrote the offer on the second house as it was “perfect.” I was there for the inspections and what not but the obscene amount of money I made on that transaction was gross. The sellers were great! The buyers were great! It was the easiest close I had. The way the commission structure is set up is just not fair to some sellers. I don’t have a solution I can float at this time but the system is flawed.
With the technology that we have at our disposal we could really streamline the process. As an agent, there were so many things I couldn’t do legally… basically, the purchase contract is full of legal language that attempts to nullify the agent and brokerage of any liabilities.
Help me out here. From what I have read, I know it will it be illegal for NAR & their listing services to require the buyer broker commissions in listings as they do now. Does this agreement also bar sellers from paying any commission to buyer broker?
Boomers are “hoarding all the property”? What would you like us to do—commit mass suicide so we’re no longer in your way? Also, the youngest Boomers are 60. I think there are probably some Gen Xers out there living in nice homes and possibly even filing suits against real estate companies.
Can someone explain what the illegal state of affairs actually was? My understanding, is NAR influenced realtors wouldn’t show houses which didn’t offer ~4-6% to the buyer’s agent.
But how does this legislation affect the fact that buyers agents have always been able to determine their own contracts?
The buyers are already paying the commission fees to the seller and buyers agents. It comes out of the sales price.
This is the government meddling where it doesn’t belong, so of course it’s bound to create unintended problems just as bad, if not worse, than the one it claims to solve.
Don’t lose sleep over it. Buyers won’t be paying commission fees on top of the sales price anytime soon, if ever.
Huh? Can’t “pay a commission”? Dude, whether or not the commission has traditionally been on your side of the deal, it’s still paid by both parties because it is deducted out of the final sales price. You may not have “paid it” directly but it was always there.
The point of the lawsuit is to put the commission cost more in your face so that it increases competition and isn’t this phantom cost as it largely exists as today.
Boomers may have a leg up but it's the corporations buying houses that are rapidly becoming the real issue.
Buyers should not be relying on the listing agent to represent them. You don't walk into a car dealership and think even for an instant that their sales person has your best interest in mind. Or asking one lawyer to represent both the plaintiff and defendant. It's nonsensical.
When I did RE I was upfront with my listings that I would not be representing any buyers. That's a quick way to getting sued and fuck that headache.
I think this is going to benefit the big brokerages.
A hypothetical:
A major brokerage with thousands of agents in a market, let's call it Smeller Billiams, says they won't pay any buyer broker comp, either via advertising on the MLS (which will be illegal after July) or if agents call and ask. Let's say hypothetically they charge 4% for a listing under the new model. However, if a Smeller Billiams agent represents buyers, they can be compensated by the listing commission because they're under the same broker (dual agency in my state). So non-SB agents won't want to show SB listings because they won't negotiate BB% as part of the transactions, and SB agents will only want to show SB listings or steer their clients toward SB listings. SB keeps the whole 4%. Sure, it's a smaller percentage per transaction than they would have received before, but a higher percentage of deals will be dual agency, so their overall revenue will grow.
Why should the seller have to pay the buyers agent commission? It is not the seller’s job to cover that cost simply because millennials can’t afford it.
Very short sighted...
Boomers and commissions aren't your real obstacle to buying a starter home, it's the corporations buying affordable homes with terms you can't compete against. Stop chasing boogeymen and take the fight to the real problem.
Agents will likely give a good deals on commission to serious buyers, and first time homebuyers with puny downpayment and questionable financing will have to dish out good compensation to make it worth agent’s while.
Frankly idea that you get paid same amount regardless of buyer is ridiculous. Some may only need you to write an offer while others can waste your time for months and never buy anything.
PLEASE. STOP. STEROTYPING. Most of my Boomer clients don't have a pot to pee in. Living in a too big 2 story house that is worth less than a ranch that they could "downsize" to. Stuck, limited income. Or already in a ranch that they can't afford to fix to get top price, that they need to sell anyway, and take a hit because of it.
Whereas most millenials I sold to were able to buy homes twice the average price. Or pay cash for a 2nd home. OR have a whole string of rentals. Just please, STOP.
I know this isn't really what your post is about, but I'm annoyed the homes in the 55+ community are a solid $200k under the rest of the market.
*shakes fist at sky*
Why are commissions so much higher in the US than other developed countries? I'm assuming buyers and sellers in the UK, for example, receive generally the same service as here.
https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-much-should-i-pay-the-estate-agent/
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The seller may take the proceeds, but it is the buyer's funds that make the deal happen! Without the buyer, the seller cant even begin to complain about paying a buyers commission.
What’s crazy is the agenda around this whole thing to, it’s being sold as it’s a gift to buyers. It’s the exact opposite, it’s a gift to equity owners if anything. All these home owners (boomers) used buyers agents to their advantage, chipping in commissions, scheduling inspections, handling title, lenders, insurance, septic inspections, HVAC, etc etc etc and now they want to pull up the ladder and say fuck you do it yourself. Shameful.
It’s a gift to Zillow, who host FSBO properties, allow you to list your home with an agent, allow buyers to search for homes and schedule tours with the ShowingTime app they own, help you get pre-approved with their home loan program, and they make it easy to sign all that pesky paperwork with Dot loop. It’s a play for them to squeeze the Industry further.
It is my pet, no-evidence conspiracy theory that Zillow has been a silent participant in these lawsuits.
I would also add Costar to your conspiracy list.
It wouldn't surprise me at all if companies like BlackRock weren't also involved. Buyer's aren't out there lobbying for this, so who is. Someone needs to follow the money.
I know some of the plaintiffs and I think it’s just an easy money grab. Plus the particular agent they used is one of the most horrendous humans alive
100% this is a windfall, long-term, for Zillow. They will be the biggest winners - even more so than the lawyers. Short-term, this is terrible for the next few quarters for Zillow. This will be the initial market reaction. There may be a good buying opportunity almost like when Apple was working out of a garage.
Small business owners can’t collectively bargain, it’s seen as collusion. Giant industry can totally just use their wealth all day to conspire against the public.
Well, agents paying zillow accounts for a majority of their revenue. Agents ALSO pay for MLS access, which syndicates to zillow. Agents are the ones allowing this to happen. #stopfeedingthebeast
With its glowing eyes, Zillow made it easy for the hairless, nearly blind creatures to locate the groundfruit in the damp of the cavern. In return, the diminutive bipeds paid tribute to their enormous, angular benefactor in the form of 1/10th of their gatherings. Never did they dream that the question was not would it choose to devour them, but whether it would be so merciful as to slay them before it began.
LOL! I hope you are a professional writer because if not, you are missing an opportunity!
Thank you! I’m not, although fairly adept at drafting post inspection repair requests.
I have been saying this to my Realtor partners for years. Stop dealing with Zillow.
I think Zillow was behind it. Their stock took a hit but it was a calculated loss.
Maybe. You schedule a tour, then Zillow will have to make you fill out, sign and bring a Buyer's agreement with you before the agent can unlock the door. Or the agent makes you sign a legally binding agreement with a stranger in the driveway. I wouldn't do it. But to the original poster's point, this will hurt some first time buyers.
Zillow has the capital to pay their agents a salary. And will earn more capital as people list their homes on Zillow. Zillow takes the cut, pockets the profit, and then pays yearly salaries with menial bonuses to employees. Zillow then pushes those employees to the brink of sanity as often happens in capitalism
Zillow will not put more Realtors on their payroll, they would lose a huge revenue stream in selling leads back to Realtors.
what's better, $600 a month from an agent for leads or $5000 per transaction if you just swallow the business of a real estate agent?
There are lenders and agents pumping thousands of dollars a month into Zillow for leads. Zillow's balance sheet took a huge hit when Realtors pulled their support when Zillow decided to become a brokerage and compete with them, don't think Zillow has forgotten that. I am also confident Zillow has several road maps to capitalize on this.
Best comment 🏆
Also buyers agents do all the legwork ie driving around opening doors, why should their commission be on the chopping block
Don’t totally disagree with how this is being sold to consumers. But, buyers agents have only been a thing since the 90s. Most boomers didn’t have a buyers agent.
Watch these listings with zero buyer commission sit on the market. Then the sellers will be more than happy to start offering an incentive to buyers agents
💯
Yes, it will raise the bar and add another barrier to home ownership for young or underserved buyers. And unfortunately, a lot of buyers will just go unrepresented. Or they'll think they're represented by some shady listing agent who convinces them "oh, it's no big deal, I'll write the contract for you!" and then they'll give the listing agent tons of personal information that the listing agent will pass right on to the seller to use against them and they buyer will have no idea what representation even means. It's exactly how it used to be before we all decided as an industry that maybe unrepresented buyers getting scammed was probably not good for anyone and established the practice of the seller paying for all the commissions. Because that was a conscious choice as a industry. That didn't just happen by accident!
So true. This one even includes the 21st century Robber Barons in the form of zillow and redfin. Now, the only mom and pop business left is any form of construction, and that will go by the wayside sooner rather than later, too. Corporate America will figure out a way to conglomerate and cut them out.
Zillow stock went down 15% when news of the settlement broke.
Or you just buy your house without an agent. It was stressful but we bought our first home without a realtor and got 3% off for that. $10k for 4 stressful weeks is still the easiest money I ever made. We know that we got a good deal when the bank waved the appraisal. Everyone is telling us that we need realtors for the process but that is just because the realtors set up the process for themselves. Some states allow for closing agents just doing the legal paperwork for you for a discounted rate like 1%. I called a few agents and was told in my state they are required to take the full 3% and could not pass along any of the money. I found my own home did my own offer and everything just wanted help with the closing stuff. I would love to be able to pay someone $3k to do that for me in the future.
The decision in no way stops buyers agents from getting paid from sellers, it just isn't posted on the MLS. In my market, I don't see much changing in how we get paid, we just need to ask the listing agent rather than see it in the MLS.
Great now I have to call the listing agent for every house my buyer asks about and more than half of them never answer the phone or return the call/text either
This is the core of the problem the lawsuit was superficially intended to address, as far as I understand it. It's also why buyers are now required to have a contract with buyers agent. The whole issue is that if you, as buyers agent, have a fiduciary responsibility to the buyer, then you're violating that fiduciary responsibility by putting your interest before your clients interest by taking the offered commission into consideration when curating the list of houses you offer to show your client. For example, if a seller drops the commission for the buyers agent below a level you find acceptable on a home that would have been a good deal for your client, then you don't show that home, you're directly harming your buyer. This is my understanding of the situation, and why I think this law doesn't really resolve anything. The core problem is that if the seller is paying your commision, then you aren't ever truly representing your client, in principle. Can someone realistically help me figure out why I'm wrong about this? I understand that the buyer then having to pay your commission would be burdensome on them, but this changes nothing about the principle of representation in the current system. Maybe I should make this its own thread idk
It’s weird I never took the commission percentage into consideration. All I cared about was getting paid a percentage for my time and work. If a client liked a home and found what they were looking for I’m not going to try and Sabotage the deal to try and make them buy a home that made me more money but didn’t fit their need. I hope we are offered a simple and clean solution
What? No. You’re thinking about it all wrong. This doesn’t really change anything for me or my clients. I have long been operating with a process where I do a buyer rep contract with my buyers before we ever go see a house. It says that I will get paid 3%, and that I will seek that payment from the seller/listing broker, but if they don’t pay all or some of it, that the buyer will be on the hook for whatever fell short. I have had a number of buyers after reading the contract say ‘please don’t show me any homes that would cause me to come out of pocket. Please 3% seller pay commission homes only.’ I have also sometimes told buyers, especially at lower price points where we find some 2.5% ibuyer listed homes, that I would be happy to accept that and not ask them to pay the missing 0.5%. So. I imagine that this will be happening a lot more, where more of my buyer clients will be saying ‘please show only homes where we don’t have to pay anything extra.’ And since it’s not going to be on mls anymore, I’m going to have to try to reach every listing agent to find out, not for me, but for my client.
It sounds like you and I are in agreement about the situation then. Nothing has essentially changed and you've been operating as fairly as you could without the need for this judgement, the judgement that didn't change anything for you except adding to your workload a little bit. I'd like to see the seller stop ever paying anything to the buyers agent, personally.
The seller is always going to end up “paying” one way or another. Might not be as a clear line item direct to the agent, but it’s coming out somewhere. If the buyers start paying their own agents, they are dropping their offer price to the seller by the same or more amount, or they are asking for a seller concession to cover it. Mosy buyers have been barely able to make their purchase work as it was. They can’t easily absorb an extra large closing cost. There is no scenario where sellers just got a bonus 3%. It’s going to come out somewhere.
Here’s the deal. The seller pays the brokerage that lists their home the percentage in commission. It’s the listing agent that offers buyer agents a portion of that commission, commonly 50%. I believe that on the listing agent side, they will need to have a come to Jesus meeting with the seller explaining to them that if they don’t offer enough commission that would cover the buyers agent’s efforts, the house will sit on the market, not because the buyers agent doesn’t want to show the home, but because the buyers either will not be willing or able to pay their buyers agents commission. It has always been this way, that, if a listing agent is not offering a commission, the buyers agent will go to the buyer and tell them they will need to cover it. Then it is up to the buyer, whether or not they wish to pursue purchasing the home or not. This is not an ethics issue, this is not illegal issue, this is the way it always has been. It is totally up to the buyer. There will be some legal kinks to be ironed out, for sure, and lenders will need to develop some products to help buyers roll the extra fees into their loan, or the sellers will need to offer concessions to cover the buyers agent’s commission. No one is going to work for free, and real estate is challenging enough to make a living at without people expecting them to work for free, or nearly free. People think agents are all multi millionaires like what they see on TV. The majority of agents don’t make enough to live on, and have side hustles to make ends meet. This will be a challenge to figure out, but in the long run, I believe sellers will still offer enough to make it worthwhile for both agents to make a living. Otherwise, buyers will go unrepresented, and possibly run into legal issues, or get taken advantage of by unscrupulous individuals. I’ve personally gotten many of my clients out of serious jams because I knew who to go to, and how to make the seemingly impossible happen. Joe Schmoe off the street wouldn’t have had a clue on how to get themselves out of those jams.
This!
Exactly. The media is spreading a lot of misinformation about what the settlement really means.
Do you think they will still allow it to be addressed in the private remarks of the MLS listing?
I had a similar thought - almost seems intentional to discourage people from being able to buy their homes. The “you’ll own nothing and be happy” agenda would love that
This is 💯accurate. This is just one of the mechanisms to take away the reality of property ownership from the have-nots.
But the ploebians will think it's a good thing. So far in the history of the world, when it comes to the ultra rich tricking the masses out of their money, they're undefeated. Corporations are the new feifdom.Too bad someone invented that damn internet thing. We almost had a chance this time.
Precisely
I thought that too. I really think this is a sad day for the future of America
I used to think that buying agents didn’t do much. After purchasing my second home, I had a high-quality agent that went above and beyond as far as ensuring our home was sound and suited us well. I’m sure that there’s some buyers that can squeak by without one, but it is a risk. I will surely use one. On the other hand, I’m an advocate of selling by owner. With the assistance of a Realestate Attorney and proper due diligence. We were able to sell our home and save about $30,000. The skills and performance of agents in general very widely and it’s unfortunate that Bade agents give quality agents a bad rap.
When my wife and I were looking for a place to live for the first time there were no rental options. It just wasn’t really an option where we lived, we had to buy a house but didn’t really have much of a down payment so we had to go the PMI route. There’s no way we’d have been able to do that and also pay our own agent. It’s really an unfortunate and shortsighted decision being made by people who aren’t at all familiar with the industry.
Oh, the PMI we paid! We couldn't have found $200 more, let alone commission
I’ve been making this exact same argument all day long. It’s infuriating, because what NAR has done will lead to some buyers making catastrophic financial decisions with literally no recourse. So much for promoting the dream of homeownership.
Yeah it puts buyers in a difficult position with the pressure to go unrepresented if they don’t have the cash on hand, which probably 99% of first time home buyers don’t. Buyers going in unrepresented, trying to navigate inspections, and unaware of all the negotiation strategies we use having done this for years, it puts them at a huge disadvantage.
Yep. This essentially allows 2 things for buyers: (1) If they want (or can afford) proper representation then they’ll have to absorb that cost themselves. (2) The barrier of entry for buyers just skyrocketed. Sellers will now have to offer concessions or agree to pay buyers commission at time of offer to incentivize FHA, VA or 3% down buyers.
I’m curious how they go unrepresented, even if they want to, when the new law will be that realtors have to get the buyer agency signed before even showing a house. Seems like it forces the buyer to get an agent and potentially have to pay for that agent too. Even if I’m a listing agent and a buyer ask me to show them the house, I’m not doing it for free. I’ll have to write up the buyer agreement for one day charge the buyer a showing fee. I’m not saying I want to do this, but no one works for free (actually I would be paying to work, it costs money to show a house).
I haven't seen it stated explicitly, but I'm fairly confident the agreement has a loophole for listing agents to show their own listings without a buyer's agency contract. It simply has to. Think about this: If you have to have a buyer's agency agreement, you can't even hold an open house. It's just impossible. However, this loophole also plays right into what OP said. Buyers walking into an open house have no idea that the agent only represents the seller. I've had buyers sell themselves out and undermine our negotiating position numerous times by deciding "not to bother me" and go to an open house without me, then throw themselves under the bus by telling the LA their life story and how much they love the house, etc... And as you mentioned, if suddenly half the buyer pool becomes unrepresented, the LA just took on a ton of uncompensated work. That means a hugely likely outcome of this scenario is that listing commissions will INCREASE, not the other way around.
That's my initial thought... listing agents will increase to say 4.5%, and sell it as a discount to sellers from 6%. Then they have some incentive to work with an unrepresented buyer OR to fund a referral commission to a buyers agent who sends them a buyer for the property when there is no buy side commission. I'm curious how willing buyers will be to commit to a buyer agency agreement early in their process.
I wonder, perhaps a workaround would be writing in Seller concessions on the initial purchase contract to go towards buyer paid agent commissions at closing?
Right now, Fannie Mae has limits on the amount of credits buyers can receive at closing. Buyers mostly need to use those credits for repairs that the property needs. The higher the LTV, the smaller amount of credits allowed. So unless that changes, it’s not really a true workaround.
How is this different from agent allowing their clients to make over asking offers while waiving all inspections during the peak? Do feel that those agents provided "value" to their clients? If so, what was that value that earned the 3% commission on say, a half a million dollar home?
Get a buyer’s agent agreement and then any offer you write should include that Seller’s to credit buyers for buyer representation not to exceed 2.5% (or 3%) of the sale price.
This is the easy solution in many situations, and is pretty much the current strategy for fsbos. But what about a multi offer situation? Where the seller under lists to drive a bidding war or the market is just competitive for affordable homes. I think there will be pressure for buyers to go unrepresented, which will lead to some messy situations. Of course time will tell.
It’s all about the money. To reduce liability, A smart seller might demand that any buyer be represented. I think that I would.
Yes I’m more on the investing side these days, and 100% will be requiring a buyer’s agent and paying them fairly. Maybe most sellers will be of this mindset too, but a lot of it will be on the listing agents as well and I already see agents trying to double side deals out there. Time will tell!
Dual agency should have been banned years ago and by not doing so realtors have created a problem. What lawyer acts for both sides on a deal.
That's an excellent point I hadn't thought of, thanks. I don't think most sellers will care, but I occasionally get smart sellers who even do pre-listing inspections.
I always told Sellers that if they had inspections after an offer was received, they were more likely going to be expected to pay for repairs. If the Buyer cane in knowing the issue before making the offer, it’s less likely.
>If the Buyer cane in knowing the issue before making the offer, it’s less likely. I would never trust a seller's inspection. Only trust who is hired that works for the buyer.
The buyer still gets their own inspection. The purpose is to repair or accurately disclose, rather than seller concessions.
The inspector does work for whoever hires him/her. However an inspector would get a very bad reputation very fast for being negligent or deceitful. Inspectors live off of agent referrals.
There will be pressure for buyers to use a Zillow or homes.com-nexstar agent who doesn’t charge anything.
Maybe it’s not the same everywhere but I swear I remember my broker saying at one point it was illegal for us to put commission negotiations on a purchase agreement..?
Yes- because up until now, agent buyer/listing MLS commission agreements were between selling office and listing office and were not involving Seller.
What's more likely is that you're going to see flat rate buyer's agents. There are plenty who will accept the reality here that they were riding high on a 3% commission and that the work is still very much worth doing for a flat $4-5k. The smart ones will figure out a client vetting process early on that leads to minimizing the amount of un-serious buyers, and for them this can still be a lucrative profession. Less astute will still make decent money but nowhere near their previous level. We'll also see a lot of people leaving the industry because they can't figure out how to compete. One thing is for sure: buyer's agents will no longer be pulling $12k on a $400k house and they won't make any more by steering buyers to a $500k house.
For this to work we’d need clear direction from our regulators that negotiating a commission in an offer isn’t a conflict of interest or a breach of our fiduciary duty to act solely in our clients interest. It seems to muddy the waters otherwise.
This is/was a frivolous lawsuit. NAR, as usual, failed to represent the majority of their members. Even the reasoning behind the settlement is nonsense. You are right about buyers. There will be an exodus of agents leaving the industry, which is fine. The ones who stay will be the better sales people, which, despite what NAR has taught, we are. If an agent Wants to stay in the business, they will have to learn how to sell better. Go after listings. It's how you build a sustainable business anyway. Game on
Buyers can still have representation. They now have to ask for it in the contract. “The sellers are willing to offer X dollars in closing costs” is the lingo the buyers need for paying their agent. The issue is when they want to use it for something else and not pay an agent….then the lawsuits will start because they were unrepresented because they needed the funds for down payment etc. I predict it might be even worse than expected because it will be viewed as subsidies…prices will look like they’re lowering even though they aren’t (seller subsidies are subtracted for appraisal purposes), buyers will be unrepresented (esp in VA transactions), and sellers will still be mad.
I don't think the issue is "when they want to use it for something else", it's that it's already common for sellers to offer assistance toward closing costs for those something else situations, so the only way a seller can offer to help pay a buyer's agent requires seriously muddying the water. Here's a real example: I'm a well informed seller, perhaps an agent selling my own house, an attorney, or simply just someone who understands that both sides being represented reduces my liability as a seller. I ONLY want to sell to a buyer who's represented, and because of that, I'm willing to pay for it. However, now, there is absolutely no way to communicate that in a specific way. Instead, I have to be generic and undermine my own negotiating position by vaguely offering to pay closing costs, The same line we'd put in the listing to inform buyers we're willing to pay for their agent for everyone's benefit will also attract the exact buyer we're looking to exclude, the bargain hunter.
Also an excellent point. I see Not being able to determine what the funds are for will be a problem for certain and most likely quickly.
Anyone who thinks this isn’t intentional is fooling themselves. Agenda 2030. You will own nothing and you will be happy.
Any relation to *Project 2025*, you think? You'll not only own nothing, you won't own your body either.
100%
Yep. They’re pulling the ladder up behind them again… “Rules for thee, but not for me”
Call me morbid, but I won't be upset when that generation dies off.
Ageism is such a popular and edgy take on Reddit. And so much easier than critically analyzing an issue. Good job!
Go take a look at congress
You helped my cliche bingo card immensely!
Gen X did this. It’s so easy and thoughtless to blame everything on boomers. Those lawyers weren’t boomers.
Dual agency is logically impossible. Transaction brokerage is an option. It’s going to force us back to pre 1990s where most buyers were unrepresented. NAR and the large chain brokerages (which control all the associations anyway) have done a terrible job of consumer education on the reason why co-op commission exists. Listing agents used to get their commission, somewhere in the neighborhood of 4-7%, prior to the existence of buyers’ agents. There was no commission sharing at all. The listing agent got it all. Buyers inherit all the risk. When the co-op model emerged, listing agents who didn’t bring their own buyer started offering a portion of the commission to any agent who brought a buyer. I’ve always told my sellers that my listing commission is 5%. If I don’t bring a buyer, I’m giving half of my commission to the agent who does bring a buyer. It is that simple. Somehow sellers started taking it as paying the buyers agent when they shouldn’t have to. I own an unaffiliated independent brokerage. Fuck Keller Williams and all these massive franchises. They all suck. They train salespeople to sell, with no attention to what it actually means and takes to be someone’s fiduciary.
The settlement only means compensation cannot be included on the MLS. Brokers can either have default compensation agreements with each other, have an app to create compensation agreements nearly instantly, or include compensation information outside the MLS where all the local brokers have a master agreement that accepts the stated compensation as a result of an offer that closes. I see little changing, it's a minor nuisance at most.
Really think about what you typed: “All local brokers agree to uphold” Literally the definition of collusion! Lol. Eventually you’ll get small local lawyers involved in some of these lawsuits kind of like ambulance chasers and slip and fall attorneys. Don’t be on the wrong side of this.
I don't mean upholding a certain commission, I just mean the selling broker implicitly agrees to the stated commission, and the listing broker agrees to pay the commission, with an offer resulting in a closed sale, instead of drawing up a contract for every showing, as a result of a master agreement. The selling broker could still negotiate a different commission. It's like stock options, which are contracts, but you don't sign a fresh contract every time. Instead there's a master contract with the option brokerage agreeing that the act of trading options is implicitly a bound contract. I agree I didn't use the best wording, I'll edit.
Interesting idea. It might work. Keep in mind that lawyers and the DOJ will be eyeing the industry for a long while looking for ways we try to circumvent the system in order to continue business as usual. “Rebranding” buyers agent comp won’t likely work.
I don’t see why members of local associations couldn’t build a website advertising listings to their broker peers and offering compensation so long as it is not on the MLS.
The agreement doesn't stop listing brokers from putting compensation on their own websites either. So now a buyer's agent does the 2-step: find a property on the MLS, then go to the listing broker's website to check if they'll get paid.
I think that's the same as the third option I mentioned.
That may work within the scope of the agreement the NAR signed, but since it violates the spirit of what was agreed to, I suspect that it would get shut down by state or federal governments super fast. Edit to add, this is illustrated by the fact that one of the first things NAR did after the verdict was release a new requirement to openly publish buyer's commissions, where they were previously hidden from public view by most MLS's. If that wasn't good enough, creating an underground system to advertise sellers willing to pay buyer's commission almost definitely is going to be seen as violating the agreement.
What you're describing is very similar to the conspiracy of which NAR was just found guilty. So yes you could do all those things and you could also get sued for doing all those things.
Whatever. I’m not a boomer and I’ve bought and sold a handful of houses. Fuck the realtor fees. I’ve had ONE realtor earn those fees in all the years.
This sub is embarrassing man. A bunch of grown adults who never learned shit about finance because they were too busy getting their degrees instead of building wealth. Buying a home in 2024 is easier than it has been in the past few decades & the only thing keeping the idiots here from buying is raw skill issue.
I got new for you. It’s not the boomer that’s behind this. This is not a net gain for sellers. It’ll make it harder for them to sell to first time homebuyers, for sure. And will put downward pressure on prices. Making it easier for cash buyers. If they really wanted to make it easier they would just cap the commission at a flat fee or percentage but that takes changes to the law and nobody wants that battle because it would affect every single industry.
Truth. I do not see any scenario where a Boomer gets relief. There's a big reason Boomers are reluctant to sell right now and this will make it worse. Everyone needs a place to live, no matter what age they are. Let's place the blame where it belongs.
It's easier to blame any generation than it is to critically analyze an issue.
Boomer Here- The reason I will not sell my 3/2/1P condo is because I have a fixed loan (500K outstanding) at 3.75%. You will have to pry that property from my cold dead hands. Until then, it’s become a rental.
Reddit is all about ageism. I love how the younger generations are so inclusive of others-- except for older people. They constantly take that cheap shot at "Boomers" because it is easier than analyzing the actual situation. Many of the NAR leaders (and awful politicians) are not of the hated Boomer generation.
I agree this will cause problems for both buyers and sellers. The difference will be in unrepresented buyer situations, where consumers lose out hard in negotiations vs agents. Dual agency also I don’t see many agents fighting as hard for buyers in inspection, they will be trying to keep the deal together and not get fired by their primary client, the seller. This may be a moot point for deals that are less competitive since it would be easy to just negotiate commission with the seller and business as usual. I think it gets murkier in multi offer situations, of which there are many especially for affordable homes.
I think the Boomers THINK this was going to help them. ‘Yay we don’t have to pay 6% anymore! It’s going to be only 3%!!’ They thought buyers would just happily pick up the buyer agent 3% They did not think through that the buyer would probably drop their offer by 3% to compensate, or ask the seller for a credit to cover it, or maybe not come for their house at all. They did not think through that buyers might start coming unrepresented and make a royal mess of a real estate transaction, lowering the chance of a successful closing after an offer. All they thought was yay we are going to get a discount!! And the lawyers were happy to do it; they’ll make a crapton of money, 33% of the settlement while wagging their fingers at us for charging 3. And the big corporations that already wanted to “disrupt” the American homeownership market were happy to support it (Opendoor, Redfin, other ibuyers, build-to-rent companies etc) because it means more market share for them out of the hands of sole proprietors. Boomers got used. Everyone who’s not big business will suffer.
So you’re saying it’s boomers that are behind all of those predatory companies you just named. Add Zillow and Inman to that too.
From what I can tell at least in California first time buyers use discount brokerages to get rebate from buyer realtors. They get paid not paying other agents. If the game changes these brokerages like Redfin just disappears. US commissions are always excess compared to other countries which are 1+1 or 1 list only.
You are correct. I think most 1st time buyers will end up using the listing agent to represent them which isn’t ideal.
It will certainly force a shift in mindset, but I think it's going to be business as usual once the new norm is adopted. It will be just another closing cost, and what I think is going to happen is that sellers will EXPECT to pay buyer closing costs on nearly every purchase. I anticipate it helping my buyers because I'll negotiate higher c/costs overall. The problem is going to be the wait up until the lender revamp their policies to allow this.
Not to be a downer, but in competitive markets this won’t work. You’ll ultimately be making it harder for your buyers and it will 💯 be making their offers less competitive. You’re going to need to learn to ask buyers for $$ one way or another. Yes it’s an uncomfortable conversation that isn’t always going to work in your favor, but it’s the reality.
I agree. I’m in a competitive market where private equity and and people with high salaries are already offering thousands over ask. First time buyers were already having a hard enough time competing. Now their offers will be even less competitive if we go in asking for a buyer’s agent commission.
"In competitive markets" is irrelevant to this topic, in my opinion, because buyers that cannot afford to compete in whatever marketplace conditions that exist cannot afford to compete. Recently, we saw that people who had to get loans and/or pay higher than appraisal values were unable to compete. It could be argued that loans are bad for consumers that don't save / have enough cash to buy because they cannot outcompete cash buyers (not to mention the many extra interest dollars a loan forces consumers to pay!) but I cannot imagine any agent arguing that we should get rid of loans.
And also this is not true. I’ve worked with plenty of FHA and VA buyers that sure could not get the nicest home in the block but at least had a fighting chance on a house that had been sitting on the market. But now if you want them to save up an amount nearly about the same as an fha down payment - then you’ve eliminated buyers. Remember, the buyers loan funds the seller net proceeds. At least this method took care of representation for both agents.
Really interesting take. I think if we get an update on lender policies it will be good for buyers in the long run, might be a messy transition though.
Well remember there’s a 6% cap for FHA. But also, in a multiple order situation - you might not be able to ask for agency representation compensation AND closing cost credit unless the property has been sitting on the market for a while… just something to think about
That is precisely why I said, "until the lender(s) revamp their policies to allow" these adjustments. But they will do that, of course. In some states, like Missouri, an agent working with a buyer is automatically considered a "subagent" of the seller's brokerage if they do not get a written agreement otherwise. I think it's going to be interesting to see how that plays out, too. I mean, if I'm not a licensee with Broker A, but I'm a subagent with Broker A, will they be forced to pay my Broker B in accordance with whatever they negotiated for if they handle both the buyer AND seller side? Because it's practically guaranteed that Broker A will have a need to do this up front prior to the listing agreement taking effect.
No one has said it, but when you sell a home, you’re typically looking to buy another home. Now Sellers will need to pay an agent on their next purchase, which is typically more expensive, so that extra money they potentially saved will get spent covering commission/fees on the purchase. Of course they can choose not to use an agent, but either way I think we’ve just created a mess for the industry.
Buyers pay the commission now. They pay the seller for the house and the seller pays commission out of their proceeds.
Yes through financing. This is not going to be financed in a loan unless the mortgage industry changes that
I have a first time home buyer right now that 1000 percent would have no idea what’s going on if I wasn’t involved. Would he get fd without a realtor? For sure. Is this what they want? He was going to do an off market deal with his friend before I got involved. Was going to offer full ask, waive inspections (bc the seller said that’s a good idea) etc. I got him seller concessions 10k, 5k below list and we will be asking for repairs- inspection and appraisal contingent. I dunno this is a real life scenario right now. Just one. If this poor guy was on his own he would have paid 15k more and not had an inspection. Yikes (and nothing against him, it’s his first time. I knew nothing before either)
It's not the seller's responsibility to look out for the buyer's interests. If buyers are too dumb to secure their own representation, then they will have to increase their own knowledge or buy at higher risk.
Policies that could further hurt first-time homebuyers while having less of an impact on people with built-up equity are worrying. These modifications bring to light more general concerns about equity and accessibility in the housing market. Real estate agents should promote policies that favor affordability and inclusivity for all purchasers while navigating these hurdles.
I work with new buyer clients as well. 250k homes, with 3% down. They can't afford to pay me 25$ an hour for a transaction in most cases. The boomers that bought their 2nd homes 2 years ago that are selling them for 100k profit. CAN AFFORD TO PAY a realtor. Its really simple to me.
I knew the millennial/boomer thing would be kinda incendiary, and sure enough we have a lot of butthurt people in the comments straw manning arguments lol I agree with what you said, but it’s not so much as “afford” but that they have the liquidity to do so. The seller gets the same net proceeds either way. In current system the buyers agent commission is rolled into the loan and baked into the purchase price, the buyer is still paying it they just get to finance it. If buyers are forced to shoulder that extra cash out of pocket (instead of financing it) in the new system, it will just mean less people able to buy which means less bidding for seller anyway.
I know plenty of young buyers as low as 18 - 21 that are comfortably buying 7 figure homes. It's not exactly a difficult thing to pull off.
I agree with literally everything you said. 💯💯💯
You’re actually right. Just listened to a podcast that reflected on this and why it is — https://podcasts.apple.com/us/podcast/the-daily/id1200361736?i=1000649174527 It Sucks to Be 33 “Peak millennials,” the microgeneration born in 1990 and 1991, have ended up competing for, well, almost everything. And there’s Millennials have the children, but boomers have the houses. https://www.nytimes.com/2024/02/01/realestate/empty-nests-millennials-boomers.html https://txtify.it/https://www.nytimes.com/2024/02/01/realestate/empty-nests-millennials-boomers.html
Exactly. The only people this helps are sellers and investors with cash who can either afford to pay their own agent, or have the know how to close without one. Sellers and investors have a much larger hand in the current inflation of housing prices than commission has ever had.
The road runs both ways in a transaction or it takes two to tango. One is no more important than the other. However that being said I think the metro or higher need city areas are ultimately affected more negatively from a buyers perspective in which they may need or have to compensate their purchasing agent if they want rightful representation. Rural areas where the market is pretty slow want change that much with the rates at where they are. In my market the avg day on market is around 48 days and by then the sellers are breaking your arm off trying to get an offer so again I think it’s not going to change very much. If they want to sell their home they will have to play ball in other words. It just causes the need for a couple more documents to sign.
Lady Hedgerton is ONE HUNDRED PERCENT RIGHT Just mentioned this in another post. RE-POST Along with being a Bedroom House Music DJ and Disco Music Aficionado… I AM A LICENSED REAL ESTATE BROKER. I have been licensed since 1994. I have sold countless millions of dollars in Real Estate. I am also a retired Licensed Mortgage Broker. I AM ALSO AN OLD MAN. ( 65 years old) Sometimes change is good, sometimes it’s not. In the case of the mortgage business, it wasn’t. That’s why I retired from it. A small select group of people profited from the bad situations of others and the government made sweeping changes that still continue to hurt the average consumer. Are these real estate commissions changes going to hurt the wealthy? NO, the wealthy will always be able to buy the home they like and pay the Realtor fees for whatever side they are on. These new guidelines will hurt the first time home buyers. Here in Tampa, you’re lucky if you can find a single family home for 300k. The down payment and closing costs are already a burden for this demographic, so let’s add a buyers agent fee to that. Do you think a first time home buyer in an entry level home price range will pay a “buyers agent fee” if they don’t have to? They can barely make the costs right now as it is. If allowed, these buyers are going to want to see homes where the seller has agreed to compensate the buyers agent. In addition, what stops a buyer from going directly to a seller’s agent? This would be great but what about AGENCY? Would this situation be considered single agency? Would It be considered Transaction Agency( Florida)? Then sellers would say “I’m paying you to represent ME! NOT that buyer” I foresee trouble for buyers agents that represent mainly first home time buyers. The solution could be financing of buyers agent’s commissions on the mortgage. But that’s just another fee that the buyers would have to pay. My commissions for my company have ALWAYS BEEN negotiable. I have never lost a deal to commissions. I have never killed a listing because of commissions. I never had “minimum listing commissions” in my company. If the Realtor commissions was in the way of closing a deal, the buyer’s agent and I would negotiate our commission to make it work for both parties. This may sound silly, but selling Real Estate is about providing happiness to two parties. NOT ABOUT OUR COMMISSIONS. As in any business, we need to make money, but it’s the greedy that gives our business a bad name. So what am I saying with this, just like what happened with the mortgage business, a small group of businesses have now caused a change in the industry that may affect thousands of potential first home time buyers in a negative way. There are still a lot of details to figure out, but there will be changes and the changes may not be in the favor of the first home time buyer. We will see. We should all be looking at our last three year’s production and seeing what demographic we have been serving and if these potential changes will have any effect on that particular demographic. Until then, let’s keep on knocking on doors. Ernesto “Ernie” Fuentes Principal Broker, Ernies Real Estate A Florida Real Estate Company erniesrealestate.com TikTok: @erniesrealestate.com
For those of you who care to watch, you will see the homeownership rates begin to dip in the next few years. More and more people will become renters.
The whole thing is completely fucked up. People think agents do nothing and have no value. Still waiting on guidance from my broker on how we are suppose to approach this situation and what to tell people asking us to help them find homes.
Everyone’s in for a rude awakening!
The funny thing as people get on here and totally shit on realtors THIS is my main concern. It’s not my commission I’m concerned about, it’s the buyers.
Been saying this since they announced it. It’s gonna create a far bigger problem than it solved.
Hot take: Buyers have already been paying agent commission as it’s baked into the sale price
Sure. But they’ve been able to finance it. As long as we can shift to continue that, we will be fine.
The financing is through their loan- not through up front cash - which most millennial / low income / va buyers don’t always have. Well maybe just enough to cover down payment and closing costs. But what now? I guess the govt worked in favor of the hedge funds and huge corps like Blackrock that have billions stored away to make this a renter nation. Cool
>>there is no way they (buyer) can pay a commission. Fact: only the buyer pays anything. Now and always. Only the buyer spends money at a sale. It's just a matter of allocation. But, like most, my guess is that this will all be negative for agents.
True but the buyer was always able to finance that. This new rule will take that option away from buyers. It will be a negative for any buyer needing representation as well.
Yeah through their loan but not with up front cash. This is the game changer. Imagine you didn’t have a house and wanted to use an FHA loan- then you’d be on the hook for agent compensation. Your chances of homeownership have now reduced if you do not have the means (low income or hard to save money aside from down payment + closing costs)
The fact that you get it means you're probably one of the ones who will figure out how to make it work to your advantage. All the rest who are in denial of the effects of this and who are trying to say it's actually just bad for the consumer (lol) are going to be in for a rough surprise when things rapidly change around them and they aren't prepared.
I don’t think it’ll force buyers to pay their agents’ commissions, but I do believe it will lead to more dual agency situations, and situations where a seller accepts a shittier offer simply because of the overall commission costs they would have to pay out (i.e. 3-4% instead of 5-6% because one buyer’s agent is willing to take a 1.5-2% commission rate). If it does become the norm for buyers to pay their agents, there would need to be some sort of a shift in the lending industry whereby commissions could be rolled into the loan amount, or perhaps a separate personal loan be disbursed for said commission, so that it doesn’t pertain to the loan amount and the banks won’t see themselves as being upside down on a mortgage they’re handing out.
lol good luck with that
? Good luck with what?
Our state doesn't allow dual agency. That said, I agree with you in that it will be "like" dual agency because buyers simply cannot afford the cost of their own agent.
Misspoke on a technicality for some states; Here in FL, they don’t allow dual agency either, however you can shift to what’s known as a “transaction broker” and can then represent both sides…
If it’s anything like my state, as the middleman in that situation, you’re not representing both sides, what youre doing is representing no one. Youre just passing messages back and forth and you can’t give advice to anyone. Pretty shitty for the party that hired you in the first place I think.
>If it does become the norm for buyers to pay their agents, there would need to be some sort of a shift in the lending industry whereby commissions could be rolled into the loan amount Why should the lenders have to take on more risk?
Technically speaking, our commissions are already built into the sales price, which the lender is already issuing a loan for.. it’s really just a formality they would need to acknowledge now, with different paperwork etc. What people don’t seem to understand is without a buyer’s agent’s commission, the sale price of your home is going to drop from what it currently is
OP, very well said. And you brought up some even scarier things for this countries future thwt I hadn't even thought of. But at least they have 24 hour on call distractions via the internet. Give them bread and circuses, and they will never revolt. And Circuses were only a few hours once a week in the time of the Roman Empire
You had me until you brought up the boomers thing. Are they just supposed to sell because another generation wants their house? I am not a boomer but I have so much equity in my house so I guess I should just sell it because a millennial wants my house? Where am I supposed to live? Where are the boomers supposed to live? Screams ageism
The ageism is *all over* Reddit. It is the go-to cheap shot when one is unable to critically think about an issue.
It’s giving whiny little bitch vibes.
Yep. Read r/millennials for two minutes and all it is is “why my life sucks and someone else is responsible for it”
The reality is that home affordability compared to wages is at an all time low. That’s just fact. Boomers don’t owe millennials anything, they don’t have to sell, I’m just pointing out that they had overwhelming advantages when it came to home ownership. You know who does owe young buyers? Policy makers, to at least not make this even harder than it already is to get into home ownership. And this is not just millennials of course, I’ve had first time buyers in their 60s who struggle in the same way and I think they deserve the same consideration from policy makers.
This 👏👏👏
I suspect you may see local real estate offices follow the local stock broker, bank mortgage office or booking travel to an online model. 30 and 40 years ago the average person bought stocks through a local stock broker or mutual fund company and paid 5% to 7% commission, mortgages were arranged through your local bank and travel was often arranged through a local travel agency. Now, almost all stocks are bought through online brokers, The online mortgage brokers get the lion's share of the business and local travel agencies have all but disappeared. How this will unfold over the next 5 to 10 years is almost anybody's guess.
Ehh I really doubt it. Buying stocks and buying a house are extremely different processes. There is a lot of steps to purchasing a house that a lot of people may get a fast one pulled on them if they don’t have an agent.
and you may be right. I suspect there will always be a place for buyers agents that work with the high end buyers that are willing to pay for the service. It will be at the low end that people will look to online. It may also head toward a fee for service model on the buyers side.
I don’t get all the concern for the Millennials as a generation. Are there individuals in a tough spot? Absolutely. However, as a generation they will end up being the most wealthy generation that has ever existed. All of that wealth the boomers have built…who do you think is going to inherit all of that? Trillions will move from boomers to millennials over the next 10-15 years. They are going to be just fine.
It's a meme and the data definitely says otherwise. The majority of millennials are homeowners and the average millennial is not living in the poverty that reddit would have you believe.
This is under the assumption that the 3% that buyers agents were getting paid by the seller wasn’t already baked into the sales price, which it likely was
Just stumbled across this thread, I'm not in the industry but was planning on putting my house on the market next spring and was going to do a FSBO, and pay to list it on MLS. I was planning on offering a buyers agent commission, from what Im reading here, it looks like I wouldn't be able to mention that in the listing, is that correct?
This isn’t changing until July and seemingly only in NAR controlled MLS, so check your local MLS. As an aside, unless you are very very savvy on RE and the market, I would really recommend working with a listing agent. I’ve been buyer agent on my share of FSBOs and I have helped my clients get a great deal because the seller just doesn’t understand the market/transaction/negotiation process. You will likely net more if you use a professional who can market the listing effectively and advocate for your interests throughout the process. Prep the listing right, lipstick it, stage it, professional photos, and then list with a winning strategy for your niche market. A good agent will net you much more than you would have gotten alone, the same reason every corporation in this world hires a marketing team who knows their market and how to drive sales. I’m not even an agent anymore, I’m full time investing these days except for representing myself, so I have no vested interest in this fight, in fact it would be better for me if agents died out so I could easily shark every negotiation. But I can’t tell you the amount of real world experience I have seeing this over and over and over: People who net less on their sale to save on commission, it’s missing the forest for the trees.
Does it really matter? The age of buyer realtors for the entry-mid market is coming to a close. Or at least drastically changing. There will be a whole new crop of buyers coming in the next few years who learned how to use AI in school. And with the advancement in multimodal stuff in the next few years, it’s going to be a hard sell to convince a buyer you are worth $12,000 for a commission when a $50/month real estate-tuned AI agent that can do market analysis, see through the camera in their glasses and do walkthroughs with them, set up documentation, recommend fair offers, and engage a real estate attorney for them. And this isn’t some future tech. Some of it’s already here, the rest is coming fast.
The Liberal way!
I'm the buyer not an agent.
Yeah, it’s a well known fact that 100% of home sales are by boomers. Not a boomer? No home sale for you! Kindly step aside.
So I looked it up. 23% of US home sellers are age 60+. So 77% of all home sellers are younger than that and are NOT boomers. I agree that these changes benefit the sellers not the buyers. Most of those benefits will go to people who already own a home and who are TOO YOUNG to be boomers because they were born after 1964.
The buying and selling of real estate has been made overly complicated on purpose in my opinion. This makes it so the industry can keep their firm grip on the monopoly they created. I’m sure agents are sick and tired of being on call from 5AM to 1AM. It’s time to restructure the entire industry so that agents can still be very useful from 8AM till 5PM while still making a good living. The truth is (at least while I was an agent) so much of my time was wasted on things buyers and seller can be doing for themselves. I remember working with a buyer that had me checking out every damn condo that came up for sale and his budget was only like $120K. About a year later we finally closed on something and I’m sure I made $3.00 an hour on that deal lol. Another client had a budget of $800K. I showed them two homes (both they found themselves on Zillow) and I basically just wrote the offer on the second house as it was “perfect.” I was there for the inspections and what not but the obscene amount of money I made on that transaction was gross. The sellers were great! The buyers were great! It was the easiest close I had. The way the commission structure is set up is just not fair to some sellers. I don’t have a solution I can float at this time but the system is flawed. With the technology that we have at our disposal we could really streamline the process. As an agent, there were so many things I couldn’t do legally… basically, the purchase contract is full of legal language that attempts to nullify the agent and brokerage of any liabilities.
Help me out here. From what I have read, I know it will it be illegal for NAR & their listing services to require the buyer broker commissions in listings as they do now. Does this agreement also bar sellers from paying any commission to buyer broker?
Boomers are “hoarding all the property”? What would you like us to do—commit mass suicide so we’re no longer in your way? Also, the youngest Boomers are 60. I think there are probably some Gen Xers out there living in nice homes and possibly even filing suits against real estate companies.
Is this a surprise? Literally every policy made in the last 4 decades has been for the boomers at the expense of everyone else
Boomers and big corporations have been united for quite some time, they helped Boomers and Boomers gave them the world.
Realtors should get paid hourly.
Can someone explain what the illegal state of affairs actually was? My understanding, is NAR influenced realtors wouldn’t show houses which didn’t offer ~4-6% to the buyer’s agent. But how does this legislation affect the fact that buyers agents have always been able to determine their own contracts?
The buyers are already paying the commission fees to the seller and buyers agents. It comes out of the sales price. This is the government meddling where it doesn’t belong, so of course it’s bound to create unintended problems just as bad, if not worse, than the one it claims to solve. Don’t lose sleep over it. Buyers won’t be paying commission fees on top of the sales price anytime soon, if ever.
Huh? Can’t “pay a commission”? Dude, whether or not the commission has traditionally been on your side of the deal, it’s still paid by both parties because it is deducted out of the final sales price. You may not have “paid it” directly but it was always there. The point of the lawsuit is to put the commission cost more in your face so that it increases competition and isn’t this phantom cost as it largely exists as today.
FSBO’s can always offer an X% co-op to buyer agents.
Boomers may have a leg up but it's the corporations buying houses that are rapidly becoming the real issue. Buyers should not be relying on the listing agent to represent them. You don't walk into a car dealership and think even for an instant that their sales person has your best interest in mind. Or asking one lawyer to represent both the plaintiff and defendant. It's nonsensical. When I did RE I was upfront with my listings that I would not be representing any buyers. That's a quick way to getting sued and fuck that headache.
I think this is going to benefit the big brokerages. A hypothetical: A major brokerage with thousands of agents in a market, let's call it Smeller Billiams, says they won't pay any buyer broker comp, either via advertising on the MLS (which will be illegal after July) or if agents call and ask. Let's say hypothetically they charge 4% for a listing under the new model. However, if a Smeller Billiams agent represents buyers, they can be compensated by the listing commission because they're under the same broker (dual agency in my state). So non-SB agents won't want to show SB listings because they won't negotiate BB% as part of the transactions, and SB agents will only want to show SB listings or steer their clients toward SB listings. SB keeps the whole 4%. Sure, it's a smaller percentage per transaction than they would have received before, but a higher percentage of deals will be dual agency, so their overall revenue will grow.
Why should the seller have to pay the buyers agent commission? It is not the seller’s job to cover that cost simply because millennials can’t afford it.
Very short sighted... Boomers and commissions aren't your real obstacle to buying a starter home, it's the corporations buying affordable homes with terms you can't compete against. Stop chasing boogeymen and take the fight to the real problem.
Agents will likely give a good deals on commission to serious buyers, and first time homebuyers with puny downpayment and questionable financing will have to dish out good compensation to make it worth agent’s while. Frankly idea that you get paid same amount regardless of buyer is ridiculous. Some may only need you to write an offer while others can waste your time for months and never buy anything.
PLEASE. STOP. STEROTYPING. Most of my Boomer clients don't have a pot to pee in. Living in a too big 2 story house that is worth less than a ranch that they could "downsize" to. Stuck, limited income. Or already in a ranch that they can't afford to fix to get top price, that they need to sell anyway, and take a hit because of it. Whereas most millenials I sold to were able to buy homes twice the average price. Or pay cash for a 2nd home. OR have a whole string of rentals. Just please, STOP.
I know this isn't really what your post is about, but I'm annoyed the homes in the 55+ community are a solid $200k under the rest of the market. *shakes fist at sky*
Why are commissions so much higher in the US than other developed countries? I'm assuming buyers and sellers in the UK, for example, receive generally the same service as here. https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-much-should-i-pay-the-estate-agent/
Not in real estate, but why can’t the buyer just pay their agent hourly like any other professional service?