Link...

https://finance.yahoo.com/news...llion-140413705.html

Basically buyer's agent will have to get a contract with buyers to be paid. The commission won't be listed in MLS. How this plays out could go a few different ways. It most likely hurts buyers and benefits sellers. But buyer offers may be adding that a certain amount be paid to their agent one way or another. Cash back at closing is one option a buyer could use.

Discussing this with my wife (who is a top agent) there are a million scenarios how this will work and it's really going to be more complicated, at least until some sort of standard develops.

An then the new standard will be seen as collusion, just like the old standard.

We recently sold our home to a buyer who did not have his own agent. So we viewed his offer as 3% better than it was. Our agent said this is an increasingly common situation.

He, of course, leaned on our agent to do some of the paperwork which his agent would have done. It seems to me a form of freeloading by the buyer.

We signed an agreement with the agent for purchasing the new home, that she would receive 3% buyer's agent commission, and if the seller was offering less then we would make up the difference.

The new system will just replace the old system. I don't see it really helping buyers or sellers in the long run.

The home buying market is really slow in the area we live in now so we can sit back to see how this plays out (my wife's a Realtor too).

The news stories are written by people that mostly don't have a clue how things really work. True for many buyers and sellers too. You don't know what you don't know.
For sellers things shouldn't be all that much different. You want to sell your house, you find your realtor to list it and strike a deal over the commission you will pay them when it sells.

There was a traditional commission rate range (usually 6-7% where we are) but truth is that was always negotiable. That commission was normally split 50/50 between the two agents.
That's sort of like a tip is traditionally for a waiter except you agree up front what that rate would be.

Your realtor represents you in the sales side of the transaction. The buyers agent represents just the buyer. Each really does need their own representative and in some states it's illegal to practice dual agency (one agent handling both sides.
Where I live in Georgia, dual agency isn't illegal but it's mostly discouraged. While it's a long story to explain why each side need their own, trust me, most times that's true.

The buyers side is where most of the issues will come up in the future as I see it. The buyer will have to sit down and come to an agreement with their agent before they start to look, as I understand it, and pay that commission themselves.

This really came up because in a few states, the organization controlling the realtors set the commission without allowing the agents to negotiate that. Most states were not that way, it could be negotiated.

Among the issues, the data base that has the listing information on Zillow, flat rate sites, list your own sites and similar sites comes from a data base paid for by the Brokers and agents through a fee they pay to the parent group like MLS. This new system is being sold as a way to lower your costs by essentially cutting out of severely restricting those realtors/brokers.
So how's that going to work?

Lot's to be worked out here. Should be interesting.

FlySig...Interesting that you viewed it as a higher offer. Usually the listing agent charges a certain commission and offers a cobroker commission from that for the buyers agent. If no buyers agent they are acting as a dual agent. Unless you had a variable commission with your listing agent depending on if the buyer has an agent?

Anyhow, the lawsuit was bull as there was no collusion. Everything was plain as day in the MLS listing. It was perhaps how some agents explained it that sounded like collusion. Like saying “you aren’t paying me anything. I get paid by the seller. “. That’s not entirely accurate. Nevertheless it was all clear in the contracts.

You are spot on with listing agents having to do more if this results in more buyers with no agents. Buyers need to beware since they won’t be represented.

I know some on here will argue that buyers agents aren’t really representing the buyer. That’s crap. One example recently: wife is at home inspection and 10 minutes I they found some big issues. My wife told her buyer, “Do you want to continue the inspection or stop now. It will save you money if we stop now.” The buyer knew they would be backing out at that point and saved like $300 by not doing the full inspection. They wouldn’t have known the inspector would cut the price for not doing the full inspection. Just one example in many.

I used to teach the prep class at the Community College for people wishing to license as real estate agents.

I think how and how much real estate agents get paid is and has always been subject to negotiation. Most people don't really understand that. Many agencies don't really agree with that. The agency may have a "standard contract" and tell a prospective customer "take it or leave it" but the seller (or buyer) can always find representation somewhere else.

BTW, I think some agents earn every dime of their commission and some do not. I've bought and sold several houses without an agent.

quote:

Originally posted by chellim1:
I used to teach the prep class at the Community College for people wishing to license as real estate agents.

I think how and how much real estate agents get paid is and has always been subject to negotiation. Most people don't really understand that. Many agencies don't really agree with that. The agency may have a "standard contract" and tell a prospective customer "take it or leave it" but the seller (or buyer) can always find representation somewhere else.

BTW, I think some agents earn every dime of their commission and some do not. I've bought and sold several houses without an agent.

I agree with you. Around here there is sort of a standard commission and split but as you said, it's always negotiable.

On your last statement, absolutely. I did my share of FSBO before I met my wife. Only 40 minutes away it was a totally different market. The agents I had used for buying didn't do a damn thing. I never felt they earned a dime. They showed me a house, then showed up at closing and never said a word between.

But my wife is incredible with her buyers. The amount of work she does guiding them is amazing. O f course, those buyers become sellers and that's why she is a top agent.

I'm sure your wife is one of the better ones.

People see successful agents and think anyone can do that... and the barriers to entry are extremely low. You take a class, pass a test, and BOOM you're licensed. Many agencies will give almost anyone a shot. But a lot of them don't make it as an agent either because they don't have the skills or aren't willing to work hard enough.

I thought the Missouri realtor group got into trouble for setting up contingencies and then was not showing any of the other offers. “Oh look you got it good thing you went $60k over”.

quote:

Originally posted by frayedends:
FlySig...Interesting that you viewed it as a higher offer. Usually the listing agent charges a certain commission and offers a cobroker commission from that for the buyers agent. If no buyers agent they are acting as a dual agent. Unless you had a variable commission with your listing agent depending on if the buyer has an agent?

Our agent agreed to only 3% in order to make the deal work. The buyer self-represented, and our agent had him sign something saying she was not his agent in any way.

Our agent could have taken the entire 6%, but then we would not have accepted the offer. Imputing the 3% back in, the price was absolutely bottom dollar we were willing to accept.

Which mathematically actually screwed our agent a little bit. Since the offer was X-3%, she got 3% of X-3%, not 3% of X. Not big $$ but definitely some dollars.

We sold in a resort area where things are definitely different than normal neighborhoods. NDA is standard, so nobody discloses the identity of the buyer nor the price.

This is a typical class action type lawsuit where the winners are the attorneys and maybe some early plaintiff's and very little benefit to anyone else.
In my opinion this was a bad job by the NAR of representing their members.
A couple of large Real Estate companies plus some NAR folks did a poor job and got the rest of the membership sued for big bucks because of malfeasance by a few.
I suspect there will be a big push-back and wouldn't be surprised if the NAR as we know them get bankrupted by this (as they should) and nobody but the attorneys end up with much to show for all of this.

The public will also not benefit as claimed and will more likely suffer in the long run too.

So now buyers have to shell out cash? If so that is bullshit. More money grab bs if so.

quote:

Originally posted by old rugged cross:
So now buyers have to shell out cash? If so that is bullshit. More money grab bs if so.

If I understand correctly it was buyers that brought the lawsuit. They felt they were being lied to when they were told that it cost them nothing to have an agent. It was how agents presented it that made it seem sketchy. When they found the money for their agent comes from the home purchase they considered that collusion.

In any case you can’t call it a money grab. Agents will likely reduce their listing rate because they aren’t paying a buyer agent. If you want a buyer agent you have to pay them separately. In the end it all comes down to how much the buyer is willing to spend for a purchase.

Buyers having to contract directly with their agents for payment could definitely complicate things.

It might make buyers more selective about choosing their agents, ensuring they get good value for their money.

I can see how it might benefit sellers since they won’t be tied to paying the buyer’s agent commission, but it will likely lead to more negotiations about terms like cash back at closing.

quote:

If I understand correctly it was buyers that brought the lawsuit.

These lawsuits are initiated by lawyers or groups of lawyers.
They get a few buyers to act as plaintiff's to start the ball rolling, then advertise for more. We've all seen and heard the ads.
Did you ever use _____________? Call 800 xxx-xxxx.
They get paid a percentage and the bigger the pot, the more they make.

quote:

Originally posted by frayedends:

quote:

Originally posted by old rugged cross:
So now buyers have to shell out cash? If so that is bullshit. More money grab bs if so.

If I understand correctly it was buyers that brought the lawsuit. They felt they were being lied to when they were told that it cost them nothing to have an agent. It was how agents presented it that made it seem sketchy. When they found the money for their agent comes from the home purchase they considered that collusion.

In any case you can’t call it a money grab. Agents will likely reduce their listing rate because they aren’t paying a buyer agent. If you want a buyer agent you have to pay them separately. In the end it all comes down to how much the buyer is willing to spend for a purchase.

I believe it was sellers that brought the lawsuit. The only one benefitting from this are the ambulance chasers that brought the suit. This will only hurt buyers in the long run as they now have to shell out funds up front to be represented, or possibly go unrepresented and take the risk of not getting a fair deal. This will especially hurt low income and first-time homebuyers who may be scrimping everything they have to buy a home. That certainly would have been the case with me 10 years ago.

Luckily for veterans, the VA is temporarily allowing funds to be used for buyer agent commissions on VA loans when prior they would not have been.

NAR really fucked this up by rolling over to the tune of almost a half billion dollars. A lot of agents, myself included are bullshit at them. $600 a year in mandatory dues and for what? I can't wait to see how bad their numbers drop next year, a lot of the top agencies are telling them to pound sand and are no longer making it mandatory to be a member.

^^^^^

Yup, lots of rumblings from agents around here about not staying with NAR.

quote:

Originally posted by chellim1:
I'm sure your wife is one of the better ones.

People see successful agents and think anyone can do that... and the barriers to entry are extremely low. You take a class, pass a test, and BOOM you're licensed. Many agencies will give almost anyone a shot. But a lot of them don't make it as an agent either because they don't have the skills or aren't willing to work hard enough.

I worked in the title insurance business for over thirty years in Washington state. I remember a big commercial closing we had and as the Title Examiner, I was asked to sit in on the closing in case there were any techinical questions. I got to talking to the buyers agent afterwards, a nice middle aged lady, and I commented on the obvious hard work she did to pull the deal together. She looked at me and said..."honey, always remember that 90% of the homes that are sold are done by 10% of the realtors". I just looked at her and said "really". I have absolutely no idea if that is true but I have heard the same thing said many times after that.

Oh, funny thing, later on in my career I also taught classes for realtors and escrow officers. Small world.

^^^^

I can’t say if those numbers are accurate but they are probably close. Many people try to do real estate as a side gig and it’s just not possible to be successful. My wife tells people that they won’t be successful until they go all in. Meaning they have to need the job to survive. She does about 60 to 70 transactions a year. It’s a lot of work.

Buyers having to contract directly with their agents for payment could definitely complicate things. It might make buyers more selective about choosing their agents, ensuring they get good value for their money. I can see how it might benefit sellers since they won’t be tied to paying the buyer’s agent commission, but it will likely lead to more negotiations about terms like cash back at closing.

Recently, I found out how much my council house was worth and ended up selling it in around 10 days (read more about how you can do it in the article). The process was smoother than I expected, but this new change in commission structures could make things a bit more complex.

This message has been edited. Last edited by: mac_220,

This pisses me off. I’m not some real estate mogul, but I have bought and sold a couple houses and plan to buy one soon.

It was a simple process. 6%. Every person buying and selling has known this for ages. Usually it’s a 3/3 split, sometimes it’s split with half a point going to one or the other. Sometimes you can get lucky and when you’re selling, negotiate a half a point down.

Bottom line, they took a simple 6% and have fucked this up to where in the end, it fucks the home buyers and sellers.