https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

Let's hope that happens.

FatZilla said:

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https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

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Don't hold your breath. This will be in appeals court for years.

I know this doesn't apply to the real estate geniuses on this board, but first time homebuyers that need representation will now have to pay their agent themselves.

So basically they're trying to eliminate buyer agency. I'm sure that will turn out well for the consumer.

Wouldn't that fee just get rolled into their loan though?

I don't see this changing much.

DubFalls said:

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Wouldn't that fee just get rolled into their loan though?

I don't see this changing much.

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Why would a lender allow you to add this into your loan? The lender loans based on LTV. A commission is an expense that adds nothing to the value of the home.

For a first time homebuyer ratios are usually tight to begin with anyway and closing costs are already heavily regulated.

Shooter McGavin said:

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DubFalls said:

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Wouldn't that fee just get rolled into their loan though?

I don't see this changing much.

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Why would a lender allow you to add this into your loan? The lender loans based on LTV. A commission is an expense that adds nothing to the value of the home.

For a first time homebuyer ratios are usually tight to begin with anyway and closing costs are already heavily regulated.

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How would it be any different than any other thing that goes into closing costs like appraisals or mortgage origination fees? Those items don't add value to a home either. I wouldn't be surprised to see FHA loans regulate fees, but it isn't like it's trying to loop in a hot tub purchase or something.

DubFalls said:

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Shooter McGavin said:

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DubFalls said:

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Wouldn't that fee just get rolled into their loan though?

I don't see this changing much.

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Why would a lender allow you to add this into your loan? The lender loans based on LTV. A commission is an expense that adds nothing to the value of the home.

For a first time homebuyer ratios are usually tight to begin with anyway and closing costs are already heavily regulated.

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How would it be any different than any other thing that goes into closing costs like appraisals or mortgage origination fees? Those items don't add value to a home either. I wouldn't be surprised to see FHA loans regulate fees, but it isn't like it's trying to loop in a hot tub purchase or something.

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It's basically just moving the buyers agent expense from the sellers side of the CD to the buyers. The problem is that there is less incentive for a buyer to employ a buyers agent than a seller a listing agent. I don't see many buyers willing to pay for representation of of pocket if it's optional. The system in place now allows them to choose to be represented for no additional cost. Yes that cost difference can be made up in sales price but many buyers will choose to minimize closing costs even further and run a higher risk of agreeing to bad terms without professional advice.

This makes no sense considering the regulatory pressures to end dual agency over the years.

I'm not a fan of brokers (long story), but this just seems ridiculous. (I need to read up on it to make sure I understand the ruling)

This will turn the industry upside down. Is this being done for consumer protection purposes?

Are they saying that a seller can't pay a finder's fee?

I am not signing contracts of that magnitude without representation. There are numerous deadlines and nuances for inspections, option periods, negotiating repairs that no normal person would ever be aware of. Furthermore, contracts are more apt to be cancelled by a buyer without representation over a silly fee or repair request. Buyers agents are always explaining to their clients why there is a certain fee or what repairs are considered normal to expect vs dealbreakers.

What is the case for collusion?

FatZilla said:

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https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

Quote:

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

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Why would you think they are leeches? I am not a realtor but it won't be realtors that lose from this action. I know several realtors. Some are experienced and some are not experienced. You don't have to use a realtor to buy a home. No need to vilify all of them.

The only thing I remember from Dr
Lard's real estate class at A&M is that an agent works for the person them. If the commissions are paid by the seller, then even the "buyer's agent" is really working for the seller. He stressed that a lot.

The realtor we used to buy our ranch was worth every penny he made.

taxpreparer said:

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The only thing I remember from Dr
Lard's real estate class at A&M is that an agent works for the person them. If the commissions are paid by the seller, then even the "buyer's agent" is really working for the seller. He stressed that a lot.

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He's wrong then.

stallion6 said:

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FatZilla said:

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https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

Quote:

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

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Why would you think they are leeches? I am not a realtor but it won't be realtors that lose from this action. I know several realtors. Some are experienced and some are not experienced. You don't have to use a realtor to buy a home. No need to vilify all of them.

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I am not arguing they do not perform a needed role, my point is about the collusion to keep the rates/% high across the board with no to little competition to lower them. I am strickly against the monopolistic practices, not the job.

I believe that's misinformation.

You can already select what you want to pay buyers agents when you list a home. Over the summer we were offering 6% to buyers agents and 3% to our listing agent. We made this decision as a seller. We also offered 1% to a buyers agent on a house we knew we would owner finance.

I'm really not sure what this lawsuit is about. As the seller, you can choose what to pay the buyers agent.

itsyourboypookie said:

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You can already select what you want to pay buyers agents when you list a home. Over the summer we were offering 6% to buyers agents and 3% to our listing agent. We made this decision as a seller. We also offered 1% to a buyers agent on a house we knew we would owner finance.

I'm really not sure what this lawsuit is about. As the seller, you can choose what to pay the buyers agent.

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Well, apparently this lawsuit may change this current practice. IMHO, this article has done a poor job of explainiung the details of what the case is about.

Who is allowed to make money according to this board? Not teachers or real estate agents.

Shooter McGavin said:

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FatZilla said:

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https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

Quote:

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

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Don't hold your breath. This will be in appeals court for years.

I know this doesn't apply to the real estate geniuses on this board, but first time homebuyers that need representation will now have to pay their agent themselves.

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So allowing the fixing of commissions is worth it so the buyer doesn't have to pay part of the RE commission?!

cevans_40 said:

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Who is allowed to make money according to this board? Not teachers or real estate agents.

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Nice strawman CE.

stallion6 said:

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FatZilla said:

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https://finance.yahoo.com/news/missouri-jury-finds-nar-brokerages-170500477.html

Quote:

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In the worst case scenario for the defendants, Bough could ban the cooperative compensation rule nationally on the multiple listing services, which would prevent listing agents and home sellers from predetermining buyer agent commission rates. Listing agents would also be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS.

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Where do i sign up for the Texas lawsuit against these leeches? Hope the judge slaps them with the hardest hand he can.

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Why would you think they are leeches? I am not a realtor but it won't be realtors that lose from this action. I know several realtors. Some are experienced and some are not experienced. You don't have to use a realtor to buy a home. No need to vilify all of them.

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And the seller wins. It's a wash.

I probably should mention that was forty years ago. The laws may have changed. It does make sense that your loyalty belongs to the person paying for your services.

taxpreparer said:

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I probably should mention that was forty years ago. The laws may have changed. It does make sense that your loyalty belongs to the person paying for your services.

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I've found that the buyer's commission is largely crap too. Seems to disincentivize the agent from trying to make a better deal for the client.

cevans_40 said:

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Who is allowed to make money according to this board? Not teachers or real estate agents.

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That sucks. I'm both of those things.

When I am representing buyers, I want to get them the lowest price and best deal possible because that builds my reputation, which is worth more to me than the marginal difference on an extra $10,000 in purchase price.

Let's say the sellers' agent is offering a 3% split. If I can negotiate a $10,000 price reduction, that's going to cost me $300 in gross commission, but I'd probably actually net about $150 - $200 or so after brokerage splits and taxes. I gain a LOT more value in negotiating that lower price and looking like a rock star to my buyers, who will then recommend me to their friends.

I understand the logical argument against the cooperative compensation model, but I don't agree with it. A buyer's agent adds a lot more value for both themselves and their buyers by negotiating as low of a price as possible.

As to rolling the cost of a buyer's agent into the loan, I think you'd really run into some problems trying to do that. Closing costs are heavily regulated, and are typically only payable in cash at the closing table. Even if you have a low down payment loan (VA, USDA, FHA, and some Conventionals), you're still paying cash for closing costs. Buyer's agent fees would then be tacked onto that, making homebuying even more out-of-reach for most people.

I have asked many realtors over the years why their fee should be percentage based instead of hourly or fixed price, and no one has been able to give me an answer. The realtor's fee for selling a 2 million dollar house shouldn't be double the fee for selling a 1 million dollar house when the work required is exactly the same. I could see the argument in a different level of effort required for a high end home versus a starter home, but still no reason for the fee to be percentage based.

Hopefully, this is the beginning of the end of this payment structure.

agstudent said:

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I have asked many realtors over the years why their fee should be percentage based instead of hourly or fixed price, and no one has been able to give me an answer. The realtor's fee for selling a 2 million dollar house shouldn't be double the fee for selling a 1 million dollar house when the work required is exactly the same. I could see the argument in a different level of effort required for a high end home versus a starter home, but still no reason for the fee to be percentage based.

Hopefully, this is the beginning of the end of this payment structure.

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This is like arguing that commission based jobs should be hourly. If that was the case you could have any sales guy you want for an hourly rate. If I'm selling a top dollar home I want the realtor who can earn that bigger paycheck.

agstudent said:

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I have asked many realtors over the years why their fee should be percentage based instead of hourly or fixed price, and no one has been able to give me an answer. The realtor's fee for selling a 2 million dollar house shouldn't be double the fee for selling a 1 million dollar house when the work required is exactly the same. I could see the argument in a different level of effort required for a high end home versus a starter home, but still no reason for the fee to be percentage based.

Hopefully, this is the beginning of the end of this payment structure.

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That's just false. The market for a $2m home is much, much smaller than the one for a $1m homes. Hourly pay is the worst form of compensation and you want someone that's selling your biggest asset to be paid that way? Where's the incentive to generate traffic and find a buyer if you're paying them regardless of their success? You can negotiate a flat fee if you'd like but my experience has been that those guys aren't very good and rely on volume over quality.

Logos, did you have something for me? All I see is a blank post, but it says you're replying to me.

LOYAL AG said:

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agstudent said:

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I have asked many realtors over the years why their fee should be percentage based instead of hourly or fixed price, and no one has been able to give me an answer. The realtor's fee for selling a 2 million dollar house shouldn't be double the fee for selling a 1 million dollar house when the work required is exactly the same. I could see the argument in a different level of effort required for a high end home versus a starter home, but still no reason for the fee to be percentage based.

Hopefully, this is the beginning of the end of this payment structure.

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That's just false. The market for a $2m home is much, much smaller than the one for a $1m homes. Hourly pay is the worst form of compensation and you want someone that's selling your biggest asset to be paid that way? Where's the incentive to generate traffic and find a buyer if you're paying them regardless of their success? You can negotiate a flat fee if you'd like but my experience has been that those guys aren't very good and rely on volume over quality.

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Good point.

Also, if I'm being paid hourly, does that mean I get paid less when I develop a great marketing strategy, dump a ton of my own money up front into videos, photos, and media distribution, and get that $2M house under contract in a week?

agstudent said:

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I have asked many realtors over the years why their fee should be percentage based instead of hourly or fixed price, and no one has been able to give me an answer. The realtor's fee for selling a 2 million dollar house shouldn't be double the fee for selling a 1 million dollar house when the work required is exactly the same. I could see the argument in a different level of effort required for a high end home versus a starter home, but still no reason for the fee to be percentage based.

Hopefully, this is the beginning of the end of this payment structure.

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Commissions in any industry don't work that way. It's always a percentage of the value of the contract.

itsyourboypookie said:

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I'm really not sure what this lawsuit is about. As the seller, you can choose what to pay the buyers agent.

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Had to read through a couple articles to find it, but apparently the collusive act at issue was:

Quote:

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The plaintiffs pointed to an NAR rule that required sellers to make a nonnegotiable commission offer before listing homes on the property database, the Multiple Listing Service, or MLS, which feeds widely used real estate sites including Zillow. That commission hovers around 5 to 6 percent of the sale price and is paid by the home seller to the sellers' agent and the buyers' agent. If sellers do not agree to the commission terms, they go virtually unseen in the market, Ketchmark said.

The rule has stifled competition and has resulted in higher prices, the plaintiffs alleged. They argued that if the rule were not in place, buyers' agents would have to compete by offering lower rates.

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Also, a Aggie professor was one of the expert witnesses for the plaintiffs.

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On Friday, Craig Schulman, an associate professor of economics at Texas A&M, took the stand again..

During his testimony on Thursday, Schulman stated that NAR's Participation Rule, which is central to the lawsuit, was "one of the clearest cases of price-fixing and collusion [he has] ever seen.

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Correction said:

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itsyourboypookie said:

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I'm really not sure what this lawsuit is about. As the seller, you can choose what to pay the buyers agent.

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Had to read through a couple articles to find it, but apparently the collusive act at issue was:

Quote:

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The plaintiffs pointed to an NAR rule that required sellers to make a nonnegotiable commission offer before listing homes on the property database, the Multiple Listing Service, or MLS, which feeds widely used real estate sites including Zillow. That commission hovers around 5 to 6 percent of the sale price and is paid by the home seller to the sellers' agent and the buyers' agent. If sellers do not agree to the commission terms, they go virtually unseen in the market, Ketchmark said.

The rule has stifled competition and has resulted in higher prices, the plaintiffs alleged. They argued that if the rule were not in place, buyers' agents would have to compete by offering lower rates.

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Also, a Aggie professor was one of the expert witnesses for the plaintiffs.

Quote:

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On Friday, Craig Schulman, an associate professor of economics at Texas A&M, took the stand again..

During his testimony on Thursday, Schulman stated that NAR's Participation Rule, which is central to the lawsuit, was "one of the clearest cases of price-fixing and collusion [he has] ever seen.

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But it's not non-negotiable, other than the fact I as a seller's agent have to offer a commission split with the buyer's agent. If the seller won't pay a buyer's agent more than 0.25%, then we can do that. Everything is negotiable other than the fact you have to cooperate with the buyer's agent.

I even have to disclose if there is a commission differential for me to work both sides of a deal myself. For example, if I have a listing agreement with a seller and will have a 6% commission (to be split evenly between myself and a buyer's agent), I will also have a provision in there that if I am procuring cause for a successful closing (in other words, I bring the buyer), the total commission is only 4%, which I don't have to split with another agent. Every realtor who looks at my listing will see that there is a commission differential. They won't see the details, but they know they will need to be more competitive.

Interesting side note: Florida doesn't allow "dual agency," but we are allowed to represent both sides of a deal as "transaction brokers." We are legally required to deal honestly and fairly with both sides, but there is limited confidentiality as spelled out in the initial listing agreement.

Also, a buyers agent typically signs an agreement with their buyers outlining compensation as well. Usually for compensation, they just put "per MLS" but they can put a flat fee or a minimum percentage. A buyers agent could in that agreement say the compensation will be 3% of the purchase price. If the sellers agent is only offering a 2.5% split then the buyers would need to kick in cash to cover the other 0.5%.