Sims said:

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Your agent could advertise the house with a 1% buyers agent commission but that's just going to reduce the number of buyer agents that want to show the property to their client.

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This statement I hear alot and hear it from some RE agents. I don't care what people charge for service and at the end of the day, I get to choose if I agree to the % commission. Anyone should be able to charge what they feel is appropriate.

But only showing properties to buyers for 3% is monopolistic, a conflict of interest, and unethical.

So if I am selling my $2M home and only offering 1% to the buyer agent and the house fits the buyer's criteria, then the RE agent will not show it? It is still a 20K commission.

But if I am selling a 200K home and offering 3% buyer agent, they would show this to their buyer eventhough they are only making 6k?

Are some RE agents so dirty that they refuse to budge from the 3% no matter the commission amount?

I had a good RE agent friend who would give me 2% and he kept 1%. When he retired 8 yrs, I interviewed some RE referrals and many would not even give me 1% back even though I am low maintenance requiring very little showings. I have bought/sold prob 10M in properties worth of properties since and they would have made about 200K in commissions.

For some reason that 3% is some holy grail that has been ingrained in their psyche.

Are your fees negotiable?

jja79 said:

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Are your fees negotiable?

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They surely are not but medical insurance coverage is a scam which I will be first to admit. Also that thing about taking care of hospital patients without verification of payment makes it difficult.

But please educate me why some realtors won't show a 1% home with a 20k commission but would a 3% with a 6k commission. Seems unethical?

Some brokerages prohibit their realtors from agreeing to less then 3%.

The 3% is a gross commission that is shared with the brokerage depending on the agent split. So if you've got a 85/15 split then going down to the 1% on a $400,000 would move the brokerage from $1800 to $600. If the brokerage is focused on being a high value add lower volume shop - that might not do it for them.

The brokerage would likely have some level of transaction support staff to pay in addition to their own bottom line.

Offered because you asked for an example. Not taking a position on the justification, just the fact of the matter.

Not a Realtor so can't answer that.

Thanks for this insight but still doesn't answer the question. I understand fixed OP ex.

But then just don't work in the low commission niche.

If I offered 1% buyer on a 2M home this is still 20k. So they won't show this because it is only 1% but commission is much higher than a 3% on a 200K home?

If work is not worth the commission, then avoid low commission sales and not a %.

Medaggie said:

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Thanks for this insight but still doesn't answer the question. I understand fixed OP ex.

But then just don't work in the low commission niche.

If I offered 1% buyer on a 2M home this is still 20k. So they won't show this because it is only 1% but commission is much higher than a 3% on a 200K home?

If work is not worth the commission, then avoid low commission sales and not a %.

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I can't answer your question satisfactorily because I don't work in the industry and I'm not party to the transactions you're critical of - and frankly, you've already made up your mind so I'm not sure your questions are in good faith anyway.

The point of the the settlement and this discussion is the lack of ability to advertise a buyers commission. You're statement would say if it's not worth it - don't do it. The inability of a sellers agent to advertise a buyers commission precludes the choice you are saying buying agents/brokers should be able to make to the extent that they have to do (at least) some of the work before they find out if it was worth it or not.

If I had to make what I think is an analogous example, and forgive me for being presumptuous to the degree that I even think I know how doctor's fee schedules work...- it would be akin to CMS refusing to publish their fee schedule until after you've done the work. Now those moves aren't near as a drastic as a 66% reduction (3% -> 1%) in fees paid so I think your risk would be much less, but I think the point is similar.

Red Pear Realty said:

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If only there was an Aggie-owned and 100% Aggie-staffed company, who also happened to be a sponsor of this website since 2018, with agents across Texas, who charged literally HALF of what other agents around Texas do to sell homes (just 1.5%), and refunded HALF of the buyer's agent commission to the buyer at closing (also, typically 1.5%). It would be even cooler if three of those agents (located in Houston, DFW, BCS, and three of five residential agents in Texas that I know of with the MRE degree) had the prestigious Master of Real Estate degree from TAMU, which is a top-5 program globally, meaning we most often run circles around other agents. That would be cool.

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Are there really only five RE agents in Texas with MRE degree? My wife has a MRE degree (not sure if one of the five you know), and never would have guessed there are so few. Pretty cool

There are many more than 5, that's just 5 that he knows of. There are quite a few LERE/MRE grads with agent and broker designations.

There are tons in commercial real estate. But just a handful in residential.

Red Pear Realty said:

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K_P said:

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So how are buyers agents most likely to get paid?

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My projection is that eventually, buyers in America stop getting representation (similar to our European cousins, who do not have buyers reps 96% of the time, and the 4% who do get them are the wealthy). I'm already hearing and seeing some transactions start to go bad with buyers trying to go at it alone, so I also think we are in the part of the pendulum where folks don't think they need a buyer's agent, but when enough bad stuff happens to buyers and the word gets out again why having representation might be a good idea after all, the pendulum will swing back the other direction. In the meanwhile, this will be a great opportunity for sellers to make some great money off unwitting buyers....

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Is it possible to buy an MLS-listed home without representation right now?

Absolutely.

I've done it by myself several times, but find that the biggest obstacle is gaining access to the property to look at it. Seller's agents frequently dislike or outright refuse opening the house to unrepresented prospects, insisting that they get a Buyer's agent to let them in to see the property.

As a buyer, I've found that to be the main or even sole benefit of a buyer's agent - simply unlocking the door so that I can see inside.

Wow. Learn something new every day. So as unrepresented buyers become more common, are the seller's agents going to be unlocking houses for these unrepresented buyers to look at?

If a buyer does want to hire an agent, can they finance the agent's fee into the mortgage if they pay it themselves?

Red Pear Realty said:

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Canada and the UK each have their own affordability crisis, and France is great if you want to live in a shoebox or out in the country. Housing in most cities in those countries are out of reach for most normal people until their late 30s to early 40s at the earliest. My former coworkers in Europe were happy to own a flat that was approximately 50 m (roughly 550 SF) once they could finally move out of their parents homes in their 30s. And because there are almost no buyers agents, sellers agents often list homes for prices that are incredibly higher than market value, then just wait for the first goober to come along who will pay more than market, and the cycle continues. The point is, buyers agents help keep pricing (sales and rents) in check. Honestly, I think it would make me a lot of money if buyers agents went away. Same with inflation, just like Trump said. Terrible for the country, but made me and most owners a lot of money.

And I think we can all agree that we don't really want to compare our housing to communist China, Russia, Vietnam, or Romania

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If there's willing buyers and sellers that is the market value. That's simple supply and demand that you're describing. I don't see how the scenario you are describing has anything to do with the commission amount.

Commissions in the US are usually 6% because that's the way its always been and realtors have fought tooth and nail to keep it that way even though the amount of work they do and value they bring to the table have greatly diminished over the years as technology and the availability of market information available to the public has GREATLY increased.

My brokerage model disagrees with this.

So far, nothing has really changed. But if anyone can predict the future with 100% certainty, they'll be making a lot of money. I don't see a scenario that's good for buyers or that brings down the cost of buying in the long term.

I will also say that for the 15+ years of my experience in the commercial and residential leasing and sales business, the joke has been that unrepresented buyers get absolutely raked, and have no idea how or how badly and often think they got a deal. On the listing side, folks love it when the other party isn't represented.