cjsag94 said:

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mazag08 said:

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cjsag94 said:

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I'm pretty sure you said that wrong.. seller pays the commission.... Which is the crux of the suit.

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There is no rule written anywhere that says the seller has to pay the commission.

If somehow the courts decided that each party would pay their own commissions.. guess what?

The market would adjust and each party would still net the same thing they do now.

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I think that's the point.. as it is now, the market doesn't come in to play... It's the rules and expectations established by the industry. I think the lawsuit is seeking just what you said... Create a playing field where market conditions can be dictated by the market.

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They can right now. Nothing is stopping sellers from paying less in commission except the way the market would react.

Why would a buyer pay their own commission when a seller of a different house is offering to pay it for them?

As a broker, I believe the days of the Realtor are coming to an end.

Real Estate as an industry has not caught up to the digital age. Sites like Costar and Redfin will be the demise of the Realtor offering the same capabilities to see and research properties that once was held close by Realtors.

Companies are beginning to offer a guarantee sale, whereby if your home does not sell on a date that you specify, they will purchase it for a % of listing price.

Basically, you will be able to guarantee your move out date and in turn make real estate a more liquid asset.

https://www.redfin.com

Costar? Not sure what they have to do with this conversation.

I doubt the end of Realtors is near. However, it wouldn't hurt if there was some cleansing of the realtor pool. It's too easy to become one in my opinion.

I think there will always be value to a lot of people for representation throughout the process, but i do think the industry needs to catch up to welcoming people who are comfortable doing it themselves (just like with investing in the stock market). But there will always be people that are uncomfortable, don't have time, or lacking knowledge of marketplace, that will need an experts help.

In that case, whether buying or selling, agree on an arrangement with your own representative, pay it, and buy or sell your home.

I believe that's what the lawsuit is trying to impose?

BQ04 said:

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As a broker, I believe the days of the Realtor are coming to an end.

Real Estate as an industry has not caught up to the digital age. Sites like Costar and Redfin will be the demise of the Realtor offering the same capabilities to see and research properties that once was held close by Realtors.

Companies are beginning to offer a guarantee sale, whereby if your home does not sell on a date that you specify, they will purchase it for a % of listing price.

Basically, you will be able to guarantee your move out date and in turn make real estate a more liquid asset.

https://www.redfin.com

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BQ I am surprised at your statement. I see real estate as a relationship based business and don't believe an online approach will fully replace a realtor. The fact that over 60% of house hunters choose representation based upon personal relationships tends to make me believe there will be future demands for a realtor. I also think a law suit will eventually come in to play with Redfin and other similar websites when a client believes they were misrepresented. I know you fully understand your responsibilities as a broker and many on this website don't understand the liability linked to a brokerage. However, I enjoy reading the discussions on this thread and appreciate the varying opinions.

BQ04 said:

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As a broker, I believe the days of the Realtor are coming to an end.

Real Estate as an industry has not caught up to the digital age. Sites like Costar and Redfin will be the demise of the Realtor offering the same capabilities to see and research properties that once was held close by Realtors.

Companies are beginning to offer a guarantee sale, whereby if your home does not sell on a date that you specify, they will purchase it for a % of listing price.

Basically, you will be able to guarantee your move out date and in turn make real estate a more liquid asset.

https://www.redfin.com

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I can make my home really liquid right now if I wanted. Just list it about 25% under what it is worth... I'm in a great neighborhood... I'd find a buyer in a day. The problem is that it would be at a significant cost to my net worth. Homes cost too much relative to the net worth of buyers and sellers to ever truly be liquid. Hell, there's a thread on this page about a competitor in the guaranteed sale space (Open Door) and how they rip everyone's faces off by lowballing. That's an alternate to realtor model... and it is more expensive.

I never said market value, but there will be a pre-negotiated discount applied to purchase. My understanding is that it is currently hovering around a 10-15% discount. These are companies offering to purchase to include in a portfolio.

Regarding relationships, yes I agree that RE is a local, relational business. But the internet has caused major market disruptions in what was once considered "evergreen" businesses. Take taxis, grocery, hotels, stock market for instance.

Consider the demographic that is up and coming. The ones that have been trained on the "buy now" button on their phones. Consider all the available mediums for targeted marketing that exist today (Google ads, Facebook ads, youtube, email, etc) and the tech that is rapidly forthcoming AI, VR, etc. The MLS is no longer the "bottom of the funnel".

The common belief before is that one would never buy a car sight unseen, now it is delivered to you after you purchase online. Grocery was always about prime location, now you can order your groceries and have them delivered to you. Now you can place trades in real time online without the need for a traditional stock broker. Western Union thought they had a lock on communication. Yellow pages thought they had a lock on advertising in the home. Wal-Mart got caught with their pants down by Amazon. Sears was replaced by the very concept they invented, catalogue purchases, by Amazon.

The industry has to embrace the changes in how the consumer obtains information and makes purchasing decisions, otherwise it will go the way of the yellow cab driver.

I think that's why the lawsuit was filed. What differentiates real estate from all of those industries is that the same people effectively control all sides of the market/transactions. Add to that the infrequency that most individuals utilize the service, and there's no force to cause change. It's not a fee and/or service that is steeped in adding value, in my opinion... It's more that the market makers have controlled it as the only effective way to do it.

Help-u-sell... Buy owner.Com... 4salebyowner.com were several services i recall that seen to have come and gone that offered alternatives. Wouldn't surprise me to find out they were bought out by someone who didn't want to see that thrive?

I think it will be very interesting to see how this is decided.... Although i suspect it will be years before we find out.

I had a Help-U-Sell franchise at one point. Not my best business decision. They went bankrupt and reformed a few years ago. No big conspiracy there. BuyOwner.com & 4SalebyOwner are still around as well.

Companies like RedFin are doing something pretty similar. Hell, we have a guy on our board doing it for cheaper than Help-U-Sell ever did. I've seen guys that will list your house for $7/day.

If people want a different model, I've seen one for every appetite. At the end of the day, they all rely on the MLS though. If someone like Zillow or Amazon wants to create their own version of that and compete head on, I'm sure they could.

That's the real kicker. People want access to the proprietary system that NAR has put in place. They say nobody can compete because NAR lobbies the government to protect their system therefore its a monopoly.

Yet they don't understand that the system is merely an aggregation of information. People still have complete freedom to conduct their sale within or outside of the system (and its really not hard to do it outside, the forms and guidelines are available to the public.. and if you were truly as smart as you think, you could figure out the value of a home without needing the MLS.. but you arent as smart as you think you are), and if within, they still have the complete freedom to negotiate whatever they want.

They're really just mad that it takes themselves more time and effort to net the same result (sometimes better, sometimes worse) that paying a professional could do for them. So they attack the system.

I think agents offer value, and in some situations a lot of value ( hard to sell house, have to do a lot of marketing, a lot of open houses etc.), for me the issue is the value relative to what they provide in many of their transactions. Between primary residence and rental properties I've bought or sold 4 houses now without the help of any agentsthey were all shockingly easy transactions with only a few forms that need to be filled out and maybe a couple back-and-forth with negotiations and that was it.

Likewise, the Internet has changed everything. On the buying side, my wife and I found a house we wanted to look at and of course we already had seen tons of pictures and videos online, drove by the house a bunch Literally knew we liked the house before we ever stepped foot in it, called my buddy agent to go show us the house and a few weeks later he was paid 3% by the seller which was around $18,000. Easiest money he ever made.

I think for a lot of people it comes down to the relativity of the value these people provide. Are they worth $5000 in a lot of these transactions? absolutely. It just gets really hard to justify paying someone $15-$20,000 in that same scenario. I would imagine with the plethora of Internet information now regarding houses that same scenario plays out a lot where people already know whether or not they're going to like the house before they ever step foot in it

Ed Carter said:

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On the buying side, my wife and I found a house we wanted to look at and of course we already had seen tons of pictures and videos online, drove by the house a bunch Literally knew we liked the house before we ever stepped foot in it, called my buddy agent to go show us the house and a few weeks later he was paid 3% by the seller which was around $18,000. Easiest money he ever made.

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I get what you're saying but that's kind of on you. In that scenario, you should have negotiated a rebate since you had done a lot of the heavy lifting. I don't think your buddy would have complained. If he did, you could have moved onto the next buddy.

So my point about real estate agents being massively overpaid relative to the value they provide is on me? You are right though, it would've been savvy of me to do that but I didn't really think about it This example was also from six years ago though. Getting part of his commission,or not getting part of his commission has nothing to do with the point I was making though

I quoted your scenario and agreed that 3% was probably too high in that case. You could have negotiated that...so yes, it was on you.

Whether or not I got paid anything does not change the fact that the seller still shelled out $18,000 and completely took it in the shorts for the value that was provided Seller is screwed either way in your scenario which what I think a lot of this thread is trying to address

Whether or not the buyers agent had to show 100 houses or 0 is of no consequence to the seller. They just want a qualified buyer who can close.

In strong sellers markets, I've seen listings offer less than 3% and still sell. This whole idea that agents won't show a house that offers less than 3% is silly. As you have stated, most buyers do a lot of research on their own, so to think that a buyers agent is going to somehow shield or steer buyers away from these listings is a bit silly.

I still haven't quite figured out what the lawsuit is attempting to change. Do they want to blow up the MLS? Do they want any person to be able to access the MLS? I don't think anyone would be happy with the consequences of either of those actions.

Ed Carter said:

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Whether or not I got paid anything does not change the fact that the seller still shelled out $18,000 and completely took it in the shorts for the value that was provided Seller is screwed either way in your scenario which what I think a lot of this thread is trying to address

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This is the point of the suit! The seller couldn't realistically negotiate that.

mazag... You keep rebutting this by saying what people can do. I guess i can build a web site and create a market place to do just what Amazon does .. but if Amazon squeezes all the suppliers and says choose them or me. They effectively stand in the way. That's where Monopoly rules become relevant. It's not about what someone CAN do.. yes, it's a free country... It's does someone create an environment where effectively you can overpower market forces because of the single handed control you have.

The lawsuit claims that by putting all fees in seller, without having reasonable means to negotiate the buyers fee.. and controlling MLS .. steering buyers where they will... It is not a free market.

The seller listed and offered that compensation to a buyer's agent. He got his house sold and paid what he expected. How is that taking it in the shorts? Why does he care how much time the buyer spent on the deal?

Diggity,

Quote:

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In that scenario, you should have negotiated a rebate since you had done a lot of the heavy lifting.

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Honest questions here, not trying to be a smart a$$, just learn something -- How does one do that exactly? Do you sign a rebate agreement with your buyer's agent before signing the contract?

Is that 'rebate' applied to the purchase price at closing? What are the mechanics on that type of thing.

And finally, what about that law stating that a licensee can't agree to split a commission with a non-licensee? How is that not in play?

Thanks.

You can write it in the buyer's rep agreement if you like but it's just an agreement between agent and client.

If you want it to be reflected on the closing statement, you'll have to make sure the buyers closing costs are enough to absorb the entire rebate. Lenders won't allow you to have a contribution higher than actual costs. Make sure the lender, listing agent, and title company are aware of the arrangement.

Some lenders are weird about rebates so the rebate would have to taken care of after closing.

As far as rules on commission splits, that doesn't apply if the person getting the rebate is party to the transaction.

cjsag94 said:

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Ed Carter said:

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Whether or not I got paid anything does not change the fact that the seller still shelled out $18,000 and completely took it in the shorts for the value that was provided Seller is screwed either way in your scenario which what I think a lot of this thread is trying to address

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This is the point of the suit! The seller couldn't realistically negotiate that.

mazag... You keep rebutting this by saying what people can do. I guess i can build a web site and create a market place to do just what Amazon does .. but if Amazon squeezes all the suppliers and says choose them or me. They effectively stand in the way. That's where Monopoly rules become relevant. It's not about what someone CAN do.. yes, it's a free country... It's does someone create an environment where effectively you can overpower market forces because of the single handed control you have.

The lawsuit claims that by putting all fees in seller, without having reasonable means to negotiate the buyers fee.. and controlling MLS .. steering buyers where they will... It is not a free market.

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I keep saying that you have tons of choices, because you do. Nobody forces you to use a Realtor, and nobody forces you to pay a certain amount.

What if we scrap the MLS. Everyone pays for their own representation. And then one day, a seller offers to pay both commissions to entice buyers to his home. More sellers start picking up on this idea to stay competitive.

At that point, is it the Realtors fault that it's a dumb business decision to make the buyer pay something they don't have to pay anywhere else?

Because that's exactly what would happen if you "blow it all up".

And Amazon has plenty of competition.. they just all aren't quite as good. That's a really dumb analogy.

one MEEN Ag said:

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EastSideLowlife said:

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Buyers agents should charge 1-1.5% to the buyer and sellers agent should get at most 1%.
Next time I sell I am calling Red Pear!!

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Jamie did an excellent job on my house. Please feel free to PM me anytime to talk about the process.

We knew we wanted to do the heavy lifting on finding the right home. Every time you bring him out to do a private viewing of a house, its $150. So we really looked hard at Zillow, HAR, Trulia, etc and viewed first at open houses. We bought the second home we brought him out to look at it. With a traditional realtor, those showings would've cost us thousands.

Because we paid him upfront for every time we used his service, he doesn't have to bake in the potential cost of getting dragged around to twenty houses in his commission.

His model saved us serious cash and streamlined the buying process. You really narrow down which houses you'll drag a realtor to when its date night money on the table. Jamie's model is going to become the norm for buyers. Eventually the market will correct and sellers will stop signing over 6% at the get go, but we'll see how this lawsuit ends up.

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Both sides paying for there representation is the ideal market situation. The problem is the lower end of the market. They don't have the cash to take care of their representation and need it on the seller's side. If Banks would allow up to 3% (Not saying this is the correct amount just the current setup) to be financed into the deal that would fix the problem.

I'm curious... Did he just decline the 3% from the seller? Did he negotiate the price, then last second say wait... Take 3% more off... Or did he rebate that to you?

When selling a home, you factor 6% in is my understanding. Paying your realtor as a buyer doesn't help you unless something in the process gets you the 3% back.

I'm no realtor.. haven't bought or sold a house in 20 years... But that's my understanding. Am i missing something?


Edit to add:. Their web site suggests this model to sellers... Then explicitly supports paying 3% to buyers agents. If I'm reading your posting correctly, sounds like you got ripped off.

dallasiteinsa02 said:

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one MEEN Ag said:

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EastSideLowlife said:

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Buyers agents should charge 1-1.5% to the buyer and sellers agent should get at most 1%.
Next time I sell I am calling Red Pear!!

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Jamie did an excellent job on my house. Please feel free to PM me anytime to talk about the process.

We knew we wanted to do the heavy lifting on finding the right home. Every time you bring him out to do a private viewing of a house, its $150. So we really looked hard at Zillow, HAR, Trulia, etc and viewed first at open houses. We bought the second home we brought him out to look at it. With a traditional realtor, those showings would've cost us thousands.

Because we paid him upfront for every time we used his service, he doesn't have to bake in the potential cost of getting dragged around to twenty houses in his commission.

His model saved us serious cash and streamlined the buying process. You really narrow down which houses you'll drag a realtor to when its date night money on the table. Jamie's model is going to become the norm for buyers. Eventually the market will correct and sellers will stop signing over 6% at the get go, but we'll see how this lawsuit ends up.

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Both sides paying for there representation is the ideal market situation. The problem is the lower end of the market. They don't have the cash to take care of their representation and need it on the seller's side. If Banks would allow up to 3% (Not saying this is the correct amount just the current setup) to be financed into the deal that would fix the problem.

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So basically fix the problem by leaving credit undercollateralized. I'm trying to think... was there ever a situation where a mass of loans were undercollateralized. Oh yeah... the late 2000's. I mean I guess that could work... but it'll cost the market substantially in higher finance charges and probably the fallout of that is less willing buyers which lowers liquidity... and guess what that does to your home values?

Actually that doesn't work at all... it just creates a messier market.

cjsag94 said:

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I'm curious... Did he just decline the 3% from the seller? Did he negotiate the price, then last second say wait... Take 3% more off... Or did he rebate that to you?

When selling a home, you factor 6% in is my understanding. Paying your realtor as a buyer doesn't help you unless something in the process gets you the 3% back.

I'm no realtor.. haven't bought or sold a house in 20 years... But that's my understanding. Am i missing something?


Edit to add:. Their web site suggests this model to sellers... Then explicitly supports paying 3% to buyers agents. If I'm reading your posting correctly, sounds like you got ripped off.

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He rebates back 2%.

You are definitely reading it wrong.

If he represents a seller, he recommends paying the buying agent 3% because, unfortunately, anything less usually removes the chance Realtors would show your home. But the scenario you were responding to was someone acting as a buyer.

They paid $ 300 for two showings, then got 2% rebated back at closing. It really doesn't get better than that considering Red Pear still offers full service from contract negotiation through closing.

Ok... I don't see any reference to rebating 2% in the post. If that's the case, all is good, just didn't see that.

By the way, that's why there's a lawsuit. Buyer acknowledges realtor isn't worth 3%, but the seller is paying it anyway.

cjsag94 said:

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By the way, that's why there's a lawsuit. Buyer acknowledges realtor isn't worth 3%, but the seller is paying it anyway.

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The sellers negotiated that commission before the house hit the market. And the vast majority of deals are based on full 6% commission. The buyer's deal with his Realtor means nothing to the seller.

Lastly, there was no rule or law stating he had to pay 6% overall. This lawsuit is effectively trying to sue an "unwritten rule".

ALL OF THIS.

Also, I don't think this has come up on anyone's post but if commission did get turned upside down somehow, how would this affect comps and appraisals?