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New lawsuit about fixed realtor pricing

2,911 Views | 12 Replies | Last: 4 yr ago by HomeFinderCody
SteveBott
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AG
I know this issue has been beaten like a dead horse but thought I would drop this here. Some big powered lawyers behind this one. The article takes a slightly wrong take on this because it focuses on the buyer agent and not the listing agent. I think the listing side has a lot more fat on it based on the internet, new companies etc well discussed here.

https://www.cnn.com/2019/05/15/economy/real-estate-commissions/index.html
Red Pear Realty
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Lots of fat.
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JBLHAG03
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I just used a flat fee broker ($595 to list and $595 at closing) to sell my house. Im sure there are exceptions, as with full price agents, but he was phenomenal for a fraction of the cost. It seems almost fraud that my last agent made $18k.
planoaggie123
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AG
Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).
TXTransplant
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planoaggie123 said:

Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).


The problem with this is, sellers don't pay the buyer's agent (at least not directly). Most sellers sign a contract with the listing agent to pay the listing agent a fixed percentage. Then the seller's agent pays out to the buyer's agent. You can't assume you will get a discount on a house just because you don't use a buyer's agent. The listing contract and fees are strictly an agreement between the seller and the seller's agent, and in my experience the buyer doesn't have a whole lot of leverage.

Maybe my experience is dated, but the three times I've bought a house, the only obligation listed on the HUD closing statement was to the listing agent. Sellers have no obligation to the buyer's agent.

Now, one would argue that the listing agent has no business keeping the full commission if there is no buyer's agent. But that's a discussion for the listing agent and the seller because the money has to go back to the seller (the seller would then pass the savings on to you by discounting the price of the house).

The exception to this might be a flat fee listing - those contacts often specify that the seller must pay 3% to a buyer's agent (in addition to the flat fee to the listing agent). But there is no guarantee that the house you will want will be listed flat-fee.
planoaggie123
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TXTransplant said:

planoaggie123 said:

Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).

Now, one would argue that the listing agent has no business keeping the full commission if there is no buyer's agent. But that's a discussion for the listing agent and the seller because the money has to go back to the seller (the seller would then pass the savings on to you by discounting the price of the house).

The exception to this might be a flat fee listing - those contacts often specify that the seller must pay 3% to a buyer's agent (in addition to the flat fee to the listing agent). But there is no guarantee that the house you will want will be listed flat-fee.
Interesting points and I appreciate it. Maybe i don't fully understand how inter-twined all this stuff is and I guess agents probably look out for each other and don't like to do the work arounds as it sets a bad precedent?

Just seems like if anyone is shelling out $18K for our side of the transaction with some calls/emails, paperwork, and an inspection...that is crazy. Seems like it should be avoidable but you are making it seem like we would have a hard time doing what we want (and shaving off price of the home).

So our realtor will end up potentially making $30K+ and there isnt much we can do about it?
Red Pear Realty
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planoaggie123 said:

Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).


I would love to help y'all, and will rebate you 2% at closing. I've helped a ton of Aggies on this board to do just what you are describing.
Sponsor Message: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. Red Pear Realty
mazag08
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AG
planoaggie123 said:

TXTransplant said:

planoaggie123 said:

Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).

Now, one would argue that the listing agent has no business keeping the full commission if there is no buyer's agent. But that's a discussion for the listing agent and the seller because the money has to go back to the seller (the seller would then pass the savings on to you by discounting the price of the house).

The exception to this might be a flat fee listing - those contacts often specify that the seller must pay 3% to a buyer's agent (in addition to the flat fee to the listing agent). But there is no guarantee that the house you will want will be listed flat-fee.
Interesting points and I appreciate it. Maybe i don't fully understand how inter-twined all this stuff is and I guess agents probably look out for each other and don't like to do the work arounds as it sets a bad precedent?

Just seems like if anyone is shelling out $18K for our side of the transaction with some calls/emails, paperwork, and an inspection...that is crazy. Seems like it should be avoidable but you are making it seem like we would have a hard time doing what we want (and shaving off price of the home).

So our realtor will end up potentially making $30K+ and there isnt much we can do about it?
If you were to not use a Realtor, the most likely scenario is that the sellers Realtor would make 6% and you would not have any representation.

My question to you is.. is the agent you hire only going to put your contract in to the seller and hire an inspector? You know what you are doing and won't rely on them for any expertise or negotiating? At your price range, a Realtors worth is based on how much they can negotiate for you, both on the initial offer and all of the things that you are going to hope they get you, like price reductions and repairs for things found post inspection post inspection. A good Realtor can save you as much on a transaction that size as they amount of the commission.

But now, you have a reputable broker offering to rebate you 2/3 of their commission regardless of any potential wildfires that come up in your transaction. I would take that offer and run.
TXTransplant
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planoaggie123 said:

TXTransplant said:

planoaggie123 said:

Interesting article.

We are looking to move in the near future. Wife and I are struggling with a lot of what this article deals with...the high cost of buyer-side agents. We are confident in our knowledge of the market we are looking in and we have been looking at houses on our own w/o a realtor. All we would like is to have a realtor put in the offer and get us through the process (inspection, etc). On a $600K house...3% = $18,000. I am certain the agent would have less than 1 month of work to do (certainly not over 100 hours focused on our transacation). That is a hefty price to pay. At this point we would rather pay a real estate attorney from our own pockets for $2 - $3K and get a lower price on the home (as the seller would not have to pay a buyer agent their 3%...saving them $18K).

Now, one would argue that the listing agent has no business keeping the full commission if there is no buyer's agent. But that's a discussion for the listing agent and the seller because the money has to go back to the seller (the seller would then pass the savings on to you by discounting the price of the house).

The exception to this might be a flat fee listing - those contacts often specify that the seller must pay 3% to a buyer's agent (in addition to the flat fee to the listing agent). But there is no guarantee that the house you will want will be listed flat-fee.
Interesting points and I appreciate it. Maybe i don't fully understand how inter-twined all this stuff is and I guess agents probably look out for each other and don't like to do the work arounds as it sets a bad precedent?

Just seems like if anyone is shelling out $18K for our side of the transaction with some calls/emails, paperwork, and an inspection...that is crazy. Seems like it should be avoidable but you are making it seem like we would have a hard time doing what we want (and shaving off price of the home).

So our realtor will end up potentially making $30K+ and there isnt much we can do about it?


You can always ask your buyer's agent to rebate some of their commission back to you, but they may not want to do that (some do, but it's entirely their discretion).

But the seller is only contracted/obligated to pay commission to the listing agent. The listing agent then pays the buyer's agent in a separate transaction that, at least on paper, does not involve the seller (or the buyer, for that matter) at all. And that's why you can't go to a seller and say "I don't have a buyer's agent, so I want a 3% discount on the house" - because by contract, the seller is obligated to pay the listing agent whatever commission is specified in the contract. The listing agent would have to agree to amend the contract will the seller. The buyer has little leverage in this situation.

IWannaGoFast1
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AG
In reference to recent posts, been there-done that.

Whenever we've gone to see a house without a buyer's agent, I've asked the listing agent if they'd be willing to rebate any portion of their commission. Out of 6, 4 have been willing to do so, but the max was 1%. Min was 0.25%, average, a half. In two cases, it was written into the selling agent's agreement that if the buyer didn't bring an agent, the seller commission was reduced to 4%.

Using Red Pear or similar makes far more financial sense than any other option.
dallasiteinsa02
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coleasterling said:

In reference to recent posts, been there-done that.

Whenever we've gone to see a house without a buyer's agent, I've asked the listing agent if they'd be willing to rebate any portion of their commission. Out of 6, 4 have been willing to do so, but the max was 1%. Min was 0.25%, average, a half. In two cases, it was written into the selling agent's agreement that if the buyer didn't bring an agent, the seller commission was reduced to 4%. In one case, on a new build, the seller agent outright refused and would take the whole 6%. She also had ownership in the property. In the last case, the listing agent claimed what I wanted was illegal and wanted nothing to do with it. In 5 cases of the 6, they were unwilling to negotiate home price based on the overall reduction in commission. In all cases, the realtors underestimated the funds necessary for closing.

Using Red Pear or similar makes far more financial sense than any other option.

There isn't anything illegal about making an offer directly to the owner. I have done this and spelled out the terms directly in the contract. You would be amazed how the seller's agent is willing to drop to 3% when the owner gets the offer first. One time, their agent blew up the deal and the owner contact me after his protection period was up. Offered 3% more off of the original deal to get it done.
mazag08
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AG
If they have a listing agreement with an agent (and its not spelled out otherwise), no matter how an offer comes in the listing agent is obligated to paid the agreed upon commission.

Sounds like in your case that the seller waited until their contract with their Realtor was up and then came back to you. That's awfully convenient for you, but definitely not the norm.
planoaggie123
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AG
Appreciate all the responses! Definitely some things to think about as far as how to proceed!
HomeFinderCody
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planoaggie123 said:

Appreciate all the responses! Definitely some things to think about as far as how to proceed!
My advice:

Find an exceptional agent to represent you. That agent will be worth their weight in gold in being your advocate throughout negotiations, repairs, more negotiations, dealing with title company, dealing with listing agent, potential issues along the way.

Have a discussion with that Agent to see if they are willing to rebate a portion of their commission to you.

DONT lead with the "I'll find the cheapest option". Many agents win business based on being least expensive. In most industries, not just Real Estate, the cheapest option is rarely the BEST option.

I don't ever want to become someone's agent because I offer the biggest rebate. I want to be chosen because I am the best agent for them. I ALWAYS rebate commission to fellow Aggies, but that's icing on top of the cake.

Happy to talk about it if you like. Cell is 972-365-0432 and email is Cody@MyRobinsonTeam.com

Cody

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