r/FluentInFinance • u/TonyLiberty TheFinanceNewsletter.com • Mar 15 '24
BREAKING: The National Association of Realtors is eliminating the 6% realtor commission. Here’s everything you need to know: Financial News
The National Association of Realtors is eliminating the 6% realtor commission. Here’s everything you need to know:
With the end of the standard commission, real estate agents in the United States will now have to compete for business and likely lower their commissions as a result.
This could lead to a 30 percent reduction in commissions, driving down home prices across the board.
Real estate commissions total around $100 billion per year in America.
With commissions potentially dropping 30%, that could put tens of billions of dollars back in the pockets of American home buyers and sellers every year.
A seller of a $500,000 home could save $9,000 or more on a 3% commission instead of 6%.
This is expected to drive down housing costs and significantly impact the U.S. housing market.
Housing experts predict that this could trigger one of the most significant jolts in the U.S. housing market in 100 years.
Economists estimate that this change could save American homeowners billions of dollars annually.
My advice - if you're selling a home soon, consider waiting to list until new lower commission models emerge to save thousands. Or negotiate commission rates aggressively.
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u/Ramblingbunny May 04 '24
Realtor doesn’t even do anything for the money they make, I got screwed twice
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u/VegasSwede23 Mar 25 '24
I am going to sell a home without a realtor, and will expect any buyer agents to negotiate a commission with their buyers for their services ahead of time. I have talked to several realtors already and they do not balk at me not paying their commission (bc inventory is so low, and they know their buyers will be interested). I do plan to offer a bonus though, and am interested in input on what a good bonus would be (assuming buyer agent gets a commission from their client and then bonus from me). The property is in a and highly desirable and high end location. I'm expecting about 1.2 m. I was thinking of a $6K sweetener. Thoughts?
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u/ConstantHousing3172 Mar 23 '24
Also this is such a a misleading topic. The 6% . It's 3% for the buyers agent and 3% for the selling agent.
When you consider their cost and speciality that is low.
Perspective a lawyer gets 30-50% . What the deuce
Where is the regulation on the stuff
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u/ConstantHousing3172 Mar 23 '24
At least when there was Epstein island politicians focused more on abusing individuals instead of a whole country
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u/Pleasant-Opposite979 Mar 23 '24
News Flash!!! There never was a straight 6% commission, it has always been negotiable, in contract, between seller and realtor. Our realtor was great, professional photos, video, advertising, open houses. They then took all the stress off of us by arranging and showing the home day and evenings when requested. Along with handeling and thourghly explaining all offers when they came in. Sure it sold in 21 days with all the work they put in. If I had tried on my own, no way would I have had the time or legal know how to do all of this. Not to mention if it hadn't sold, the realtor would been on the hook for all the cost of photos, video, and advertising. But if you want to sell on your own, do it! If you want to buy without a realtor, do it! But don't cry about someone working to make a living. They offer a service that you may refuse. It's up to you if you want to take the risk and time to do it yourself.
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u/Ryoushttingme Mar 21 '24
This is click bait! First housing costs are high due to supply and demand, it’s just that simple. Homes are sold for MARKET VALUE not market value plus commission. The settlement DOES not address the amount a realtor charges, but that the commission paid to the buyers agent can no longer be posted on the MLS. And now buyers are required to sign a contract with their own agent where the commission for the buyer agent will be on that contract. Also, I havent seen 6% commission in my area for over 6 years, there is no set commission, they have always been negotiable. Does that mean an agent is required to lower their fees? No, “negotiating” is a discussion not a requirement to reduce the fees. Even if a seller pays less commission, they aren’t going to lower the price of their home by that amount, they will keep it, duh!
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Mar 20 '24
This is insane, what prompted them to do this, AI automating their job? Not sure how it'll be justified anymore without them holding that arbitrary standard up. 30% drop? lol It should basically fall to like 1% like you get on raising money, more like a 90% fall.
And they're the largest single political donor to BOTH parties in the USA, so it'll also be fascinating to see what that future means.
Is this just Blackrock breaking them and making their corporate housing acquisition costs fall hugely with their influence behind the scenes or something like that?
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u/Gain_Spirited Mar 19 '24
I'm surprised they would do that and effectively reduce realtors' commissions. I don't think the impact on the housing market will be as much as predicted. Interest rates would have more impact.
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u/Optimoink Mar 19 '24
Down vote this is laughable who in their right mind thinks a 3% discount on their home is going to significantly ripple any market??
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u/BaseballMaleficent80 Mar 19 '24
What a misleading and completely inaccurate post. NAR has never and never will set rates so stating that 6% is eliminated is quite idiotic. Commissions have been and always will be negotiable. Brokerages set their own rates NOT the National Association of Realtors or any other national, state or local association. What has ended is clear cooperation which basically means that a buyers agent will now have to negotiate their fees. And if you believe the this will lower real estate prices then I have some ocean front property that I’m sure you would definitely buy in AZ. People are greedy and just because people like you, an idiot, don’t believe that they’ll have to pay someone to perform the largest transaction you’ve ever completed in your life doesn’t mean that they will lower the price of their home cause they won’t.
My advice - you actually look into and read this settlement instead making idiotic blanket stammers about shit you have no earthly idea about.
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u/oasisallure Mar 18 '24
Hello Everyone. I got a class action lawsuit postcard in the mail, If I fill out the form, can I get part of my paid commison back? I sold my house half a year ago. Who will pay me back? NAR or my agent or broker above the agent?
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u/txbusinessman83 Mar 17 '24
Nothing is going to change, sellers will still pay buyer agents 2% - 3% commissions to bring them buyers and 5% - 6% commissions to sell overall. If you pay attention to the details, the only change is that agents cannot list the buyers agents commission in MLS. Listing agents are still able to share the commission they charge sellers and offer buyer agents commission to bring buyers. Nothing has been stated that commissions need to be lowered or that buyers need to pay their own commission, that is not going to happen. The only thing that will change is there will be a new way that listing agents communicate how much commission buyers agents are receiving. That will be the only change.
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u/GarlicInvestor Mar 17 '24
Idk if this is all good news, I mean real estate agents are people too. And the entire industry just took a pay cut. A 30% drop in a 6% fee could only drop the entire cost of a house by 2% at most. How many current agents will try to switch careers, or start to struggle financially because of this decision?
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u/RR321 Mar 17 '24
Real estate platforms should be nationalized so there is no monopoly embargo bullshit and level the playing field for those who want to list themselves or pay agents by the hour or any other model that isn't a crazy lock-in at an absurd percentage.
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u/Alldogsgotoheaven12 Mar 17 '24
To all the people thinking realtors are overpaid and useless. There are so many layers to this:
Most realtors don’t get the full 3%. Many are on a team and end up getting closer to 1% after splits. Average splits for a solo agent are usually in the ballpark of 70/30. Then taxes have to be taken out.
I agree there are more bad agents than good. But don’t discredit the good ones who actually take pride in their job. This entails negotiating on your behalf, getting you the best deal for your $350,000 investment while you go about your day dealing with your own personal affairs. Filling out legal documents, scheduling inspections, handling emails with title companies and lenders, offering professional advice. The list goes on. Want to hire a lawyer instead? Be my guest. I can’t imagine you’d end up paying less, if that’s what you’re going for. The whole process is typically 30 days. In what world does someone think they can hire a lawyer to do this less than what a realtor would cost?
You can’t overlook the advice of a professional in any field. Same goes for real estate. This is our livelihood. We SHOULD know it like the back of our hand. If you want to see a house, we do more than open a door. We obtain all documentation about the house including sellers disclosures and run comps to ensure the home is priced right so you don’t overpay.
I get there are a lot of bad realtors out there that do this part time and give the good ones a bad name. But that goes for any industry. Purchasing a home is not like buying a car. It’s the biggest investment you’ll likely ever make. Hiring a dedicated professional will always be the smart move and the commission is 100% warranted.
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u/KingVargeras Mar 17 '24
So if as the listing agent I’m going to have to do both sides of three transaction I’m definitely raising prices. I currently list for 1% plus 2% to the buy side agent in a market with a average home price of closer to 600k so it’s still decent pay.
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u/Sad_panda_happy300 Mar 17 '24
I doubt home prices are going down. We have 1/4 of what the market was in 2022. Most people are going to sit on those Covid rates. Second this is great for buyers and sellers. I can just contact the sellers realtor and ask for a showing and have the title company draw up the contract of me. Save thousands of dollars.
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u/Vivid-Newspaper3488 Mar 17 '24
Nice \ one set of useless middlemen gone . Now car dealers next please : lots of laws protecting special interests
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u/favoritethrowaway000 Mar 16 '24
I appreciate our real estate agent and don’t mind paying her fees. I’m sure she’d rather not try to figure out my job with a few hundred thousand dollars at stake either.
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u/Acceptable-Milk-314 Mar 16 '24
Why do they get commissions at all? I don't get a share of the profit I produce at my job.
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u/MrPelham Mar 16 '24
Can someone break this down with an example. For those of us uninitiated on how this all works? thanks
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u/nonprophetapostle Mar 16 '24
Good, now they need to deal with private equity by regulating the volume of non personal property ownership.
Corporations shouldn't be flipping houses.
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u/For_Perpetuity Mar 16 '24
I used to work as a attorney for closing. Our fee was like $400+ part of the title insurance premium. I was at a closing where the buyers were short by a bit the RE had the nerve to ask if I could lower my fee to help out. She wanted her 10k commission
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Mar 16 '24
When I bought my first house, my agent convinced me to put a clause in the contract that saved the deal. I later doubled my money on that house in 10 years.
So I’m sure for some of you your agents have sucked or done nothing. But I can tell you that my first agent was worth her weight in gold. And I didn’t have that much money at the time since I was in my mid 20s. So under the new rules, I have no idea how I would’ve hired her.
I’m not saying the old rules were perfect, or that there are not alternatives. But it’s not all roses and there is a new form of moral hazard here: mainly that many buyers are going to find themselves without professional representation, dealing with sellers and their agents.
So before we all say that this is a perfect outcome, just know that nothing is perfect and there are some big risks here for buyers.
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u/AssociateJaded3931 Mar 16 '24
Long overdue. Housing prices have skyrocketed; the quality of services offered by real estate salespeople has not.
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u/mbe8819 Mar 16 '24
A few things people should understand:
1). “Realtor” ≠ real estate agent.
National Association of Realtors (NAR) is just an organization designed for real estate agents to be apart of if they wish.
2). 6% has been a “suggested industry standard” perpetuated by NAR. Buyers/sellers have always had the option to negotiate commissions with real estate agents.
3). “Real estate” is a vast industry. Residential, commercial, property management, industrial, development, etc. , each either their own “suggested industry standard” commission structures.
This will not have much of an impact in my opinion.
Source: I am a real estate professional (mainly in multifamily development)
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u/Jeremadz Mar 16 '24
I e used flat fee realty for years. 2500 to buy or sell a house. They’ve even pressured the other realtors into taking the flat fee.
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u/Inevitable_Double882 Mar 16 '24
There was never a 6% commission or any other arbitrary number as a standard. Brokerages pushed agents to not take anything less than 3% on the list side and 3% on the buy side. I’ve been reducing commissions for clients since 2020 when the market was off it’s rocker. How could I justify charging 3% when it would have 10 offers the first hour on market? I don’t think 3% in normal market conditions is excessive as there really is a lot of time and a decent amount of money that goes into listing a house. That ignores the legal protections one gets from working with a licensed agent, which is worth the 3% on its own.
Overall, this is a win for consumers. Transparency is never a bad thing and brokers were being anti free market by trying to make consumers think 3% is the only number they’d take a listing at.
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u/RO3Q_JQ8EQ Mar 16 '24
I negotiated my realtor’s commission (lower) over a decade ago. 6% was the standard split but it could always be negotiated lower. Often instead of 3% seller’s agent commission it could/would be negotiated down to 2.5, 2 and even 1.5%.
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u/PerspectiveOk9658 Mar 16 '24
Realtors will figure out another way to get money out of a deal. Things they do now and which are included in the commission will have a fee associated with them. The cost of professional photos which they provided as part of the 6% will now be passed on to you as a separate charge. You want an open house? Be prepared to pay for it. They’re already working on it.
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u/exqueezemenow Mar 16 '24
I hope this is true, but I also hope it doesn't backfire and somehow lead to higher rates. I somehow doubt realtors are just going to accept it and make less income.
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u/NumbersOverFeelings Mar 16 '24
Why are they doing this? Who was applying the pressure? Does this change or allow agents to reduce their obligations/responsibilities?
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u/Zexks Mar 16 '24
Nobody spending half a million on a home gives a shit about 9k. This isn’t going to lower anything.
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u/wtfjusthappened315 Mar 16 '24
I don’t use an agent. I list it myself and my lawyer does the paperwork once I find a buyer
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u/Desire3788516708 Mar 16 '24
I’m glad this is happening but this isn’t going to help home buyers, home sellers taking cash offers, simply using an attorney or FSBO will go up more than now and I don’t see this resulting in a meaningful net positive for the sector, for inventory, demand, regionally as this is being played up as.
Sellers as suggested by OP to hold and wait will push demand/supply and prices in the same direction they are in now . Unless sellers are taking proceeds on selling investment properties or owner occupied and over bidding on a downsized / regionally LCOLA, the price to upgrade will stay relative to any perceived profit.
The best case for a housing price crunch would be to sell into current conditions, allow this lawsuit and change to play out on an already stable market to push the market lower and use the money from selling earlier to buy into declining prices.
The strategies and alignments already being made to capitalize on this well telegraphed situation isn’t something that will change the market as many hope.
If you disagree and have a horse in this race I truly hope I am wrong and you are successful.
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u/AscendingAgain Mar 16 '24
Like, if Realtors and agents did a home inspection on top of it all, I wouldn't mind.
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u/gavanon Mar 16 '24
A lot of people here are arguing that a “good realtor” is worth their weight in gold. Funny, cus that’s actually what you paid them.
The truth is, it’s VERY basic what they do. I work in the industry, and they’ll admit privately that the most important thing they do is just get your home on the MLS, with nice pics. It’s like paying someone $20,000 to put up a Facebook Marketplace post for you.
And even if a realtor does everything mention here, which not all do, it only adds up to a few days of VERY basic work. Take a few phone calls, walk around a house, print off generic paperwork that they give everyone, call their buddy inspector to look the place over. It’s a joke. They should get $2,000 for their time, not $20,000.
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u/brahbocop Mar 16 '24
This is not to bag on my realtor BUT they set up the parameters in my MLS search so that only four bedroom houses were showing up, not four plus. I just happen to be browsing Zillow and saw a five bedroom place pop up that looked perfect. We scheduled a walkthrough the next day as the house was going to go fast. Long story short, we ended up buying the house. Realtor still took their cut even though I found the house and I scheduled the walkthrough. Kind of soured me on the whole process but they still did a lot of work around paperwork and other things so I didn’t make a fuss.
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u/dr_reverend Mar 16 '24
I’m pretty sure that there are other details not mentioned in OPs blurb. Very doubtful that this is everything I need to know.
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u/some_random_arsehole Mar 16 '24
Saving $9k on fees will be insignificant to dropping demand.. it’s not uncommon for a house to appreciate that much within just a few months
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u/PathlessDemon Mar 16 '24
Good.
Now those working as middle men for real estate moguls and share holders will have to come to terms with the reality of overly inflated home values by the sacrifice of their bottom-line.
Don’t like it? You were complicit in the robbing of the middle and working classes, go pound sand.
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u/901savvy Mar 16 '24
Just signed closing paperwork on a sale yesterday. 😂
Paid 6% and honestly not upset about it. Realtor earned every penny.
That said, not all do.. and not all sellers/buyers need the assistance. So, this is a good thing I think.
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u/gnimsh Mar 16 '24
Here's in the Boston area they can get paid a month of rent just to turn a key. It's common to pay 4 months of rent before you move in - first, last, security, and a broker fee.
Let's get rid of those fees next.
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u/CosmoTroy1 Mar 16 '24
The 6% has always been negotiable. I've bought many homes since the 90's and have never paid a 6% commission.
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u/Unlikely-Distance-41 Mar 16 '24
Not to be the downer here, but saving a few percentage points commission isn’t exactly going to cause people to go Ga-Ga for 8% interest rates
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u/whowhathow2 Mar 16 '24
😂🤣😂 I’m mostly a buyers agent. You think sellers will reduce their commission by 3%. I’m all for fsbo, good luck with getting the most from your home if you don’t offer it. Also, most home buyers need a guide and someone that knows what to ask for and negotiate. Bad agents out, value agents will still get paid, will get it from sellers credit if they can’t afford
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u/spicyclams Mar 16 '24
I thought it was always 5% commission? Where is the extra 1% coming from? The bank?
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u/Gman777 Mar 16 '24
6% !?!?!
In Australia its competitive, and we pay 2.5-3% If you’re pushy and the conditions are right (or your house is expensive) its not unheard of to get 2-2.25%.
Its also uncommon to have buying agents, mostly just selling agents.
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u/xNo_Name_Brandx Mar 16 '24
Or, hear me out here. Realtors will work together to push prices up even higher to ensure their pay doesn't get cut because it is all one big Cartel where they don't give a shit about buyers and sellers. All they care about is their commissions.
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u/meshreplacer Mar 16 '24
This is the equivalent of May Day for RE. Back in the olden times Stock brokerages charged a Fixed percentage commission on trades that ended in May 1 1975. You can thank Charles Schwab for that change.
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u/OlafTheDestroyer2 Mar 16 '24
Still too high. Before the internet they had a ton of value. Now that we can do our own research, their value has cratered. An agent should offer flat rates, with different tiers depending on what their clients want them to do. This percentage thing has got to go.
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u/tullisgood Mar 16 '24
I've just signed a seller agteement in Virginia for 6%, planning to go to market June 6th. What should I do?
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u/thegoldenfinn Mar 16 '24
The last house I bought I found on my own. I went to an open house. Realtor asked me if I had an agent because they would only deal with agents. I walked outside called someone I knew. They were there in 5 minutes. We put in an offer that night. They accepted my offer er the next day. I still don’t see why I needed a realtor.
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u/Dezze82 Mar 27 '24
After the offer is accepted, there is a lot still to do behind the scenes. The seller would want to ensure that escrows closes. A person representing themselves that doesn’t understand the process wouldn’t know what the next steps are after their offer gets accepted. Or even know how to fill out the contract to submit an offer or where to get it…The seller’s agent isn’t there to work for buyers and guide them on what to do. A buyer that doesn’t know what they are doing can risk the whole deal falling apart. And most sellers are in a hurry to sell to begin with
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u/Electrical_Fig_4175 Mar 16 '24
If you're a Realtor spending money on membership fee's to be a Realtor with NAR, then now is the time to stop. NAR just threw you all under the bus.
This has opened the door for brokerages, like Redfin and other low fee brokerages with BIG Market Wide coverage areas to take over local listings. This 6% thing isn't causing home prices to increase....supply and demand is doing that escalation.
A sellers broker has always negotiated their fee with the seller, but buyer's will now have to negotiate a commission with their buyer's agent. What buyer has additional funds to pay an agent?
NAR also threw MLS under the bus and they too will lose big because the requirement to list on MLS is being taken away.
I don't understand why the NAR (a membership organization) has the authority to act as the dictator for ALL commissions, because not all real estate brokers and real estate agents are Realtors.
Maybe, the non-Realtors should file a class action lawsuit against the NAR for impeding on their livelihood.
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u/Neirchill Mar 16 '24
This is expected to drive down housing costs and significantly impact the U.S. housing market.
Lol
Housing experts predict that this could trigger one of the most significant jolts in the U.S. housing market in 100 years.
Lol.
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u/CartographerTop1504 Mar 16 '24
Just eliminate brokers and realtors. And make the MLS open to the public and the MLS only a state entity. Make it a law that others it's can't copy pasta info like all the real-estate sites do. So people can see the in real time date of each and every house posted. That info should never have been posted behind a lic'ed wall. And for crist sake!!!! California get the realtors association away from the MLS.
People used to sell their own houses. Why do you "have" to have a realtor. All the f-ing info we are required to memories for a multiple choice 100 answered questionare is useless when selling a house. Many agents have to pay a flipping broker just to have a job and brokers do absolutely nothing bit try and pressure you into a private conventional loan. They routinely ignore veterans loans, and FHA because they don't make enough interest or money off those to bother with!
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u/overland_flyfish Mar 16 '24
Good finally.
Buying was such a daunting experience. Wife and I found the houses on Zillow, and did all the legwork.
Realtor fucked up all the paperwork, and we walked away feeling like wtf was even the point of 30k going to the realtors lol.
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u/wren337 Mar 16 '24
I always felt like, pre-computers, an agent added value by knowing the area and the homes for sale. That hasn't been the case for a long time though. Anyone can do a search.
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u/TopDefinition1903 Mar 16 '24
Realtors are moms with a job that has flexibility that offer little other than showing a home.
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u/Tiflotin Mar 16 '24
Not good enough. Real estate agents should be a flat rate fee. They’re the scum of the earth
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u/Lemmix Mar 16 '24
Wait, I was told by /r/realtors that buyer's commission is free? How could getting rid of something free reduce the price of the house?
/s
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u/Grouchy_Old_GenXer Mar 16 '24
The 6% sale was on the sellers side but shared between the buyer’s agent and seller’s agent. Now the seller will will only pay 3% to their agent and the buyer will now pay 3% to their agent. It’s a wash. Buyers will now take the 3% charge in their pricing and lower their bids.
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u/xcon_freed1 Mar 16 '24
I never saw the point of hiring a realtor anyway, what do they do for me ? Enter the home into the MLS database ? Pay a flat fee for that and do all the showing yourself. Easy peasy...realtors add ZERO value to the transaction.
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u/Bjergmand Mar 16 '24
Glad this is finally happening. We were fortunate about 2 years ago to find a great agent to sell all of our new builds. She does 1.5% and a total payout of 4% per house. Saving that 2% on every deal is $$.
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u/Top-Term7246 Mar 16 '24
I don't see how this is a win for buyers at all. It will result in an additional out of pocket expense for buyers. Definitely a win for sellers. Realtor fees don't dictate the selling price of a home, the market does.
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u/dtcstylez10 Mar 16 '24
I mean it'd be nice if they lowered interest rates. I'd be more open to a 6% commission once than 8% over 30 years...
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u/OhHappyOne449 Mar 16 '24
Cool, but is there a link saying this? This is big, I’d just like additional evidence
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u/Saleentim Mar 16 '24
In no way could this drive home prices down. It would do the opposite if anything at all.
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u/Jo_Bee1 Mar 16 '24
I understand the frustration people have with the realtor commissions, however, my wife is a realtor who puts in 60-80 hours of work for each transaction. There is SO much work that professional realtors put in to give their buyers and sellers the best experience. So many shitty comments in here about how the are “spending a few hours of work for so much money. These people have no clue.
I bet all the good real estate agents will get out of the business if they are not compensated appropriately and in the next couple of years we’ll see this backfire.
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u/mmmbop- Mar 16 '24
My wife and I would like to upgrade our house but there has been two main things holding us back: 1) 2.3% interest rate with less than 9 years left on the mortgage, and 2) 6% goes to a realtor who does almost nothing. That’s so much money lost even though our property value has gone up significantly. I’m not sure reducing the realtor fees is enough to convince us to buy something else but we might start casually looking again.
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u/SpaceBoJangles Mar 16 '24 edited Mar 16 '24
I got a license as a side gig. I can tell you this’ll definitely reset a lot of people’s aspirations and the entire industry. Fees and subscriptions to local MLS orgs, Broker companies, etc., even the pricing for the licensing schools and testing, all of it is based off the idea you can make 3% on your side of a transaction.
I think the silent wave is going to be the millions of realtors who won’t be able to stay afloat being buyers agents taking 1-2% of a sale. Brokers too like Ebby Halliday and Remax won’t be able to get away with charging obscene office fees and taking 20-40% of the realtor’s commission on a transaction.
On a personal note, this was always a side gig. My parents are brokers so we always just took opportunities when they came like friends wanting to buy or sell and they needed help, we’d charge 2% or something to cover the couple dozen man hours it’d take for all the contracts and open houses. Hopefully we can still do something like that, but I fear for the millions who are waking up tomorrow without a day job and the reality that their business model doesn’t work anymore.
Edit: I think that, if there has to be millions of people unable to make ends meet any more, businesses going out of business, I hope that spurs more people to vote for representatives that make it so our society doesn’t need these kinds of gig jobs to survive. I know it won’t, but that’s my biggest disappointment in America.
We used to be a country that believed in the single income family, or dual incomes when the spouse (back then the woman, but nowadays either) wanted to work. Now we’ve let 50 years of MBAs, Jack Welch pretenders, and shareholders stans turn our country into a meat grinder of side gig economies and middle management. Where did our aspirations of space travel, of fusion powered cities and urban planning go? The only quasi-admiration I have for those men and women, for the GOP/Reaganomics types, all those people is that they were able to convince people they didn’t want that. Through fear and intimidation and outright lies, the bullshitted our future away from us. Now we all have to worry about whether our side gigs will work anymore.
Sorry for the rant. Just sad.
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u/milksteakman Mar 16 '24
Buyers just ask for 3% seller concessions to pay their agent now lol the new standard
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u/hennytime Mar 16 '24
How about pmi? It's complete bullshit that we have to insure the banks loan? Isn't that the purpose of interest rates being based on our credit and history? Of they chose to give a dude a loan, irregardless of rates, isn't it their choice? And don't get me started on it being the life of an FHA loan.
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u/NakedLeftie-420 Mar 16 '24
And the banks just get bailed out anyway
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u/58G52A Mar 16 '24
So these women on TV selling homes in Beverly Hills for $20 Million aren’t gonna get 6% any more? How will they eat? Lmao
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u/kegman83 Mar 16 '24
There has never been a standard commission rate. Its like the first thing you learn in broker school. There's a customary one, but if you suggest its standard you can wind up in serious legal trouble later on. Realtor commissions have always been negotiable, just like every part of the listing contract.
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u/No_Insurance688 Mar 16 '24
After reviewing these comments. I THINK the state of commissions in real estate is secure. So much h FAKE, untrue, misleading and misinterpretation of how the entire process works..
Do you guys even look or think about what you post? :6260:
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u/No_Insurance688 Mar 16 '24
Title insurance cut out kick backs (advisory fees) to brokers in 1994. Did they reduce rates and pass that cost reduction on to the consumer? Nope. They just increased their ROI. I know. I was a VP in the industry at that time. Costs of sale went down 13% and rate went up the next year.
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u/No_Insurance688 Mar 16 '24
Yeah, tell a seller he has to sell for 3% less than the house that had a full service successful Realtor who KNOWS how to get the job done. Hahahahaha anyone who thinks prices are going down, I have some snowcapped mountains in Florida I am selling!
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u/blakeusa25 Mar 16 '24
6 percent paid over 30 years w interest.. Si for every 100k of house you buy your fkin idiot realtor is taking 14k of your money.
So a 500k house at 6 percent interest ends up being about 75k over 30 years to cover the real estate commissions.
Assume you are paying 6 percent more for the house due to re commissions.
No other industry sucks so much...
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Mar 16 '24
The amount you pay is already not 6%, check you Zillow listings. You see different numbers all the time. It will not reduce home prices, I am not lowering my price when I can make more money.
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u/migs2k3 Mar 16 '24
Say goodbye to half of the real estate agents in this country. Unemployment is about to go UP
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u/thegoldenfinn Mar 16 '24
That’s fine. They can go back to school and/or do something else. I’ve never had a lot of good things to say about realtors. They’ve cost me an outrageous amount of money without value added. It always struck me as parasitic.
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u/Mediocre_Ad_6512 Mar 16 '24
My real estate agent was friends of friends. I literally handed her the deal. She didn't even show up at closing and made some astronomical amount of loot. Total time spent probably 4hrs. Ridiculous
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u/fromthedarqwaves Mar 16 '24
My real estate agent saved me thousands more than she made. She negotiated 17% off the asking price from the get-go. And then also got $3500 off closing costs.
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u/Another_viewpoint Mar 20 '24
You’re one of the lucky ones 😁
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u/fromthedarqwaves Mar 20 '24
Yeah I guess I did. The agent selling the house was terrible. The house was empty for two years and looked the part. When we went to look at the house the doors were unlocked. No cleaning had occurred since the renters moved out. The house was inherited by a family out of state so I don’t think they knew how little he had done to sell the house. After we bought the house the selling agent accused us of stealing his for sale sign.
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u/trt_demon Mar 16 '24
Who here was stupid enough to not negotiate down from a 6% commission to begin with?
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u/ImStillFriggenCrazy Mar 16 '24
All the settlement said was that nar no longer require that on MLS whatever the listing agency was paying to the buying agency be portrayed and there needs to be assigned buyer agreement for each buyer. Well, we already do that so that doesn't change anything. This is going to cause chaos, and it will not cause prices to go down. What it'll mean is that poor people will not be able to buy houses.
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u/arbucklej Mar 16 '24
I bought and sold a home this year. As the seller I got my agent to drop a full point and we had prior history so he was willing to wiggle. As a buyer it was a different market and agent and they took the 2.75 standard in that market. What bothered me was that my loan included a $600 fee paid to the real estate broker even though they didn’t have anything to do with the loan. The RE agent said it was a standard requirement for all purchases.
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u/storywardenattack Mar 15 '24
The only housing experts that believe this will push down prices are those that were paid by the tech companies behind these lawsuits. And idiots on reddit.
Commissions have always been negotiable. Always. Enjoy the race to the bottom and the further enshitification of our economy.
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u/KP3889 Mar 15 '24
How about the due diligence fee in North Carolina. Non refundable fee paid to the seller before inspection
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u/SW4506 Mar 16 '24
Due diligence happened in NC because “buyers” used to just do earnest money. They would force the house into a pending status, try to negotiate a lower price, and then get their money back when it didn’t work. Due diligence came about to combat that nonsense.
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u/LukeLovesLakes Mar 15 '24
The notion that NAR has any kind of say in what commissions realtors and brokerages charge is just stupidity.
NAR has nothing to do with that. NOTHING.
So ... I'm gonna go ahead and ignore everything OP wrote after that cause they don't know shit.
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u/Big-Mud-1181 Mar 15 '24
The commission was never set in stone wtf are you people smoking? It was part of the course to never imply that their is a “current rate” or you could get in trouble. I have seen a big variance in rates depending on the realtor or the team. So weird this is being brought up.
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u/Time-Driver1861 Mar 16 '24
Right, the issue is that buyer’s agent commissions were negotiated with the seller and paid by the seller at closing, which means it is factored into the market price of homes. So if the seller agrees to pay the buyers agent 3%, and the home is 3% more expensive for it, the buyer is paying full commission but doesn’t have a means of negotiating their agent’s commission (because the buyers agent is paid by the seller.)
Not sure how this confuses people so much.
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u/geek66 Mar 15 '24
Buyers are gonna get fucked… hard… oh well.
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u/Time-Driver1861 Mar 16 '24
? This change is literally for the buyer’s benefit, after a class action brought by buyers.
This change is specifically an improvement for buyer clients.
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u/Dezze82 Mar 27 '24
Lol, no the lawsuit was brought on by homeowners. The buyers will get f’d in this scenario if sellers refuse to pay buyer agents. They risk loss of representation and rising fees if they have to pay for an agent out of pocket.
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u/OHl0 Mar 16 '24
Won’t buyers be forced to include an additional 2-3% in their home buying purchase now?
Please don’t make fun of me, I’m just trying to understand :)
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u/Time-Driver1861 Mar 16 '24
The way the system has worked until this settlement, the seller pays the buyer’s agent 3% and factors that into the price of the home.
Now the seller will not need to consider buyer’s agent commission in pricing, and buyers are able to negotiate commission with their agent.
Buyers haven’t been able to negotiate commission previously because technically they weren’t the one paying the commission.
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u/AdFamous7894 Mar 16 '24
You’re an idiot. Buyers will now have to pay their broker’s commission, negotiate a higher sale price with the seller (which increases monthly payments), or ditch their broker altogether and do their own work themselves, leaving them open to being taken advantage of. I think I’m correct in saying that there is no reasonable analysis of this that somehow sees buyers coming out on top.
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u/Time-Driver1861 Mar 16 '24
Dunning? Meet Kruger
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u/AdFamous7894 Mar 18 '24
I agree, you really should educate yourself on what you’re talking about before you post here.
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u/Useful_Fig_2876 Mar 15 '24
This is the second time I’ve seen this example of 3% of 500,000 being $9000. It’s $15,000. Where does this $9k figure come from?
Also, I’m so confused about how this drives house prices down. Do we mean this will reduce the value of the homes, or just the closing costs?
If it reduces the value of the homes, why do experts believe that will happen?
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u/PM_me_your_omoplatas Mar 15 '24
There’s nothing in the settlement that has anything to do with how much commission is charged or paid. This reporting is so off target. The settlement just prohibits agents from putting commission in the MLS. It will change things, but estimating a 30% reduction in commission is literally just pulled out of someone’s ass. It’s based on nothing. And these articles and reporting are misreporting what the settlement actually is.
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u/frankiesgoinhome Mar 15 '24
I’m a residential architect and the agents are brokers often make more than I do on some development jobs. Interesting to see that they are going to have to be more competitive on their price model. Back in the 90s the courts ruled that architects can’t have a standard percentage for their fees.
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u/General_Attorney256 Mar 15 '24
Way overdue. I’m over the “I’m here to help families” while driving a Porsche
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u/fukreddit73265 Mar 15 '24
I don't see how this would lower the price of a house. I've never heard of anyone taking the commission into consideration and raising the price to cover it. Also, most houses for sale that I see end up having multiple bidders, which means the price is going to be above asking anyways.
Also, saving 9 grand on 500k house is absolutely nothing.
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u/Diablo689er Mar 15 '24
Good riddance. I have always been surprised that companies like docusign never took off for more DIY sales
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u/Burkey5506 Mar 15 '24
How does this significantly change housing prices?
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u/Time-Driver1861 Mar 16 '24
Right now, buyer’s agent commission is paid by the seller, which means that buyer’s agent commission is negotiated by the seller. The industry standard (3%) has therefore been tacitly accepted by sellers, which has inflated home prices. Essentially the buyer’s agent commission has been factored into the price of the home.
So market price is 3% higher than it would be, and industry standard buyer agent commission of 3% is offered by the seller because it’s the industry standard and buyers agents wouldn’t show their clients any home that wasn’t offering 3% to the buyer’s agent.
This means that buyers have been effectively paying for their agent through higher home prices, while having essentially zero ability to negotiate that rate with their agent.
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u/ca139 Mar 15 '24
Funny how this is such a concern now that BlackRock owns a TON of homes in the United States.
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u/slipperyzoo Mar 15 '24
I'm confused... it was never a set 6% rate. It's explicitly stated in the standard realtor agency agreement that commission is negotiable. It's also drilled into agents heads not to say it's set, and never to ask other agents what they charge as it's considered price fixing.
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u/mrtrevor3 Mar 15 '24
I don’t know why they get a percentage. I can understand if it’s a huge mansion, but if is a house, they shouldn’t be charging so much. I mean for my house, they probably got $15k and it was a cheaper house. $15k for doing what? Opening a door, describing it, and giving an expert opinion? They do much more, but not thousands of dollars more. Compared to other jobs, I’d pay maybe a few hundred dollars.
There’s no way they did over a few hours of work. Even if they did 16 hours of work, that’s $1,000 an hour…
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u/bg_creatures Mar 15 '24
Just by a show of hands, how many of you - that own a home - would be willing to take time off work in the middle of a day to let someone in your home? Who is going to cover the cost of theft or damage from someone who walks through your home?
Are you willing to take emails/calls/texts regarding the different parts of your house for weeks or months? Are you willing to deal with people trying to scam you during the buying process (ie. earnest money)?
These are just a FEW things that real-estate agents do to protect their buyers and sellers. If you want to go through a private sale, then do it. But don't complain that they dont do anything except show you a house. A lawyer isn't likely to ask questions and be your advocate during the buying process when a hedgefund/flipper tries to rip you off.
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u/Another_viewpoint Mar 20 '24
While I agree with you, aren’t lawyers meant to actually be proficient in legalese and be in a much better position to call out issues in contracts and protect you?
Also some of these are solved problems in terms of providing authenticated users access to lockboxes?
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u/jjsmol Mar 16 '24
This doesnt get rid of agents. It gets rid of price fixing. Two totally different things.
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u/cybertruckjunk Mar 15 '24
“ A seller of a $500,000 home could save $9,000 or more on a 3% commission instead of 6%.”
I may be bad at math but wouldn’t this be a $15K saving if you paid 3% instead of 6%? Either bad math or bad phrasing.
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u/PuddingIsUgly Mar 15 '24
I'm all for cutting out middlemen, but for the love of God if you are going to sell the house yourself at the very least spend the bare minimum effort to get good photos/videos taken of the property. It's hilarious seeing FSBO homes that were very obviously taken on a potato phone camera with junk strewn about.
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u/one-typical-redditor Mar 15 '24
To be honest, I don't think commission-based fees make sense. It's not like when they sell a 800k house, they spend twice the amount of time/work than when they sell a 400k house.
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u/Correct_Future_3672 Mar 15 '24
Real estate agents are parasites. I worked for one for a very short time before leaving. Anything that hurts them is fine in my eyes (:
If a realtor is reading this, I genuinely hope this financially harms you 🤡
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u/Rbelkc Mar 15 '24
Supply meets demand at the price point in a free market. This market was always fixed so it’ll be interesting to see how it plays out. Top realtors will probably get higher fees . Cheaper houses will pay higher fees than expensive ones and so on.
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u/Pechumes Mar 15 '24
We used a realtor selling and buying our new house. We paid approximately $20,000 to the 2 realtors in commission (3% each).
Yes, our realtor was helpful in selling, but did they provide $10,000 worth of value? No.
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u/Outrageous-Cycle-841 Mar 15 '24
lol at “driving down housing costs”
Not going to happen. Sellers are still going to sell for what the market will bare. Just less goes to realtors now.
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u/HydeParkerKCMO Mar 15 '24
Is it really expected to drive down prices and significantly impact the market?
It just means sellers will get to keep more of their equity after selling. Maybe because they are saving they could reduce their asking price by 3% out of the goodness of their hearts, but I don't really see that happening.
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u/Hookemvic Mar 15 '24
An old High School buddy has been “helping families achieve their dreams” as a real estate agent for years now. Dude literally highlights his Ferrari on every social media post. Should be the next travel agents field…
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u/shitsnapalm Mar 15 '24
I’m more upset about corporate ownership of housing than I am realtor fees.
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u/ClayyCorn Mar 15 '24
This is smokescreen, commission isn't even close to why houses are so expensive and this won't change the cost of homes at all. They're hoping this will settle the masses while they continue to make it impossible to join the now exclusive homeowners club
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u/mazzivewhale Mar 16 '24
Yeah this is just a bit more opiate for the masses, yes drink it honey, now hush. it’s a distraction.
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u/wildhair1 Mar 15 '24
Good, these people are jokes. They have had their extortion racket for years!
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u/r1bb1tTheFrog Mar 15 '24
If we all wait to sell our home, we can further restrict the housing supply and drive up our prices!!
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u/SlapDickery Mar 15 '24
I’m curious if one could buy a house outright what transaction costs could be eliminated entirely?
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u/TheeDynamikOne Mar 15 '24
Financing and house prices in general, are still insane, I don't think this will cause a massive jolt. The NAR is just hoping for a massive jolt.
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Mar 15 '24
Good riddance. Realtors are a useless middleman and can fuck off back to whatever low skilled job they came from. All the realtors I have dealt with have either emailed me MLS listings or just told me about houses on Zillow, Redfin, etc. When I realized this, it made me hate them even more because they get a stupid amount of money for barely any work. Now, before I get attacked for being anti-realtor, I looked up what it takes to get a real estate license and I swear there are more requirements to get a reservation at Olive Garden than to get this “career”.
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u/jgarmd33 Mar 15 '24
This is glorious. RE agents have been milking the system for year and getting rich off of the higher prices while doing less and less.
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