Jury Finds Realtors Conspired to Keep Commissions High (1 Viewer)

[Zow]

Lot's of jobs look easy but aren't. People saying it's easy money ... then why didn't you do it ? If the grass is so green for realtors, everyone would be doing it. They go without income for months at a time. It's a lot more legal than people think. And mostly clients are tough to deal with in ANY sales job. Also, you don't have to use one. Nobody is forcing you. The appeal stands a good chance to win. But in the process you will see changes in the industry and I'm not sure most are good for the consumer. Cheaper doesn't = better. This same fee structure is typical in the yacht selling industry, but at 10%. I guess that will be among the next targets for lawyers trying to get 38% of the class action lawsuit penalty.

And those lawyers go without income for months at a time, deal with challenging clients, and it's a lot more legal what they do than people think. Further, and of course, if their jobs were so easy everybody else should be doing it.

Point well taken. I respect lawyers. But hate frivolous class action lawsuits (not that this particular one is frivolous).

I can tell you that as a lawyer I and the majority of my colleagues frivolous major class action lawsuits where, at best, an actual defendant may get something like a coupon.

But, in this case, one has to presume* that there was very much a merit to this case as it presumably passed summary judgment (meaning, in layman's terms, that a judge found that there's at least something valid here) and, given that it went through a jury trial, that the plaintiffs' lawyers almost certainly spent 100s of hours on this matter so their contingency fee is probably well earned in this situation.

*These types of cases are waaaaay outside my wheelhouse, though, so I'll defer to some of the other lawyers on this board if they correct any of my comments.

 

[bigbottom]

Lot's of jobs look easy but aren't. People saying it's easy money ... then why didn't you do it ? If the grass is so green for realtors, everyone would be doing it. They go without income for months at a time. It's a lot more legal than people think. And mostly clients are tough to deal with in ANY sales job. Also, you don't have to use one. Nobody is forcing you. The appeal stands a good chance to win. But in the process you will see changes in the industry and I'm not sure most are good for the consumer. Cheaper doesn't = better. This same fee structure is typical in the yacht selling industry, but at 10%. I guess that will be among the next targets for lawyers trying to get 38% of the class action lawsuit penalty.

And those lawyers go without income for months at a time, deal with challenging clients, and it's a lot more legal what they do than people think. Further, and of course, if their jobs were so easy everybody else should be doing it.

A bit of a softball, yes, but you still went yard.

 

[Drunken knight]

A realtor’s commission shouldn’t be a flat % of a home’s selling price, rather, it should reflect the time and effort they invest in the sale. And they shouldn’t be incentivized to sell the most expensive homes. I think billing based on hours, like lawyers, makes more sense.

The fixed % fee based on price makes little sense, just like it doesn't in the "asset management" business.

For a $1 million home, the standard commission is $60,000 (6%).

For a $1.5 million home, that same fee suddenly becomes $90,000, a $30,000 increase. Simply because the house is bigger.

I've asked, and it's amazing how sensitive that topic is for realtors.

But there is virtually no difference in the amount/quality of work done to sell those two respective homes.

Yeah this has been my tipping argument and frustration about tipping for years. I don't know why a server at a fine restaurant who pops one wine bottle and maybe refills the glass once should get 20% of a two hundred dollar bottle (so basically $40 for these two tasks) when waitress Dottie at the local diner refills a $2 cup of coffee for somebody like eight times (which likely impacts her tip less than $1). I get that the server probably has more training in presentation, but to me the actual job here seems at the very least comparable.

@Drunken knight do you have an opinion on this? I don't want to devalue the fine servers who create a very nice dining experience at a good restaurant, but I genuinely don't get the logic of the server's tip being variable based solely on the list price of the wine (or entree or whatever).

I apologize in advance for somewhat derailing the thread

I have many thoughts on this, so I will attempt to be concise. I do not believe we should be tipping 20% on the bottle of wine. Mark up is already around 300-400%

1. Do we have somm as part of the selection process?
- If so, we should tip him/her separately. There is value in proper storage, oxidation, opening technique (older bottles), and pairing knowledge.
- If not, the tip is should go to the server, but adjusted for the wine (imo).... How savvy is the server truly about wine? Some love learning and have excellent knowledge. Some are only somewhat familiar with what a particular restaurant offers.

I always wanted the serving staff to have good tip nights, so when i go out, I believe I am generally generous and forgiving, but the total at the end of the night needs to be proportionate to service and the experience.

 

[massraider]

And those lawyers go without income for months at a time, deal with challenging clients, and it's a lot more legal what they do than people think. Further, and of course, if their jobs were so easy everybody else should be doing it.

Funny I could make a similar argument for servers in high end restaurants.

Weird that you are bent about THEM getting paid.


Perspective.

 

[Zow]

A realtor’s commission shouldn’t be a flat % of a home’s selling price, rather, it should reflect the time and effort they invest in the sale. And they shouldn’t be incentivized to sell the most expensive homes. I think billing based on hours, like lawyers, makes more sense.

The fixed % fee based on price makes little sense, just like it doesn't in the "asset management" business.

For a $1 million home, the standard commission is $60,000 (6%).

For a $1.5 million home, that same fee suddenly becomes $90,000, a $30,000 increase. Simply because the house is bigger.

I've asked, and it's amazing how sensitive that topic is for realtors.

But there is virtually no difference in the amount/quality of work done to sell those two respective homes.

Yeah this has been my tipping argument and frustration about tipping for years. I don't know why a server at a fine restaurant who pops one wine bottle and maybe refills the glass once should get 20% of a two hundred dollar bottle (so basically $40 for these two tasks) when waitress Dottie at the local diner refills a $2 cup of coffee for somebody like eight times (which likely impacts her tip less than $1). I get that the server probably has more training in presentation, but to me the actual job here seems at the very least comparable.

@Drunken knight do you have an opinion on this? I don't want to devalue the fine servers who create a very nice dining experience at a good restaurant, but I genuinely don't get the logic of the server's tip being variable based solely on the list price of the wine (or entree or whatever).

I apologize in advance for somewhat derailing the thread

I have many thoughts on this, so I will attempt to be concise. I do not believe we should be tipping 20% on the bottle of wine. Mark up is already around 300-400%

1. Do we have somm as part of the selection process?
- If so, we should tip him/her separately. There is value in proper storage, oxidation, opening technique (older bottles), and pairing knowledge.
- If not, the tip is should go to the server, but adjusted for the wine (imo).... How savvy is the server truly about wine? Some love learning and have excellent knowledge. Some are only somewhat familiar with what a particular restaurant offers.

I always wanted the serving staff to have good tip nights, so when i go out, I believe I am generally generous and forgiving, but the total at the end of the night needs to be proportionate to service and the experience.

Totally agree with the bold. The few times I've had a dinner where we utilized the services of a somm, I made sure to tip him or her separately and philosophically have no issues with that.

My question focused instead on the etiquette in tipping a server, who nonetheless does his or her job, but simply brings one the $200 (or whatever not low cost bottle that drastically impacts the tip) as requested and pours the wine appropriately and without issue. Sounds like we may be on the same page, there.

 

[Zow]

And those lawyers go without income for months at a time, deal with challenging clients, and it's a lot more legal what they do than people think. Further, and of course, if their jobs were so easy everybody else should be doing it.

Funny I could make a similar argument for servers in high end restaurants.

Weird that you are bent about THEM getting paid.


Perspective.

I'm not "bent" at all.

But, you're saying that servers in high end restaurants go months without payment? I'm confused.

 

[massraider]

I'm not "bent" at all.

But, you're saying that servers in high end restaurants go months without payment? I'm confused.

I said similar argument.

Bad weather? no money.
Pandemic? No money.
Bad tipper? No money.

Very much like lawyers, they get paid when there is business. Servers deal with challenging clients, they get stiffed, just like lawyers.

I would also say that if you are having dinner, and someone orders a round of shots during dinner, no one backs out the price of the round of shots on the tab. You tip on the whole tab, right? Even if that round of shots is 1-200 dollars. Which is less work than opening an expensive bottle of wine tableside.

Tipping 20% on a high end bottle of wine is not expected, not at any high end restaurant I have ever been at. I've seen many bottles of wine served for over $1000, and it's about 50/50 that people tip fully on the bottle. On the one hand, a server has no right to get upset of they don't get a $1000 tip on a $5000 bottle of wine. on the other hand, most people paying that for a bottle of wine aren't really concerned about making sure they don't accidentally over-tip.

 

[Brunell4MVP]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

You know this is a Missouri judge? They have no authority at a national level.

 

[FatMax]

I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Too much. Most would just buy from the listing agent and try to negotiate one commission instead. There are a whole host of reasons why this is a bad idea, but saving money (in the short term) usually ends up being more important to most buyers.

 

[Zegras11]

For a $1 million home, the standard commission is $60,000 (6%).

this just is not a true statement.

There is no standard rate. Rates are always negotiable and if you don't think they are, you're not asking the right/enough questions

 

[CletiusMaximus]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

You know this is a Missouri judge? They have no authority at a national level.

The case was in federal court and applies to the brokerage activities in certain specified states, certain specified MLS services and large brokerages for home listings and sales made during a specific time period. There are other similar pending lawsuits that apply to different geographic areas and time periods. The Plaintiffs initially made claims under Missouri state consumer protection laws but dismissed those claims on the eve of trial and proceeded only on a claim under the federal anti-trust statute.

 

[CletiusMaximus]

For a $1 million home, the standard commission is $60,000 (6%).

this just is not a true statement.

There is no standard rate. Rates are always negotiable and if you don't think they are, you're not asking the right/enough questions

Brokerage rates may be negotiable, but one of the central claims of this lawsuit which the jury bought was that NAR and the large brokers conspire to make people believe otherwise and put in place certain market forces which make it difficult for consumers to avoid paying the standard fee.

 

[Stoneworker]

Spot on @CletiusMaximus. Thank you for beating me to the punch on the clarifications (and at much higher level of quality).

 

[bryhamm]

A realtor’s commission shouldn’t be a flat % of a home’s selling price, rather, it should reflect the time and effort they invest in the sale. And they shouldn’t be incentivized to sell the most expensive homes. I think billing based on hours, like lawyers, makes more sense.

The fixed % fee based on price makes little sense, just like it doesn't in the "asset management" business.

For a $1 million home, the standard commission is $60,000 (6%).

For a $1.5 million home, that same fee suddenly becomes $90,000, a $30,000 increase. Simply because the house is bigger.

I've asked, and it's amazing how sensitive that topic is for realtors.

But there is virtually no difference in the amount/quality of work done to sell those two respective homes.

No different for tipping at a restaurant. Waitress brings you a plate of food worth $50 = $10 tip. Waitress brings you a plate of food worth $20 = $4 tip. More tip simply because what your ordered is worth more?

 

[Stoneworker]

A realtor’s commission shouldn’t be a flat % of a home’s selling price, rather, it should reflect the time and effort they invest in the sale. And they shouldn’t be incentivized to sell the most expensive homes. I think billing based on hours, like lawyers, makes more sense.

The fixed % fee based on price makes little sense, just like it doesn't in the "asset management" business.

For a $1 million home, the standard commission is $60,000 (6%).

For a $1.5 million home, that same fee suddenly becomes $90,000, a $30,000 increase. Simply because the house is bigger.

I've asked, and it's amazing how sensitive that topic is for realtors.

But there is virtually no difference in the amount/quality of work done to sell those two respective homes.

No different for tipping at a restaurant. Waitress brings you a plate of food worth $50 = $10 tip. Waitress brings you a plate of food worth $20 = $4 tip. More tip simply because what your ordered is worth more?

Slight difference in magnitude. A $6 difference is no big deal. A $30,000 difference with little to no value added is worth a conversation.

 

[Zegras11]

For a $1 million home, the standard commission is $60,000 (6%).

this just is not a true statement.

There is no standard rate. Rates are always negotiable and if you don't think they are, you're not asking the right/enough questions

Brokerage rates may be negotiable, but one of the central claims of this lawsuit which the jury bought was that NAR and the large brokers conspire to make people believe otherwise and put in place certain market forces which make it difficult for consumers to avoid paying the standard fee.

I've spent the last four nights doing my 18 hours of CE for my license renewal, so haven't been able to dig dep into this. I can see how large brokers could conspire in markets, but not seeing how NAR could be involved.

Like Bass said, Zillow and Open Door have tried new models and failed in a huge way.

As mostly a buyers agent for my now ten years, it would be incredibly hard for almost all buyers to pay an additional 2-3% cash up front. That would kill the first time buyers market just about as much as the rates going from 3.5 to 8% has.

 

[Zow]

I'm not "bent" at all.

But, you're saying that servers in high end restaurants go months without payment? I'm confused.

I said similar argument.

Bad weather? no money.
Pandemic? No money.
Bad tipper? No money.

Very much like lawyers, they get paid when there is business. Servers deal with challenging clients, they get stiffed, just like lawyers.

I would also say that if you are having dinner, and someone orders a round of shots during dinner, no one backs out the price of the round of shots on the tab. You tip on the whole tab, right? Even if that round of shots is 1-200 dollars. Which is less work than opening an expensive bottle of wine tableside.

Tipping 20% on a high end bottle of wine is not expected, not at any high end restaurant I have ever been at. I've seen many bottles of wine served for over $1000, and it's about 50/50 that people tip fully on the bottle. On the one hand, a server has no right to get upset of they don't get a $1000 tip on a $5000 bottle of wine. on the other hand, most people paying that for a bottle of wine aren't really concerned about making sure they don't accidentally over-tip.

Okay, fair points. But I want to stress that at point in my point was I "bent" on anything and genuinely wanted to understand how to fairly compensate servers in certain circumstances. In other words, I think you misread my intent behind my post.

 

[Gally]

As mostly a buyers agent for my now ten years, it would be incredibly hard for almost all buyers to pay an additional 2-3% cash up front. That would kill the first time buyers market just about as much as the rates going from 3.5 to 8% has.

Why does it have to be a percentage of the sell price? Couldn't a buyers agent say to get me on retainer it will cost $2K (or $XK per month or something similar) and with that I will do X amount of work? Then have an additional fee of $5K (or whatever amount) upon the completion of a sale?

 

[culdeus]

As mostly a buyers agent for my now ten years, it would be incredibly hard for almost all buyers to pay an additional 2-3% cash up front. That would kill the first time buyers market just about as much as the rates going from 3.5 to 8% has.

Why does it have to be a percentage of the sell price? Couldn't a buyers agent say to get me on retainer it will cost $2K (or $XK per month or something similar) and with that I will do X amount of work? Then have an additional fee of $5K (or whatever amount) upon the completion of a sale?

Because it takes mad skills to be able to say that the siding is concrete or OSB. And on a million dollar house that **** matters to the tune of 10 grand.

 

[Zegras11]

Why does it have to be a percentage of the sell price? Couldn't a buyers agent say to get me on retainer it will cost $2K (or $XK per month or something similar) and with that I will do X amount of work? Then have an additional fee of $5K (or whatever amount) upon the completion of a sale?

Doesn't have to be a %. flat amounts are an option on my Idaho forms.

There is no way I would ever be a buyers agent for something like this unless a nice chunk was placed in an escrow/trust account to make sure I'd get paid at the end.

And then, what happens if they don't buy? There are dozens of reasons buyers don't eventually buy and we lose money on, often working with them for months and getting squat.

Changing the way commissions are paid now would have an insane negative effect on first time buyers.

 

[CletiusMaximus]

For a $1 million home, the standard commission is $60,000 (6%).

this just is not a true statement.

There is no standard rate. Rates are always negotiable and if you don't think they are, you're not asking the right/enough questions

Brokerage rates may be negotiable, but one of the central claims of this lawsuit which the jury bought was that NAR and the large brokers conspire to make people believe otherwise and put in place certain market forces which make it difficult for consumers to avoid paying the standard fee.

I've spent the last four nights doing my 18 hours of CE for my license renewal, so haven't been able to dig dep into this. I can see how large brokers could conspire in markets, but not seeing how NAR could be involved.

Like Bass said, Zillow and Open Door have tried new models and failed in a huge way.

As mostly a buyers agent for my now ten years, it would be incredibly hard for almost all buyers to pay an additional 2-3% cash up front. That would kill the first time buyers market just about as much as the rates going from 3.5 to 8% has.

I don't pretend to fully understand the claims either, but I understand that the claim against NAR relates in large part to its Clear Cooperation Rule and other mandatory rules required of listing services and brokers in order to receive NAR membership benefits, including E&O coverage. The NAR mandate is essentially what holds the entire collusive scheme together, or so it was alleged and apparently proven. For what its worth, the defendants who went to trial (NAR, Keller-Williams, HomeServices/Berkshire Hathaway) as well as those who settled before trial (ReMax, Anywhere) were all represented by separate lawyers at some of the largest silk-stocking law firms in the country. Gary Keller testified at trial as well as the CEO and other top executives at NAR. This was a big deal to them and I expect this was a shocking jury verdict for those folks.

 

[Runkle]

Well of course they did.

They're all crooks.

 

[Gally]

There is no way I would ever be a buyers agent for something like this unless a nice chunk was placed in an escrow/trust account to make sure I'd get paid at the end.

Did you miss the part that I said that you get put on retainer for $X a month? The buyers pay you a monthly fee to do your job so you are getting paid. Then you get some other agreed to amount at time of purchase/closing. I don't see why this would be an issue for the realtor or the buyer.

I would be more apprehensive as the buyer than the realtor in this scenario because I would want to make sure the realtor is putting in the time for the monthly fee I am paying. I could see where the realtor has incentive to drag it out so maybe there needs to be a cap to the monthly fee or the longer the time drags the less the closing fees would be. I am sure there is an equitable way this payment structure could be set up to incentivize both sides to move quickly and do the work that needs to be done to make everyone happy.

 

[BassNBrew]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

I’m trying to have a conversation. Looks like you brought the chippy reply rather than address my points. I don’t suspect someone will sue me over $100 rental referral hindering the market. I was the one who brought up NAR talking points and mentioned an alternative system. Not sure why you are starting threads in a discussion forum if you just want to hear an echo

Still interested in your response, why should I sell a home when I’m not guaranteed compensation.

 

[TripItUp]

A great win for the people.

Realtors don't even require college degrees....I have little respect for 99% of them.

 

[Buckna]

I am very curious to see what happens as well. I think its important to decouple the relationship between % of sale price commission as much as the next guy but most of the proposed new ideas or models have their own drawbacks or big unresolved question marks. From what I understand, some of these lawsuits are targeted specifically at buyers agent commissions being forced to be bourne by the seller. I believe this came about over the years as the sellers are the one with the asset and generally have the financial ability to pay to facilitate the transaction. I think the idea of buyers having to find their own agents and compensate them will be a tough road to get to work initially whether flat rate, hourly or whatever.

First timers in particular have enough problems coming up with down payments and closing costs and now you’re asking them to bear the burden of compensating some sort of advocate/agent, or even worse, go it alone in the process (which many will likely do). Caveat emptor indeed but I guess the hope is someone can build a better mousetrap or come up with something that isn’t a % of market value that saves sellers $ but still incentivizes agents to represent the various sides in the negotiations. One of the proposals is agents just go to a straight transaction broker relationship filling out paperwork but not giving any advice. That would definitely work for more sophisticated parties (and is an option already existing in most States), but you’d be back to caveat emptor for the vast majority of buyers and sellers. The retainer and payout for a buyers agent is an interesting idea, but who bears the cost of payout at Closing? Going to be tough for many buyers to cover that, i think you’d need lenders to change their requirements and allow buyers to roll the buyers commission into the loan somehow.

 

[massraider]

Still interested in your response, why should I sell a home when I’m not guaranteed compensation.

Like to hear this answer myself

 

[fruity pebbles]

I’ve had one buyers agent who was a true professional. She’d research the **** out of any property I was thinking about putting an offer on. The rest didn’t do much more than unlock the door for me. I found the houses I wanted to look at, they knew nothing about the house, I told them exactly what to bid and they filled out the generic offer sheet.

 

[Stoneworker]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

I’m trying to have a conversation. Looks like you brought the chippy reply rather than address my points. I don’t suspect someone will sue me over $100 rental referral hindering the market. I was the one who brought up NAR talking points and mentioned an alternative system. Not sure why you are starting threads in a discussion forum if you just want to hear an echo

Still interested in your response, why should I sell a home when I’m not guaranteed compensation.

If an agent performs services for the buyer, common sense would suggest that the buyer be responsible for paying that person. It's up to them to figure out how that's done. Which is what REX's policy appeared to be.

If the buyer happens to use an agent, REX will request that the buyer pay their fee, potentially by financing it as a part of the home purchase.

REX (Real Estate Exchange) Review – They Only Charge 2% to Sell Your Home

A new company called “REX” is attempting to disrupt the real estate industry, and perhaps more importantly, displace the real estate agent. Or possibly even put them out of business for good. The message is clear – real estate agents make large commissions and may not have your best interests in...

www.thetruthaboutrealty.com

 

[fruity pebbles]

Gotta think that if the buyer has to pay their own agent, changes are going to occur. I can’t see most buyers wanting to pay 3% of the selling price for the service they’re receiving. The “it doesn’t cost you anything” has always been the buyers agent‘s main selling point.

 

[ghostguy123]

For a $1 million home, the standard commission is $60,000 (6%).

this just is not a true statement.

There is no standard rate. Rates are always negotiable and if you don't think they are, you're not asking the right/enough questions

Most people don't know what to ask, or even that they CAN ask.
Every realtor I ever worked with or almost worked with has said something to the tune of "6% is the standard rate". One said they they may take a little less if the buyer did not have representation.
One of them charged me 2% when I found a buyer myself, and they just facilitated the transaction.
I have yet to ever meet a realtor that I felt wasn't just trying to make the most money possible not caring about me whatsoever, even one of them who is a "friend" of mine.

 

[Zegras11]

I have yet to ever meet a realtor that I felt wasn't just trying to make the most money possible not caring about me whatsoever, even one of them who is a "friend" of mine.

All I have to say to this is you're not trying very hard then. I can get a top notch agent in any market in 15 minutes and have for a few posters here over the years.


It's not the agents fault you don't care enough to easily google and find the right questions to ask.

Tip - unless your friend is a very top agent, hiring a friend is by far the dumbest thing you can do in a RE transaction. They are often too afraid to ask you the tough questions that need to be asked because it might jeopardize your friendship in the future.

We have these posts just about every year. It's basically this simple. You want a good agent? Do an hour of homework and interview at least three agents and find the one the best fits your needs at the price that works for you.

All this , "I didn't know rates are negotiable" and all the other comments like "agents just put a sign in the yard" means YOU DID NOT DO YOUR BEST to hire the right agent. There are NOT many great agents because way too many of them do it part time and do make a bad name for the good ones.

The arrogance of so many of you in here that make agent comments like you know exactly everything an agent does in a transaction is mind boggling. It's a very hard ****ing job, with no guaranteed paycheck and most of the work happens after you go pending dealing with inspections , appraisers, more negotiations from those things. RARELY is a transaction very smooth and "easy money."

 

[PIK95]

Lot's of jobs look easy but aren't. People saying it's easy money ... then why didn't you do it ? If the grass is so green for realtors, everyone would be doing it. They go without income for months at a time. It's a lot more legal than people think. And mostly clients are tough to deal with in ANY sales job. Also, you don't have to use one. Nobody is forcing you. The appeal stands a good chance to win. But in the process you will see changes in the industry and I'm not sure most are good for the consumer. Cheaper doesn't = better. This same fee structure is typical in the yacht selling industry, but at 10%. I guess that will be among the next targets for lawyers trying to get 38% of the class action lawsuit penalty.

And those lawyers go without income for months at a time, deal with challenging clients, and it's a lot more legal what they do than people think. Further, and of course, if their jobs were so easy everybody else should be doing it.

My last commission check was May of 2020, lol. I win (lose)

 

[Stoneworker]

Interesting factoids from a WSJ editorial entitled, "A Big Legal Defeat for the Realtors."

The plaintiffs provided compelling evidence that overall commissions have stayed at roughly 5% or 6% for decades, split evenly between the buyer and seller brokers. This is about two to three times as high as in other wealthy countries where such self-serving industry arrangements don’t exist.

...in other countries buyers rarely use brokers. Mortgage lenders and sellers’ agents handle negotiations, appraisals and closing. Buyers can generally figure out what to bid based on the closing sales prices of other homes in the area. Buyers could always employ and pay a broker if they want.

 

[bcat01]

Bought and sold my first home without a realtor. Saved on both deals. Just paid a local broker $500 to file the paperwork on the sale.

 

[BassNBrew]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

I’m trying to have a conversation. Looks like you brought the chippy reply rather than address my points. I don’t suspect someone will sue me over $100 rental referral hindering the market. I was the one who brought up NAR talking points and mentioned an alternative system. Not sure why you are starting threads in a discussion forum if you just want to hear an echo

Still interested in your response, why should I sell a home when I’m not guaranteed compensation.

If an agent performs services for the buyer, common sense would suggest that the buyer be responsible for paying that person. It's up to them to figure out how that's done. Which is what REX's policy appeared to be.

If the buyer happens to use an agent, REX will request that the buyer pay their fee, potentially by financing it as a part of the home purchase.

REX (Real Estate Exchange) Review – They Only Charge 2% to Sell Your Home

A new company called “REX” is attempting to disrupt the real estate industry, and perhaps more importantly, displace the real estate agent. Or possibly even put them out of business for good. The message is clear – real estate agents make large commissions and may not have your best interests in...

www.thetruthaboutrealty.com

@Chadstroma Are federally backed mortgages allowing buyers to finance a buyer's agent fee?

@Stoneworker Now we are getting somewhere. I don't disagree that the model could improve for consumers. If it's going to change it will be NAR leading the way, maybe by force from the courts. Right now your suggestion doesn't work because when I bring it up to my buyers, they go to another agent not asking them to sign off on compensation in advance. One advantage of the system now is that everything is negotiated up front and put out on the table. You don't have agents suing buyers to enforce the contract that the parties agreed to.

Again, Zillow and Opendoor had some smart people trying to shake up the industry and they failed horribly. I worked with Zillow and they were pretty transparent how they would make a buck off of you. Problem is they couldn't get inventory in a hot market without overpaying. I watched Opendoor lose $60k on a $400k home because they didn't understand the community or closely look at the home. A lot of investors don't get their licenses because they are held to a higher standard. I can't buy your house $50k below market value without letting you know what market value is. My point is that a lot of the state regulation hinders change in the industry.

 

[BassNBrew]

Bought and sold my first home without a realtor. Saved on both deals. Just paid a local broker $500 to file the paperwork on the sale.

That works great. Probably best to use an attorney. Maybe broker has a different definition in your state, but in my state if I'm filling out a contract I'm responsible for the accuracy of what's in it.

Seller A sells a lot that they say perc'ed for a 3 bdrm. Buyer B what to build a 3 bdrm home. Whoops, septic permit expired two years ago and now the lot doesn't perc. I don't want my name on the contract.

 

[BassNBrew]

Just for reference, here are some of our state's disciplinary actions this month.

The Commission found that xxxxxxx advertised the subject property as containing four bedrooms and that “every inch” of the subject property had been updated, including electrical and plumbing; however, Mustafa was unable to locate a septic permit for the subject property and failed to disclose this to the buyers prior to the time of offer. Mustafa failed to discover and disclose that the sellers neither obtained required permits nor did they use a licensed general contractor for renovations when required to do so by law.

The Commission found that xxxxxx represented the sellers of the subject property and advertised the property as having an oil furnace and an oil tank in use, but failed to disclose the presence of a second abandoned tank.

The Commission found that xxxxxxx acted as listing agent for the subject property in 2021 and advertised it as having a septic system, 3 bedrooms, and 2 bathrooms. The buyers closed but due to a job relocation in 2022, had to sell and learned at that time that the septic system permit is for only 2 bedrooms.

Here's a negotiated listing arrangement where the agent got stiffed and paid the price for it........The Commission found that xxxxxxx, acting as a listing agent, verbally agreed with his client to painting and other improvements to the property. xxxxxx advised the client that a part of his listing fee included the management of contractors and managing timelines for work performed. Emails indicated the client would pay xxxxxx for the cost of the renovations over an unspecified time period. xxxxxxx failed to inform the buyer, buyer agent, or closing attorney that there was a debt owed by seller for improvements to the property. After closing, xxxxxxx renovation company filed a lien against the property for $16,870 and filed a lawsuit against both his client and the buyer. The buyer’s title insurer paid Purser’s company to remove the lien and settle the lawsuit, then filed a lawsuit against xxxxxxx client for payment of the debt. As part of the Commission’s order, xxxxxxx has refunded the title insurer for its payment.

The Commission found that xxxxxxx, purchased residential property, performed renovations to it, and then listed it for sale through her firm. A licensed electrician was hired to perform some renovation work, while other work was performed by unlicensed persons. One of the renovations consisted of moving the laundry area from one room to another. xxxxxxx failed to ensure that electrical and plumbing permits were pulled for this work as required by the county. xxxxxxxx failed to occupy the property for 12 months after renovations were completed and failed to disclose the unlicensed contractors or the failure to obtain required permits.

Just putting a sign up doesn't cut it anymore. The commission expects agents to find and discover material facts. That means getting into the crawl space far enough to ensure it's dry. Verifying the age of "newly" replaced water heater. Noticing the ceiling had been re-painted in an area and then grilling their client as to why and sharing that information in the listing. Are all agents do this...no, but the good ones are.

 

[Chadstroma]

Well duh. Are you going to show up to work if your employer says they aren't guaranteeing your pay? Are you going to get sued because you don't want to work for a company who is offering to pay you?

This is like paying to list something on ebay and saying we aren't guaranteeing you get your item.

In a situation like this, REX and the seller should state clearly that they are not paying a buyer's agent fee. Yes each agent could call the seller and negotiate a fee in advance, but you're not dealing with a known commodity. Should I be sued by private auto sellers because I refuse to by a car from them and prefer to use a dealer?

Obviously buyer's agency where the buyer is expecting to pay the agent directly rather than the seller would resolve a lot of this. I wonder how much education of the public it would take for them to accept signing up for paying a buyer's agent of of pocket.

Getting chippy, so obviously this is starting to hit closer and closer to home.

The plaintiffs won the lawsuit, in part because of evidence provided that looked just like what I quoted.

Maybe you should take your flippant response to the NAR lawyers, so they can do a better job in the appeal.

I’m trying to have a conversation. Looks like you brought the chippy reply rather than address my points. I don’t suspect someone will sue me over $100 rental referral hindering the market. I was the one who brought up NAR talking points and mentioned an alternative system. Not sure why you are starting threads in a discussion forum if you just want to hear an echo

Still interested in your response, why should I sell a home when I’m not guaranteed compensation.

If an agent performs services for the buyer, common sense would suggest that the buyer be responsible for paying that person. It's up to them to figure out how that's done. Which is what REX's policy appeared to be.

If the buyer happens to use an agent, REX will request that the buyer pay their fee, potentially by financing it as a part of the home purchase.

REX (Real Estate Exchange) Review – They Only Charge 2% to Sell Your Home

A new company called “REX” is attempting to disrupt the real estate industry, and perhaps more importantly, displace the real estate agent. Or possibly even put them out of business for good. The message is clear – real estate agents make large commissions and may not have your best interests in...

www.thetruthaboutrealty.com

@Chadstroma Are federally backed mortgages allowing buyers to finance a buyer's agent fee?

@Stoneworker Now we are getting somewhere. I don't disagree that the model could improve for consumers. If it's going to change it will be NAR leading the way, maybe by force from the courts. Right now your suggestion doesn't work because when I bring it up to my buyers, they go to another agent not asking them to sign off on compensation in advance. One advantage of the system now is that everything is negotiated up front and put out on the table. You don't have agents suing buyers to enforce the contract that the parties agreed to.

Again, Zillow and Opendoor had some smart people trying to shake up the industry and they failed horribly. I worked with Zillow and they were pretty transparent how they would make a buck off of you. Problem is they couldn't get inventory in a hot market without overpaying. I watched Opendoor lose $60k on a $400k home because they didn't understand the community or closely look at the home. A lot of investors don't get their licenses because they are held to a higher standard. I can't buy your house $50k below market value without letting you know what market value is. My point is that a lot of the state regulation hinders change in the industry.

There are no issues with FHA or USDA but VA specifically does not allow a vet buyer to pay any commission or fee to the buying agent.

 

[Chadstroma]

I've thought for a long time that real estate agents are pretty much used car salesmen. I've only been on the buying side, but that should seem like easy money as a buyers agent. They don't have to show or list and split the commission. But instead, what I've found is that they try their best to push their own listings so that the can make money on both sides. Slimy ####s.

Though it is possible to buy/sell without a realtor, pretty much every single transaction that I have been involved with without one with ONE exception was an ugly mess. If my client was not represented as a buyer then without fail they would ask me questions. As much as I would like to help and even when I know the answers, I would have to politely decline to answer an explain to them that I am not licensed as a realtor and in as much I can not give them guidance or advice in those areas. Just as much as I would not give legal advice.

I think the commission percentage "norm" is well over priced for the value that realtors bring now (please don't repeat that to any of my realtor partners ) and it more a hand me down back when realtors did a lot more work for each transaction on both buyer and listing sides than they do today.

That being said, a good realtor is very valuable to both a selling or buying side transaction. The big problem is that there are SOOOOOOO many realtors period. The bar is very low to enter. The only lower bar to get into RE is to get hired by a bank to be a Mortgage Loan Officer (basically there is no bar with that). Even though I have not taken the RE exam, I have talked to people who have done both the RE license exam and the NMLS exam (NMLS is the licensing all mortgage lenders have to do who do not work for a depository lender) and they have all said it was not close. I have even talked to someone who is licensed as a realtor, an insurance agent, a mortgage lender and securities. He said the realtor license was the easiest. And for those that do pass, the license itself really doesn't help prepare people for the actual job of being a RE agent. There are a massive amount of realtors who haven't done any business. They basically have their license and when something falls into their lap, they do it to make some extra cash. Those transactions can be just as bad as when no one is represented but what usually happens is that one of the realtors knows what they are doing and they do extra work to get the deal done.

 

[culdeus]

Bought and sold my first home without a realtor. Saved on both deals. Just paid a local broker $500 to file the paperwork on the sale.

That works great. Probably best to use an attorney. Maybe broker has a different definition in your state, but in my state if I'm filling out a contract I'm responsible for the accuracy of what's in it.

Seller A sells a lot that they say perc'ed for a 3 bdrm. Buyer B what to build a 3 bdrm home. Whoops, septic permit expired two years ago and now the lot doesn't perc. I don't want my name on the contract.

The fact that realtors don't have to really research this is part of the issue. If they can't search down this info why not and why pay them 60k or whatever

 

[BassNBrew]

I've thought for a long time that real estate agents are pretty much used car salesmen. I've only been on the buying side, but that should seem like easy money as a buyers agent. They don't have to show or list and split the commission. But instead, what I've found is that they try their best to push their own listings so that the can make money on both sides. Slimy ####s.

Though it is possible to buy/sell without a realtor, pretty much every single transaction that I have been involved with without one with ONE exception was an ugly mess. If my client was not represented as a buyer then without fail they would ask me questions. As much as I would like to help and even when I know the answers, I would have to politely decline to answer an explain to them that I am not licensed as a realtor and in as much I can not give them guidance or advice in those areas. Just as much as I would not give legal advice.

I think the commission percentage "norm" is well over priced for the value that realtors bring now (please don't repeat that to any of my realtor partners ) and it more a hand me down back when realtors did a lot more work for each transaction on both buyer and listing sides than they do today.

That being said, a good realtor is very valuable to both a selling or buying side transaction. The big problem is that there are SOOOOOOO many realtors period. The bar is very low to enter. The only lower bar to get into RE is to get hired by a bank to be a Mortgage Loan Officer (basically there is no bar with that). Even though I have not taken the RE exam, I have talked to people who have done both the RE license exam and the NMLS exam (NMLS is the licensing all mortgage lenders have to do who do not work for a depository lender) and they have all said it was not close. I have even talked to someone who is licensed as a realtor, an insurance agent, a mortgage lender and securities. He said the realtor license was the easiest. And for those that do pass, the license itself really doesn't help prepare people for the actual job of being a RE agent. There are a massive amount of realtors who haven't done any business. They basically have their license and when something falls into their lap, they do it to make some extra cash. Those transactions can be just as bad as when no one is represented but what usually happens is that one of the realtors knows what they are doing and they do extra work to get the deal done.

Ask opposed to 1% origination to badger me for the same paperwork a half dozen times because you can't keep your e-mail organized only to tell me the rate you quoted wasn't correct because I forgot it was a condo and oh by the way I need more docs 3 days before close.

 

[Stoneworker]

@Chadstroma Are federally backed mortgages allowing buyers to finance a buyer's agent fee?

@Stoneworker Now we are getting somewhere. I don't disagree that the model could improve for consumers. If it's going to change it will be NAR leading the way, maybe by force from the courts. Right now your suggestion doesn't work because when I bring it up to my buyers, they go to another agent not asking them to sign off on compensation in advance. One advantage of the system now is that everything is negotiated up front and put out on the table. You don't have agents suing buyers to enforce the contract that the parties agreed to.

Thanks. I understand and appreciate there may be many structural issues to work through to design a better system. And that many of those current "issues" may actually have been very consumer-friendly practices when they were first implemented.

At the macro consumer level, IMO most people have seen technology bring huge savings in transaction fees for stock brokers, travel agents, legal services (e.g. Nolo) and a whole bunch of other services.

Then we look at selling a house and wonder what the heck is going on. Very little (if any) reduction in transaction costs, a fee structure that seems outdated (e.g. why is the seller responsible for paying a buyer's agent, difficulty being creative aligning amount paid to agent with value created, etc.), and much more difficult to negotiate than some may want to believe (due to impediments pointed out in the lawsuit).

I wouldn't expect to have any of this solved in a discussion forum, but the educated responses of you and @Chadstroma have certainly been informative and helped take the discussion to a much higher level than most.

 

[BassNBrew]

Bought and sold my first home without a realtor. Saved on both deals. Just paid a local broker $500 to file the paperwork on the sale.

That works great. Probably best to use an attorney. Maybe broker has a different definition in your state, but in my state if I'm filling out a contract I'm responsible for the accuracy of what's in it.

Seller A sells a lot that they say perc'ed for a 3 bdrm. Buyer B what to build a 3 bdrm home. Whoops, septic permit expired two years ago and now the lot doesn't perc. I don't want my name on the contract.

The fact that realtors don't have to really research this is part of the issue. If they can't search down this info why not and why pay them 60k or whatever

In my state they have to unless they want to have to answer to the commission. Now that only happens when the crap hits the fan and a consumer files a complaint. Quite honestly, the crap that they are telling us in class that we are responsible for is getting downright scary. If my cell phone isn't getting good reception at your home, I better be disclosing this. You get more snow on the west side of the mountain than the east, better inform your buyer via e-mail.

I was walking a property last month with a buyer excited to buy the place. Buy the time I got down pointing out all the material facts I noticed they thought I was just a miserable person to be around

 

[BassNBrew]

Another component of the industry is that many agents are paying huge fees to Zillow and other sites for leads because they have monopolized the search engines. You pay for leads hoping that enough work out to cover the expense. Many of these companies have the math worked out to where you spend $2-$4 to make $5. While Realtors are seen as the middle people ranking in huge commissions, the Zillows of the world are actually getting a huge cut of those fees. Kind of ironic that Realtors finance the mls system and then companies use that information to generate leads to sell back to the Realtors.

 

[Stoneworker]

My point is that a lot of the state regulation hinders change in the industry.

This is a very good point.

I have worked in renewable energy on and off for the past 25 years. A lot of people wonder why we haven't implemented clean energy solutions sooner.

The biggest impediment hasn't been technology per se, but a similar issue of byzantine state/regional regulations for the utility industry being iceberg slow to adapt to all the changes that clean energy technology has brought.

 

[Chadstroma]

Another component of the industry is that many agents are paying huge fees to Zillow and other sites for leads because they have monopolized the search engines. You pay for leads hoping that enough work out to cover the expense. Many of these companies have the math worked out to where you spend $2-$4 to make $5. While Realtors are seen as the middle people ranking in huge commissions, the Zillows of the world are actually getting a huge cut of those fees. Kind of ironic that Realtors finance the mls system and then companies use that information to generate leads to sell back to the Realtors.

Actually that brings up a good point. Non realtors see "You are getting X% and that is $XXXXXX money, oh my gawd!" and think the realtor is walking away with that whole paycheck. The reality is that most end up getting a slice of that amount as it gets split between the broker and them, plus this fee and that fee etc and it gets shrunk quite fast.

But yea, freaking Zillow... I have lost relationships with realtors in the past because I refused to do a 'co-marketing' with them and pay for the Zillow leads (or technically half but in realty that isn't always the case) so they went to some bank MLO who has a bloated budget to waste on stuff like that. Zillow has progressively got worse for RE agents as Zillow added RE division (which they swore they would never do). From some realtors I have talked to, the leads are getting crappier and crappier which is likely Zillow trying to get the best leads to their side and sell the crap to the realtors.

 

[Zegras11]

Another component of the industry is that many agents are paying huge fees to Zillow and other sites for leads because they have monopolized the search engines. You pay for leads hoping that enough work out to cover the expense. Many of these companies have the math worked out to where you spend $2-$4 to make $5. While Realtors are seen as the middle people ranking in huge commissions, the Zillows of the world are actually getting a huge cut of those fees. Kind of ironic that Realtors finance the mls system and then companies use that information to generate leads to sell back to the Realtors.

This is a great post..

 

[FatMax]

Another component of the industry is that many agents are paying huge fees to Zillow and other sites for leads because they have monopolized the search engines. You pay for leads hoping that enough work out to cover the expense. Many of these companies have the math worked out to where you spend $2-$4 to make $5. While Realtors are seen as the middle people ranking in huge commissions, the Zillows of the world are actually getting a huge cut of those fees. Kind of ironic that Realtors finance the mls system and then companies use that information to generate leads to sell back to the Realtors.

I like Zillow. I'm not in the industry, but it's interesting to see prior sell dates and prices. I don't know of any other site that has all that info at hand for no cost (to me). But I'd never consider going through them to purchase a home. I guess I'm a little surprised that anybody does that.

 

[BassNBrew]

Another component of the industry is that many agents are paying huge fees to Zillow and other sites for leads because they have monopolized the search engines. You pay for leads hoping that enough work out to cover the expense. Many of these companies have the math worked out to where you spend $2-$4 to make $5. While Realtors are seen as the middle people ranking in huge commissions, the Zillows of the world are actually getting a huge cut of those fees. Kind of ironic that Realtors finance the mls system and then companies use that information to generate leads to sell back to the Realtors.

I like Zillow. I'm not in the industry, but it's interesting to see prior sell dates and prices. I don't know of any other site that has all that info at hand for no cost (to me). But I'd never consider going through them to purchase a home. I guess I'm a little surprised that anybody does that.

On the listings they have a button that says request a tour or contact agent. You're not really contacting the listing agent, you're being sent out as lead to an agent who pays them for leads. You click that button and provide your information, some agent is paying $50 to $500 (based on the market demand and sales price). If the ROI is great like 100%, that means Zillow is taking 50% of the buyer's commission.

We’ve built Zillow through strong real estate industry partnerships, and those partners are key to our shared success. Zillow is now a member of the National Association of REALTORS® and many other real estate groups and organizations that we are excited to partner with to meet our shared goals.

As members of the real estate community, we will continue to work together to accelerate innovation and expand opportunities for agents, brokers, builders, MLSs, other real estate professionals and, of course our customers, who are our North Star.

The above is from Zillow's website. So while many people think Zillow is a reason we don't need Realtors, Zillow is actively supporting the system. Note I'm not taking a stance on this, just sharing. Obviously Zillow would like to keep the status quo because eliminating the need for Realtors would damage their business.