Under the current system of cooperative compensation, buyer agents generally receive 2.5 to 3% of the final selling price. The buyers agent often pay a 5% franchise fee, 20 to 40% house fee, transaction coordinator fees, etc. from the net commission, deduct office expense, advertising, cell phone, E & O insurance, computer, internet, auto and fuel. Don’t forget health insurance, unpaid vacation, licensing fees, professional dues. All this before house payment , groceries, kid stuff…in this last sellers market, buyer brokers may have written 5-25 declined offers…and never got paid for their work! Why will anyone want to be a buyer’s broker after this? Smart buyers will appreciate the value a competent broker brings to the table on their behalf and be willing to pay for the service.
Couldn’t agree more! I believe that buyers will vet agents more as well which will hopefully motivate all of us who plan on sticking around and serving buyers to level up!
I got my license in two states late 90's. I realized fairly quickly 80% of the agents weren't needed, the fee was excessive for the work being done and there was deceptive practices going on.
Unfortunately, I have also found this to be true. I'm curious to know if you think the barrier of entry to become a real estate agent should be higher?
Just to clarify, prior to this court ruling a seller of a house had to pay his\her agent AND the buyer's agent in the form of a commission split? If so, that's foul! If that was the case then the courts finally got something right, each person in the transaction SHOULD have to pay for their own agent.
Technically, a seller wasn’t obligated to provide a portion of the commission for the buyer's agent. But the rules up until this point required that compensation must be decided ahead of time when signing a listing agreement and then clearly disclosed in the property listing for buyers agents to view on the MLS. Because of this, most sellers ended up offering compensation that was high enough to fairly compensate both agents. With the new policies, I could see us transitioning into a market where each person pays for their own agent. There will be adjustment pains for sure, but overall I agree that it would be a better system!
@@NicoleNark VA Home loans forbids the buyer to pay any commission. First time home buyers will need taxpayer funded subsidies. Buyers will expect the seller to "lower" price. Some buyers will not be able to get representation for the complex transactions and will need to pay a lawyer per hour (400-600 here). Sellers could offer closing cost assistance to buyers they "like" vs buyers they don't like, and this might lead to discrimination.
@@globalfamily8172 there is going to be a lot to work out! At this point, the settlement would still need to be approved by the courts before we can really tell how the market will react to policy changes
A seller pays a commission to sell their home. It takes 2 agents to get that done, each one representing a different party. The seller is profiting off the sale of their home an it does not happen without both agents. That is why traditionally the seller pays the commission. Both agents are working to help the home get sold for the owner
@@JohnRymsza-s5u thanks for chiming in! Do you think that the policy changes could lead to more dual agency where buyers are contacting the listing agent directly? That was a common practice just a few decades ago.
I would advise all house buyers or sellers to ask A.I. every question you can think of. You will find you can do pretty much everything yourself. Hire a photographer that also does drone video. Hire a lawyer to look over everything before it closes. You can hire someone to do all the inspections: roof, termites, general home inspection. Most realtors out there can open the door and let you look inside but they have zero knowledge or skill.
The commission is built into the selling price. And while the seller pays the commissions to the brokers, the buyer is the one ultimately paying for it. Under the new system, if the buyer has to agree to pay the buyers agent, they are still paying for it. Sellers will not be lowering their prices after this. Seller are the only ones benefiting from this.
This is the best explanation of the NAR proposed settlement so far. Bottom line, agents should provide an estimated net sheet to both buyers and sellers to show the buyers cost to close and the seller net proceeds. In the final analysis, these are the only important numbers and the purpose of negotiation is to satisfy both buyer and seller needs and desires.
The point is, where will the buyer's agent commission come from if sellers don't want to pay it? Agent and buyer need to agree up front where the compensation will come from. I don't think buyers are going to pay 2-3%
@@marciamakoviecki3295some buyers may forego using a buyer’s agent. Others may choose dual agency and work with the agent that represents the house that they are interested in. There are also ways to finance the agent fees into some loans. All of these policies could change and sellers may still elect to offer compensation for buyer’s agents. There are so many ways this could play out and we won’t really know until then! 🤷🏻♀️
As frustrating and overwhelming as the situation feels at this time, I would not say that NAR was "quick to propose a settlement". In addition to many similar claims over the years, NAR has been fighting this case since early 2019. To imply that NAR has not been working hard to stand up for Realtors is simply not accurate.
NAR has never had competition or accountability through the years. If NAR truly had the back of Realtors, they wouldn't have lost this lawsuit in the first place. I have a different perspective on this than most in the industry but I also dive deeper into these claims than many do.
It doesn't affect us at all, but the way you explained it it seems like it will help us even more when we offer cash to sellers and let them know that we will cover everything or they can do it the old traditional way than have fun having to cover or been asked to cover clueless realtors scam fees, closing costs. And before anyone says anything every commercial property we have purchase we've paid a .5 to 1% brokers commission but yet you guys want 3-6% to sell a house?
If the traditional brokerage model changes, I'm all for it! Realtor compensation should be free market and I agree to your point that covering the cost of a buyer's agent if you elect to use one as a buyer will help make your offer stronger in the eyes of a seller.
5 -6% commission in the million dollar plus market is a huge chunk of change. However, the expenses involved in marketing the million dollar home in expensive markets doesn't really cost more than 500k house costs to market. I'm not talking about the Sotheby's market with 10 million plus homes. We shall see what happens. I see alot of people just using the internet and websites to find their own homes instead of going to a buyers agent they have to pay. Especially if they're a first time buyer without the extra cash.
What will end up happening is the cost could drop initially, but creep slowly up to where we may end back where we are at now. Some of the flat fees brokerages are struggling and sometime don't offer the exact same services and its not always clear you ARE getting less. Granted I am NOT necessarily opposed to some aspects of this change all I am saying is be VERY careful what you wish for it could end worse than what we had be before. Never been a huge fan of NAR, should we also not argue about how the MLS is handled. Granted I agree changes are needed. There is chance this could actually muddy the waters more as move along. I just feel like this could have been handled by all sides involved in a better way than class action upfront.
Best explanation of the ruling so far. Just sold and had to pay both buyer and seller commissions but negotiated it. Wouldn’t want my realtor to work for free - that’s asinine. Who will the more than 4 million dollars in payout from NARS go to?
Thank you, I appreciate that! If the settlement is approved the money will first cover the costs of the plaintiffs' attorneys' fees (estimated to be around 20% of the 418 million) and then would be distributed to members of the class.
1. Sellers won't want to lower prices, so it won't affect seller's prices. The market affects prices. 2. I see discount brokers gaining here, advertiser portals will hire agents and offer discount services.
Great question! There are a lot of factors to consider. Ultimately, I am not a fan of dual agency. A dual agent can't represent the best interests of two parties with different goals.
A percentage of the sale should never exist. A flat fee for all homes sold if a realtor is used. If you want to be in sales then your income will be up and down. The commissions to a realtor can take a buyer 5-6 years of regular payments to pay off. Realtors are used car sales people and usually they have no real skills so they show and sell houses. you do not need a realtor to sell your house or to buy a house. When you see a sold price that is not what the seller got the (roaches) realtors take commission out of the price. So the buyer pays more and the seller gets less.
Most real estate agents would not agree with you and be offended by your comment. Not me! Being in the industry has opened my eyes to SO many agents that are out here making tons of money doing little to no work. I gladly welcome a change in policy and consumer behavior when buying and selling. There's a reason that real estate agents are often grouped in with sleezy used car salesmen. The barrier of entry to get into real estate is low...too low in my opinion. We would have a smaller pool of much more competent agents that the public might actually enjoy working with if the career demanded even some form of higher education. But in the US, it doesn't.
It’s insane that a seller that bought a house with a $ amount paid interest taxes and maintenance throughout the years. But what are the buyers are looking at is how much last bought and how much the seller is making out of this deal. It’s insane that agents will make 6% for sending out emails to other agents and potential buyers and printing out flyers and maybe doing some open houses with couple boxes of donuts and box of Joe and whining about how hard they work of wait for that amount of money trust me you are not doing enough 😂. BS. I m glad this is over and soon. A flat fee is fair EXP learn from them.
Most real estate agents would not agree with you and be offended by your comment. Not me! Being in the industry has opened my eyes to SO many agents that are out here making tons of money doing little to no work. There's a reason that real estate agents are often grouped in with sleezy used car salesmen. The barrier of entry to get into real estate is low...too low in my opinion. We would have a smaller pool of much more competent agents that the public might actually enjoy working with if the career demanded even some form of higher education. But in the US, it doesn't.
And if that's what you want, you should go for it! I'm about transparency here - I'm not about hiding the truth so that more people feel obligated to work with a real estate agent. The choice is yours and should be taken seriously!
@@NicoleNark Off course you will have to make an earning, but always within reason. Here in Denmark the real estate fee is on average 12.300 USD, and thats between 1 and 6 % of what the house costs.
@@NicoleNark But you can also save that fee and make a private sale, which is way cheaper. Then there is only a small fee for the goverment. But you have to do a lot of work.
Realtors are totally unnecessary. AI has you job now. Contractors in builders building the million dollar houses should definitely make more money than you does nothing
Under the current system of cooperative compensation, buyer agents generally receive 2.5 to 3% of the final selling price. The buyers agent often pay a 5% franchise fee, 20 to 40% house fee, transaction coordinator fees, etc. from the net commission, deduct office expense, advertising, cell phone, E & O insurance, computer, internet, auto and fuel. Don’t forget health insurance, unpaid vacation, licensing fees, professional dues. All this before house payment , groceries, kid stuff…in this last sellers market, buyer brokers may have written 5-25 declined offers…and never got paid for their work! Why will anyone want to be a buyer’s broker after this? Smart buyers will appreciate the value a competent broker brings to the table on their behalf and be willing to pay for the service.
Couldn’t agree more! I believe that buyers will vet agents more as well which will hopefully motivate all of us who plan on sticking around and serving buyers to level up!
Exactly
I got my license in two states late 90's. I realized fairly quickly 80% of the agents weren't needed, the fee was excessive for the work being done and there was deceptive practices going on.
Unfortunately, I have also found this to be true. I'm curious to know if you think the barrier of entry to become a real estate agent should be higher?
Ridiculous
Just to clarify, prior to this court ruling a seller of a house had to pay his\her agent AND the buyer's agent in the form of a commission split? If so, that's foul! If that was the case then the courts finally got something right, each person in the transaction SHOULD have to pay for their own agent.
Technically, a seller wasn’t obligated to provide a portion of the commission for the buyer's agent. But the rules up until this point required that compensation must be decided ahead of time when signing a listing agreement and then clearly disclosed in the property listing for buyers agents to view on the MLS. Because of this, most sellers ended up offering compensation that was high enough to fairly compensate both agents. With the new policies, I could see us transitioning into a market where each person pays for their own agent. There will be adjustment pains for sure, but overall I agree that it would be a better system!
@@NicoleNark VA Home loans forbids the buyer to pay any commission. First time home buyers will need taxpayer funded subsidies. Buyers will expect the seller to "lower" price. Some buyers will not be able to get representation for the complex transactions and will need to pay a lawyer per hour (400-600 here). Sellers could offer closing cost assistance to buyers they "like" vs buyers they don't like, and this might lead to discrimination.
@@globalfamily8172 there is going to be a lot to work out! At this point, the settlement would still need to be approved by the courts before we can really tell how the market will react to policy changes
A seller pays a commission to sell their home. It takes 2 agents to get that done, each one representing a different party. The seller is profiting off the sale of their home an it does not happen without both agents. That is why traditionally the seller pays the commission. Both agents are working to help the home get sold for the owner
@@JohnRymsza-s5u thanks for chiming in! Do you think that the policy changes could lead to more dual agency where buyers are contacting the listing agent directly? That was a common practice just a few decades ago.
I would advise all house buyers or sellers to ask A.I. every question you can think of. You will find you can do pretty much everything yourself. Hire a photographer that also does drone video. Hire a lawyer to look over everything before it closes. You can hire someone to do all the inspections: roof, termites, general home inspection. Most realtors out there can open the door and let you look inside but they have zero knowledge or skill.
Oh brother lol. Okay, let's see if you get the best value without having your property on the MLS!
@@CarisaRae you can put it on there without a realtor
The commission is built into the selling price. And while the seller pays the commissions to the brokers, the buyer is the one ultimately paying for it. Under the new system, if the buyer has to agree to pay the buyers agent, they are still paying for it. Sellers will not be lowering their prices after this. Seller are the only ones benefiting from this.
Exactly!!!!!!
No buyer agent???? Seems like the buyer won't be represented and open to getting screwed over!!
Thank you for sharing ma’am … good info 😊
Absolutely! Happy to share ☺️
Outcome = about 5 more pages added to the sales contract.
😂 True! As if they weren't already long enough!
Not for commission info. Simple.
This is the best explanation of the NAR proposed settlement so far. Bottom line, agents should provide an estimated net sheet to both buyers and sellers to show the buyers cost to close and the seller net proceeds. In the final analysis, these are the only important numbers and the purpose of negotiation is to satisfy both buyer and seller needs and desires.
Thank you, Steve! I appreciate it and agree with you 100% on the net sheets.
The point is, where will the buyer's agent commission come from if sellers don't want to pay it? Agent and buyer need to agree up front where the compensation will come from. I don't think buyers are going to pay 2-3%
@@marciamakoviecki3295some buyers may forego using a buyer’s agent. Others may choose dual agency and work with the agent that represents the house that they are interested in. There are also ways to finance the agent fees into some loans. All of these policies could change and sellers may still elect to offer compensation for buyer’s agents. There are so many ways this could play out and we won’t really know until then! 🤷🏻♀️
Thank you for breaking it all down for us 😊.
Happy to do so! Thanks for watching ☺️🥰
As frustrating and overwhelming as the situation feels at this time, I would not say that NAR was "quick to propose a settlement". In addition to many similar claims over the years, NAR has been fighting this case since early 2019. To imply that NAR has not been working hard to stand up for Realtors is simply not accurate.
NAR has never had competition or accountability through the years. If NAR truly had the back of Realtors, they wouldn't have lost this lawsuit in the first place. I have a different perspective on this than most in the industry but I also dive deeper into these claims than many do.
It doesn't affect us at all, but the way you explained it it seems like it will help us even more when we offer cash to sellers and let them know that we will cover everything or they can do it the old traditional way than have fun having to cover or been asked to cover clueless realtors scam fees, closing costs. And before anyone says anything every commercial property we have purchase we've paid a .5 to 1% brokers commission but yet you guys want 3-6% to sell a house?
If the traditional brokerage model changes, I'm all for it! Realtor compensation should be free market and I agree to your point that covering the cost of a buyer's agent if you elect to use one as a buyer will help make your offer stronger in the eyes of a seller.
The commission check goes to the brokerage, not the agent.
Absolutely!
5 -6% commission in the million dollar plus market is a huge chunk of change. However, the expenses involved in marketing the million dollar home in expensive markets doesn't really cost more than 500k house costs to market. I'm not talking about the Sotheby's market with 10 million plus homes. We shall see what happens. I see alot of people just using the internet and websites to find their own homes instead of going to a buyers agent they have to pay. Especially if they're a first time buyer without the extra cash.
That’s a very real possibility! I am interested to see how consumer attitudes change
What will end up happening is the cost could drop initially, but creep slowly up to where we may end back where we are at now. Some of the flat fees brokerages are struggling and sometime don't offer the exact same services and its not always clear you ARE getting less. Granted I am NOT necessarily opposed to some aspects of this change all I am saying is be VERY careful what you wish for it could end worse than what we had be before. Never been a huge fan of NAR, should we also not argue about how the MLS is handled. Granted I agree changes are needed. There is chance this could actually muddy the waters more as move along. I just feel like this could have been handled by all sides involved in a better way than class action upfront.
Best explanation of the ruling so far. Just sold and had to pay both buyer and seller commissions but negotiated it. Wouldn’t want my realtor to work for free - that’s asinine. Who will the more than 4 million dollars in payout from NARS go to?
Thank you, I appreciate that! If the settlement is approved the money will first cover the costs of the plaintiffs' attorneys' fees (estimated to be around 20% of the 418 million) and then would be distributed to members of the class.
Yesssssss, I hate that I'm forced to pay NAR so much money and I don't even want to be a NAR member!
It's such a broken system!
As an investor, I would contact the listing agent and bypass the buyers agent.
We might see a lot more of that in the future!
As am investor.... that's not for everyone!
1. Sellers won't want to lower prices, so it won't affect seller's prices. The market affects prices. 2. I see discount brokers gaining here, advertiser portals will hire agents and offer discount services.
Those are very real possibilities! We could likely see an increase in people just using real estate attorneys and foregoing agents all together.
Do you think dual agency should be banned after this?
Great question! There are a lot of factors to consider. Ultimately, I am not a fan of dual agency. A dual agent can't represent the best interests of two parties with different goals.
@@NicoleNarkYes I really hope dual agency will disappear after this lawsuit!
All that's happening is you're driving up prices inflation is already killing everyone
A percentage of the sale should never exist. A flat fee for all homes sold if a realtor is used. If you want to be in sales then your income will be up and down. The commissions to a realtor can take a buyer 5-6 years of regular payments to pay off. Realtors are used car sales people and usually they have no real skills so they show and sell houses. you do not need a realtor to sell your house or to buy a house. When you see a sold price that is not what the seller got the (roaches) realtors take commission out of the price. So the buyer pays more and the seller gets less.
Most real estate agents would not agree with you and be offended by your comment. Not me! Being in the industry has opened my eyes to SO many agents that are out here making tons of money doing little to no work. I gladly welcome a change in policy and consumer behavior when buying and selling. There's a reason that real estate agents are often grouped in with sleezy used car salesmen. The barrier of entry to get into real estate is low...too low in my opinion. We would have a smaller pool of much more competent agents that the public might actually enjoy working with if the career demanded even some form of higher education. But in the US, it doesn't.
THE 6% WAS ALWAYS NEGOTIATED!!!! THIS IS SENSASIONALISM!!! TOO MANY REALTORS AND AGENTS ANYWAY!!!!
Yes! Commissions have always been negotiable!
It’s insane that a seller that bought a house with a $ amount paid interest taxes and maintenance throughout the years. But what are the buyers are looking at is how much last bought and how much the seller is making out of this deal. It’s insane that agents will make 6% for sending out emails to other agents and potential buyers and printing out flyers and maybe doing some open houses with couple boxes of donuts and box of Joe and whining about how hard they work of wait for that amount of money trust me you are not doing enough 😂. BS. I m glad this is over and soon. A flat fee is fair EXP learn from them.
Most real estate agents would not agree with you and be offended by your comment. Not me! Being in the industry has opened my eyes to SO many agents that are out here making tons of money doing little to no work. There's a reason that real estate agents are often grouped in with sleezy used car salesmen. The barrier of entry to get into real estate is low...too low in my opinion. We would have a smaller pool of much more competent agents that the public might actually enjoy working with if the career demanded even some form of higher education. But in the US, it doesn't.
I’d rather list on mls myself and sell it myself.
And if that's what you want, you should go for it! I'm about transparency here - I'm not about hiding the truth so that more people feel obligated to work with a real estate agent. The choice is yours and should be taken seriously!
Your voice is very nice.
Thank you!
You provide a service, service costs but dont be greedy :P Thats my opinion :P
I'm with you! No need for greed!
@@NicoleNark Off course you will have to make an earning, but always within reason. Here in Denmark the real estate fee is on average 12.300 USD, and thats between 1 and 6 % of what the house costs.
@@dennisoestermann1880 wow!
@@NicoleNark But you can also save that fee and make a private sale, which is way cheaper. Then there is only a small fee for the goverment. But you have to do a lot of work.
No Buyer's agent Agent!!! There used to be no Buyer's agents. Houses were efficiently bought and sold without them. Theycare pure psrssite.
Ya right
Realtors are totally unnecessary. AI has you job now. Contractors in builders building the million dollar houses should definitely make more money than you does nothing
It's unfortunate that you didn't use AI to assist you with your comment. If you had, maybe your grammar would have been correct.
So happy to see all these Realtors losing their jobs