Real Estate JUST Changed FOREVER: Realtor Commission Settlement.
HTML-код
- Опубликовано: 15 мар 2024
- 1️⃣ ✅ 🌟 June 21-23 Millionaire Symposium: events.meetkevin.com/ 2️⃣ ✅ 🚨 Kevin's Courses on Wealth (Real Estate, Stocks, Productivity): meetkevin.com 3️⃣ ✅ 🏘️ Real Estate Startup: househack.com/2024 4️⃣ ✅ 🎥 Market Open Live: @MeetKevinLive 5️⃣ ✅ 💎 eHack News at eHack.com 6️⃣ ✅ 📰 My Daily Newsletter: meetkevin.com/daily
The National Association of Realtors Commission Settlement (NAR) just changed real estate forever. Will prices collapse?
📝Disclaimer:
This video is not personalized advice for the viewer.
#meetkevin #househack #JuneVegasEvent
This seems like an avenue to eliminate retail buyers and relax competition for corporate buyers
Bingo! Experienced corporate buyers are the winners here. You hear that average Joe American this helps corporations...not you!
I feel it's no mistake this is happening now, of all times. "You will own nothing and be happy" - the first time homebuyers are getting totally squashed!
Now we need to sue the Federal Bar of Lawyers and stop them from taking 50% of peoples cases as a commission.
It's a stupid arrangement because it's the buyer's agent that get the house sold, so if you don't give the buyer's agent an incentive then the property won't get sold and the property stays on the market, as a result nobody makes any money. The buyer agent is most valuable in the process because the buyer agent brings the buyer to make a deal, all the seller's agent does is able to market the property on MLS because they have access to MLS. The seller's agent or listing agent is basically useless other than staging the home which is mostly easy and common sense. In addition, the buyer agent works much harder to close the deal than the listing agent, most listing agents are very lazy.
Home prices keep going up, interest rates stay high & now buyers have to come up with more money for representation. Buyers are totally screwed.
So why should the seller have to pay your fee without being told they are doing so?
Even so, NAR’s agreement to scrap longstanding rules governing broker commission fees will slash a key expense Americans face when selling their homes.
“It’s totally upended the current system as we know it,” Vasi Yiannoulis-Riva, a partner in the New York real estate team at Withers law firm, told The Hill.
The agreement settles four antitrust cases that accused the powerful realtor organization of working with real estate brokerage firms to establish rules requiring home sellers to pay buyer broker fees, which they argue resulted in inflated rates. Most home sellers currently pay about 5 to 6 percent in commission fees, split between their own broker and the buyer’s broker. For a $1 million home, this could amount to $50,000 to $60,000 in fees.
Under the newly scrapped NAR rules, which were enacted in the 1990s, sellers were required to pay for the broker representing the buyer and offer a commission for the buyer’s broker when initially listing a property.
The realtor group, which denied any wrongdoing, argued that these rules “help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers.” However, the lawsuits alleged that this incentivized sellers to offer higher commission fees to buyer brokers, since they would be more likely to show homes with higher fees to potential buyers.
“Buyers and sellers lose some money because they have to pay these agent fees that would otherwise be lower,” said Tomasz Piskorski, a real estate professor at Columbia Business School.
It's better idiot
This will negatively affect the buyers, they will have to pay more money upfront in fees and therefore will hurt the seller market by lowering home prices now that the buyer has less upfront capital and therefore can’t afford as much.
@@WaltWW I disagree, there’s plenty of buyers available at current inventory levels that are looking for a house.
probably cheaper for me to get a real estate license and handle this myself than to get a "buyer's broker" and pay 2.5%. if the home is 400K, i'd be paying 10K. F*ck that shit.
You gotta pay fees to become a realtor and pay yearly fees, about $1200 a year.
They are making it easier for people to rent and harder to buy really it seems like.
Bingo
Exactly. Rental inventory keeps going up and prices are going down. Even here in Cali, they cut the rent on my unit from $2,700 to $2,100 from 2023 to 2024 (I observed the last tenants rental amount). That being said, can’t find any properties on Zillow in this area anymore lol
I am an old lady and I bought my first house long before the days of the internet. So maybe I completely misunderstood the process. The way it was explained to me was that the seller’s agent was paid 6% and she paid the buyer’s agent out of that. How that was split was a contract between the two agents, not the buyer and seller. Both agents had to split their share with their broker. Is there anything in this settlement that prohibits going back to that model?
Under your scenario, where the buyer has to have funds to pay their agent. It seems to me the seller is the loser. There are now less potential buyers for their home. An investor is unlikely to overpay for a home. But a first time home buyer is inexperienced and more likely to fall in love with a home and be drawn into bidding wars and overpay for a home.
Yes that’s correct but with this change seller’s agent will not split their commission with the buyer’s agent, the agent has to negotiate that with the buyer. Sellers agents will not be able to charge 5-6 % anymore. Not sure how buyers’ agent will be compensated maybe listing agents will have to do more legwork and find a buyer.
Thank you! That IS how it currently works. Also, this guy kind of "debunked" his own prediction when on one hand said "agents will say 'forget the buyers agents', and offer to list the home at only 2.5%", then turn around and explain that during the housing crash during the recession, listing agents would offer "buyers agent incentives" of higher commission. When he advocated for cutting out the buyers agent's commission, there will be less buyers. Guess what he's gonna have to do to get the buyers and agents back???
You are right. Most people on this thread have no idea what they are talking about
Amen! I love the fact that as an older woman you clearly seem to know exactly how the real estate transaction works and yet how so many younger people appear to know nothing even after going through the process themselves. What you say is exactly the problem! Agents are there for buyers and sellers protection. Buyers agent especially does a lot of the hard work. No agent is doing that for free. The housing market will stall and buyers will get screwed in mass because let’s face it most people need to be overseen to do the right thing.
You know what’s going to happen when seller doesn’t offer a commission to the buy side? Buyers agents will just skip over it and show the houses that do offer a commission.
Nobody is talking about how the gazillions of showings are going to get serviced. If you think listing agents are going to manage 30 showings on every listing, you're out of your mind.
This sounds like it would potentially decrease the pool of buyers, which in turn will increase amount of inventory for buyers. Could be wrong, but reading in between the lines here.
The buyer ultimately pays the commissions anyway, they are are ones bringing the capital to the table for the transaction.
The model where the seller pays both seller and buyer agent commission sides from their proceeds actually helps the seller by allowing the buyer to roll the cost of their real estate representation into their loan if they are using a lender since it is “baked in” as a part of the purchase price and the seller is able to sell the house for a higher number because the buyer doesn’t have to upfront the cost for real estate representation. This ultimately hurts the sellers and the buyers and only helps corporations and wealthy cash buyers because it will ultimately lower prices by knocking out low capital/ low income and/or first time buyers that have to use a loan. The money grabber sellers and attorneys that brought on this lawsuit essentially hurt the sellers bottom line by hurting the buyers. Without buyers the sellers become holders and maintenance people of real estate and/or foreclosures.
I’ve bought and sold several properties without a Realtor. The title company and the mortgage company did everything I needed and I arranged my own inspection. The last house I sold FSBO saved me about $15k in commissions.
You seem to be in the business and you make the time for it. Your invested with multiple properties. No?
People should really learn how to sell and buy property without a middle man, that's not necessary.
Congratulations. If you are very experienced that's great. The average person has very little experience with the ins & outs and managing the roughly 10-15 people and deadlines involved from start to finish to get the deal closed. They'd need to take a month off work to handle all the details and phone calls.
10% of all homes are sold by owner. Congratulations. Everyone else is doing it and has been forever.
not everyone wants to do everything and feels comfortable doing everything. just like some people don't want to change their own oil and fix their own pipes.
Never made sense that the same amount of work on a 250k house compared to a 1.2 million dollar house had a 1000% difference. Now we need to get a fix on institutional home buyers screwing up all the inventory and home prices. Then making home owners delusional of the house value. Because even with a 760 working 50 hours a week I STILL cant afford a house. System is busted and imploding because of delusional greed.
Where do you live? Might need to get out of a big city if that’s where you are.
Commissions were always negotiable. Savy million-dollar sellers know that to get well-connected, buyer's agents with the clientele they need to sell their house will take a proper incentive.
If you understand this, then you should realize that the next bubble is coming and be getting ready.
Most people won't do whatever it takes. In 2007, I moved into a single wide trailer with 2 roommates and only ate cooked bulk food. Saved every cent I could and spent zero on frivolous items.
In 2009, I was moving into my %40 off 2006 built house.
Get a better paying job.
@@aaronb7990you must mean bubble pop.
I only sell and buy with Redfin, full price realtors can suck it. Go get your GED and stop making 6 figures cause you can fill out forms and have the code for the key
Not sure you thought through this yet. Agents are not going to say they will list for 2.5%. When the dust settles sellers will realize paying buyers agents will get them more money and a better buyer. It may just go back to the way it’s been because it works.
lol, at the expense of the buyer. This will have ripples in the hosing market when too many buyers get screwed because they will not have agents! Basic laws, every action has an equal reaction. No way sellers will go unscathed.
Kevin, what you seem to forget is that the system will die. Early investors or first-time buyer are in an age group that will amazingly quickly convert to AI for their agents. Sellers will see that and no longer use regular agents and brokers and work with the 1% Redfin and all the other coming organizations. The lawsuits about access to the MLS will succeed so agents and brokers will not be allowed to be the only ones to list. As soon as that happens agents on both sides will go away. Real estate agents working on a percentage of sales price will be a thing of the past in 5 years.
Great for sellers, investors and flippers. Terrible for everyone else involved. What a time we live in... Home purchasing is going to be way more complicated in the coming months
The rich get richer.
When I bought my first home at the age of 24 back in 2014 MY agent told me to sign some CC&Rs without telling me what they were. Luckily I felt something was off and did research and saved myself, but now Imagine now that buyers wont have representation buyers are gonna get taken advantage of big time just like I almost did.
Am I the only one who doesn't understand the value of the buyers agent? I bought in NJ, ny, and TN. In all 3 cases most that I got from my agent was the recommendation of the inspector and the title company. I could have find them myself. Any delays we had with title insurance or the bank was handled by me. I found all 3 homes myself before contacting the agent. My agents would show up at closing to collect their money.
Sorry you had a bad experience…
I could have found them myself (but didn't). There's a saying "Fool me once....." Sounds like you like to be fooled. LOL
So strange... in Europe there is no buyers agents. Most buyers don't even like seller agents and look for direct contact to seller without any agents in the middle. So its 0% fee or 2% fee if seller is not able to show real estate himself. Normally you can just pay like 200$ for really good staged pictures and listing on internet. Why would you give 2% of 300k$ ? that is like 6000$ ? For pictures/listing on internet and maybe to show property to few interested buyers? People in US are like crazy or lazy ;)
You better believe something like that would better fly in Europe where it appears as if the government is a lot more serious about protecting regular people from each other and corporations, but in the US, sheesh that will lead to chaos because our nature is so…. Greedy.
Buyers are already rare and unable to purchase at these high prices. Now, this just adds additional expenses to people who are already priced out.
I think this is just going to price more people out of the housing market.
Probably start seeing more buyers agents leave the business. Selling agents will most likely be doing the open house for their contracted homes VS getting buyer agents to hold the open house. Possible closing costs might get switched around a bit too. Sellers may start paying closing costs or partial to lessen the burden to get a sale. People are still pandemic drunk and don’t remember what it’s like to have your house sit on the market for 5 months.
Look up average RE agent salary and see how much RE agents make. Then realize they still pay taxes on that. They don't have health insurance, or pensions! Once they get the commission after several months of working with a client they still have to split that AGAIN!
99 percent of buyers agents don’t really work for them anyways. And Ive seen many sellers agents posting 1 picture. Lots of these agents are simply there to stand in your way and collect a piece of the action.
Realtors are lazy and do nothing for society, infrastructure, or technological advances.
Oh please. First of all, you show me the percentage of listings that have one picture or tell me where to find them- I’ll wait. It’s a damn lie. Secondly, you say 99% of buyer’s agents don’t work, again where is your proof! I guarantee you there is no way a single real estate transaction would successfully go through if it weren’t for the buyers agent! They make the buyers aware of all the terms of the contract, help the buyers to negotiate the contract to something they can afford and actually live up to, they ensure buyers are meeting all of their deadlines for inspections, title search, securing financing, appealing to potential problems they discover during the processes and then renegotiating terms or walking away from the deal if truly not in the buyer’s best interest and all with their earnest deposits still in tact, protecting buyers from falling for many of the tactics some unscrupulous sellers will use to unknowingly have buyers breach a part of the contract thus giving them the option to keep their earnest deposit while also walking away from the deal, or worse, forcing the buyer to buy a home that is truly a pit and or not in the buyer’s best interest. I have seen so much in just 4 years in the business (no longer and agent but I definitely learned it is so much work and for most agents they are so far underpaid).
The mls should be catagorized as public record
I’d like to know why isn’t it
It's privately owned. Why would an independent American citizen put their private property for sale in a "public record"? What could possible go wrong? Isn't the government in our pockets enough?
Because licensed agents pay money to be a member. It's a Co-op@@edennard1
Monopoly powers enforced by government regulations paid for by the monopoly to keep its monopoly. Just like every other major "regulated industry" the illusion of capitalism
@@edennard1 “The Multiple Listing Service (MLS) is private because it's a professional database that's owned and operated by real estate brokers. The MLS is created, maintained, and paid for by brokers to help their clients buy and sell property. Brokers pay fees to the MLS for administrative and security costs, so they don't want the MLS to be free and open to the public. The MLS also has private remarks, showing information, and commission amounts, which can help buyers make informed decisions.” It’s antiquated and it’s time for change. Been around since 1907. In the age of the internet this needs to be free information for anyone 🤷🏼♀️ I think in 1907, 1950, even 1997 it had a place. 2024? No way.
In my opinion this is backwards, the listing agent is the one who does no work and deserves less money
This is all subject to what market you are in. Yes, a listing agent can look like a hero to the sellers by not offering a commission to a buyers agent, but if you are in a BUYERS MARKET, it's not going to work out that well for the listing agent or the seller when the house sits on the market forever. Not to mention the listing agents that do this will quickly get blacklisted from other realtors.
I remember asking a real estate agent friend why he didn’t charge lower commission on the MLS and he said if he did other agents would look at it and say that’s not worth my time I want my full commission one and a half percent percent is not good for me so I’m not gonna show this house to these people
This "screws" buyers because it's a seller's markets in which buyers are competing for limited houses for sale. The extreme imbalance of buyers to sellers falls at the feet of the Fed.
6% of commission for people who don't do anything worthy. My CPA doesn't charge a percentage of my income. Real estate agents must be given a fixed amount like CPAs. period.
Spend a day in the life as a realtor and you will be shocked . 6% isn’t enough , should be 7-8% , costs 15-30% to take a high value item to auction 😂😂
So first time home buyers continue to get screwed and continue to be priced out, AWESOME!!!
How!! Please explain 😂
yep
No... first time homebuyers will be forced to educate themselves on the home purchasing process. It is possibly the most important purchase of your life, wouldn't you want to know as much as possible on how to best navigate the transaction?
You're right. first time home buyers will just go through builders like DRHorton cause you don't need an agent to buy a new home with them. I think you will see second time home buyers get it the hardest. You won't have enough equity to cover selling your old home, paying the new buyer agent fees and also putting 20% down on your new home
Save your money. Get banks to go back to take over payments.
I am currently working with a homeowner who waved their home inspection, assuming that the VA appraiser would protect them. OMG VA should never have given a loan on that total POS. A home inspection and Pest inspection would have prevented them from buying a total tear-down.
These commisions are crazy to me as a Swede. Here, 99% of the time only the sellers agent that get paid. And its free market. Usually its a set price for sell + a % bonus on above ask price
So Keven, after watching the full video: this is a transfer of wealth, from those without assets, to those who do.
Hey Kevin,
interesting analysis on the situation. Don't you think this ruling threatens listing agents more than buyer agents? If your assessment is accurate and listing agents immediately stops advocating for the buyer agents commission doesn't that mean companies like Zillow and Redpin can offer the seller 2% commission instead of the 2.5% from the regular listing agent? 1% for Zillow and 1% for the buyers agent (-25% for the buyer referral from Zillow). I think this ruling threatens the way listing agents run their businesses. Zillow is a major player in the real estate market. They refer out so many deals to buying agents. If you say listing agents are not going to advocate for buyer commissions then wouldn't that put a massive dent in Zillows pocket? I think Zillow wants to replace the MLS. The buyer agents are the ones running around all day showing homes. Logistically wouldn't it be easier to replace the listing agents than the buyer agents from Zillows point of view?
Most first time buyers dont have money for closing costs, much less paying an agent. This puts the listing agent in a powerful position and no one is there to advocate for the buyer.
You actually believe buyer agents advocate for buyers, that's adorable.
It is possible that many buyers who cannot afford the extra cost of representation would eliminate them from the market. This in turn brings less buyers to a listed property. Less interest could keep a home sitting on the market longer and could lead to price reductions. That eliminates the perceived extra money to the seller. Any thoughts on this?
Spot on, couldn't have said it better myself. As a broker for over 28 years I think you nailed it. We just screwed buyers representation. So now the seller can just run over the buyers and because of this we are going to see more lawsuits. So in some ways it even makes the listing agents job harder with dual representation. Walking that line of fiduciary obligation to the sellers and treating that buyer fairly will be scrutinized more than ever. Its almost funny that the general public never realized that the system was in place to protect them. Everybody always so concerned with the bottom line. Well if you think paying an extra 2 to 2.5% to have fair and equal representation was expensive.... wait till you see how much your potential lawsuits are going to cost you!
100%. Not to mention commissions were already going down. Who's to say that in 10 years it would be a 2% total commission situation.
First time and second time homebuyers will get screwed because they will not be able to get transparency from the listing agent if they decide they dont want to pay a buyer's agent.
I had to laugh at all the people online looking for a house and complaining about high prices, didn't realize this settlement will make it more expensive for them to buy a house.
He never pointed out this is an _obvious move_ to increase the incentive _even further_ for sellers to favor “investors” over regular people _who actually need a home._ He just says, welp, I dunno? *What a coward.*
I agree
commissioned buyers agent is incentivized to make sure you pay the most money possible for the house you want
Sold my house in an area where things sold quickly.My agent just said 4% right off the top. She had a list of people looking in the area. She asked us how much we wanted. We told her. It was sold in 10 minutes. but the best part where I got my moneys worth was, she took care of everything.
You’re forgetting that buyer agent agreement can include verbiage that the seller will pay for their commission. And obviously if the seller accepts the offer, they are agreeing to terms of agreement.
This would take away or delay some of the active buyers which means there's a chance of inventory increasing on the market which will force prices downward. Then when prices go down, the rich would swoop in and snag more properties making the divide between the have & have nots even wider.
If you offer the 3% as a seller and work with the two agents, the buyer knowing that does not have to pay anything to the buying agent, will be motivate to buy faster and will be willing to move forward with the purchase.
Great, been saving up to buy my first home and now I need to save another 15 grand. How perfect couldn't be a better time for this to happen after being laid off. Bright future for the Amerian dream!
Why would you pay someone 12,000 to help you buy a house? This is wayyyy too much money for the value provided.
Also too high to get it sold.
i KNOW. CUSHY JOB.
Exactly thats why a buyers agent relies on a motivated seller to compensate. Thats how it works 😂
What is the point of doing this now? Prevent 1st time homebuyers?
Yup. People making the laws are pretty much universally all real estate investors, all owning multiple properties, and they use their positions to make their lives better.
Always has worked that way. If you look at the organizations that rate freedom rankings and democracy rankings, the freedom Index in the US has taken a nosedive over the last 15 years due to blatant corruption in the govt, and now we are listed as either a flawed democracy or even failed democracy.
Kevin is misleading viewers here. Overall commissions for both Sellers and buyers agents will go down, (no more 6% rule) as both of them have to compete for business with clients. New Startups might come up or Redfin or Zillow may offer buyer agents commissions. Imagine websites like Expedia or Kayak for real estate instead of the old MLS.
Its a good start. Next is to get rid of realtors completely.
Who hurt you and what did they do so bad to make you say such a thing?
The only reason why home prices would go down because of this is if buyers agent fade away, there is nobody to keep potential buyers engaged, send listings, schedule showings etc… less excitement, less salesforce, less $$
What if they go “google everything on how to buy a house” then pay “1000 for a lawyer to write the offer”. That’s what I’m hearing from clients
If you are making a simple sale and don’t need to contact the seller then that will work just fine. Most people aren’t savvy enough and or need too many issues resolved and contingencies. I am always shocked how many people ask their agent to help them through the lending process. It’s sad but most people need A LOT of hand holding.
For sure, family/relatives or friends transacting amongst each other have at it. You want to sell your home for actual market value and do it right, hire professional agents/brokers. There will always be the DIY mindset, I DIY what I can, everyone has limitations whether it be skills or actual time. Pick and choose your battles friend. Be happy and thrive!
Horrible idea. You can find yourself in a very bad spot if you don’t know the right questions to ask.
That's what I did worked perfect. I paid $500 for the lawyer
The momentum was already shifting towards this. My buddy sold his $225k house in 2021 by paying an agent ~$800 for basically the agent's network and ability to list the house on the MLS. No other help. Had to pay the buyer's agent but overall only surrendered 2.5% + ~0.5% to the listing agent. Apparently this agent was absolutely killing it because he could sell 30 houses a month this way with very little work. I hope this pushes RE into a renaissance of sorts where you find an agent which you can price out, a la carte, what you need as you search for a house.
A city I've lived in and know the RE market well? Maybe I only solicit a listing agent's help to put the word out to their client base/colleagues for houses that fit my needs for say, $500 but I do all the other buying work. A brand new city I have to move to on a dime with no idea of the local market? Maybe I'll put out for an agent's 2.5 to 3% buying fee to navigate the market for me.
It’s called a flat fee Lsiting company. This was always an option; has been for the past 50 years.
When I was an agent everyone always said "Buyer always pay the commission" - because the seller always just ads the commission and other expenses to what he wants to walk away with.
good job on explaining this ..thx
Offer nothing to the buyers agent and they wont show the house, its pretty simple, they have no incentive to do so if they wont' make any money.
Then they don't represent the buyer do they? Ethics matter....
Would you work for free?
@@binwin2582 No, that is exactly what I am saying, pay nothing to a buyers agent and there will be no buyers agents, its that simple, look at my other comment. I said the buyers agent is the one that does all the work, still pay them and get rid of the listing agents, let the buyer pay to put the house on MLS, they can hire a photographer to take photos if they don't want to take their own then do their own research to figure out what the house is worth or hire someone that can give them that info but to pay a listing agent is kind of a waste in my opinion.
They will still show the house, its just that they will get paid much less, like a flat fee of 1 or 2 grands
That's for the buyer to figure out. No one's saying a buyer's agent has to work for free
I think this will benefit redfin and Big Realtor, where they will try to list every house in the neighbor and provide a free buyer agent. They will bank all the fees and just pay small amounts to their virtual agents (or robo ai agent in the future)
Exactly…everyone against agents are just asking for a wealth transfer. People don’t know what they’re really asking for here. This is the catalyst event.
Can that robot open a door?
that's exactly what will happen and I've been saying this for the last 3 years, big corporation will be offering to sell the properties for let's say $500 dollars flat fee and that will be the end of real estate agents and brokers, so realtors will go the way of travel agents and we don't see too many of those any more
Ultimately, this is going to cost home buyers more money, especially up front. This is not a good thing for todays extremely high market prices, and elevated interest rates.
I think this change will just force buying agents to charge much lower fees to buyers. That's the whole point of the ruling. For years the fees have been inflated, because no agent was forced to market lower fees to get a home buyer to choose them.
So now buyers have to pay a realtor who makes more money the higher they pay for a home? that's the very literal outline for the lawsuits against sellers being forced to pay for buyer agent fees.
Personally, after buying/selling/flipping homes, I think this will definitely hurt Buyers. It will chase a great deal of looky lou's away and/or give unscrupulous sellers easier to cheat out buyers - termites, inspectors, negotiating, etc. etc. Chasing away buyers.
At some point, when inventory gets back to a normal supply and there are more homes for sale... buyer's will just not want to see the homes that require them to pay for a buyer's agent. If sellers want to broaden their chance of getting strong offers they will end up paying a buyer commission once again. Seller's are forgetting that "owner occupants" typically make higher price offers since their goal isn't to it flip it for a quick profit.
Couple of tips to bypass realtors:
List house for sale by owner
Don't sign a contract with sellers agent. Even if someone drives by your house and knocks on your door to purchase from you directly, the contract will require you to pay the sellers agent that did nothing. This contract can be in effect even months after you quit working with the realtor
Fantastic analysis. No way prices will go down from this. Well said.
They are removing the entire buyer agent commission from the MLS, aren’t they? Sellers can’t pre-negotiate the buy side commission with the sellers agent. So the buyer and buyers agent have to figure out who’s paying for what upfront and when submitting offers to ask the seller to pay for it.
The additional factor is no new realtors will be added since those agents usually work with buyers. Everyone will just want to list and say the hell with the buyers. Mistrust in the industry will certainly increase as well.
Now, the next thing that needs to be addressed is closing costs. They're way too high.
When the buyers need to pay the buyer's commission fee, I would imagine that they might make a lower offer or even below the asking price to the house to offset the overall transaction cost.
For sure... and then they don't get a house because the vast majority of homes are still being bought by cash buyers above listing price.
The real estate business needed a change, it is way too out of control and people making too much money for doing NOTHING.
First time homebuyers aren’t gonna be screwed. 1) if they do the work, they can now have the option to not pay the commission they used to have to through seller 2) if they can’t come up with additional cash to pay the buyers agent, they can request the seller to pay the agent fee. Unless there are rules against that. 3) listing agent fees also may not be safe. If I sell my home, I used to have a strong incentive to pay a listing fee cuz if I don’t, buyer agents aren’t showing my home. Now I don’t have to list with an agent. Buyers agents aren’t commissioned anyway.
One of the biggest benefits of being on the listing side is that you also get the seller's buy side. I think you're missing this in your analysis. I think listing agents will be slower to not talk about buyer commission than you think. Like cutting your own legs off. In 99% of listing appointments, the sellers ask what it will cost them to sell and what it will cost them to buy for your services. So you don't avoid the extra fee in the conversation by taking it off the listing agreement.
I agree that first time home buyers get hit here though. You see multiple offers on all of their inventory. So you'll really struggle to bake the agent's fee into the deal.
First time homebuyers get screwed! But f-them am I right?!
I would argue the seller has been getting screwed for years buy having to pay everyone from the profits of their equity.
Who said it has to come from “profits” would you prefer a separate out of pocket up front sellers fee? By all means open a school for home owners on how to sell on your own without an agent/broker. You’d potentially make millions. You can create video content. And then you can one day read a comment from some random individual asking “i cant believe this guy is making money from teaching people the complexities of selling a their own home” 🤣
F
At fee, agents are worth 3% of $3MM
Have you ever tried to sell a $3M house? It’s hard as hell.
@@MichaelNiteRealEstate 😭😭😭😭😭😭😭😭
agreed. I think buyers will move towards of a model of finding a home themselves. At THAT point I think more buyers will hire a real estate attorney to represent them (at an hourly rate) instead of handing out big chunks of their equity to buyers agents.
We had this problem years ago. It wasn't done then because the buyers couldn't get the commission included in the loan which is why the seller paid for it as it was done after the sale and transfer of funds. It will be interesting if the buyers will be able to come up with it. If not sellers may find that they have to include it to get it sold.
Yes. That would be if you know it. Just making you pay and not telling you is dispicable.
*_Remember that anything that is the result of a negotiation is re-negotiable._*
That means that the real estate broker commission is fully negotiable and re-negotiable.
A broker that wants a 5% commission at closing may allow a 30-day (60-day or 90-day) delay in payment, or allow a portion or all of it as a note.
When I meet with a commercial listing broker to view a property, one of my first questions is "If I decide to buy, will you accept a note for your commission?"
The usual answer is something like, "Uh, um, we've done that before."
(He is reluctant to say YES, but he doesn't want to tarnish the relationship by saying NO so early in the discussion.)
If he balks, then I can casually mention that _"I have no problem bringing in my own buyer's broker for half of the commission and I know that my broker will accept a note."_
Then talk about the benefits of a steady income stream from multiple notes.
(This tactic is actually much easier with a residential real estate broker than a commercial real estate broker.)
We were the buyers in 2018 and still had to pay both fees. If we ever sell, we are doing it on our own. I did most of the work including finding the home.
In your example of the house being 500k and having to pay your agent 12,5 upfront, man I’d rather read a book and pass a real estate test then pay someone 125 of my hard earned cash
Great idea. Just to let you know you will also need to pay dues, desk fees, errors and omissions insurance. And you have to pay fees e an electronic key too
You don't need a license to sell your own home. There is no law that requires you to use an agent.
That’s exactly what I did. Forget giving someone free money when you can invest that in yourself
One other thing that is not talked/thought about yet. If the realtors focus on listings and there is percentage of buyers that are not represented, the listing agents will still need the homes showed. So....the listing agent will have to increase the workload the show the homes to unrepresented buyers. Or only represented buyers will be buying homes or they will purchase without showing and make a determination if they want to follow through with the sale after inspections. I can see the listing agents increasing their commission to deal with the extra workload.
As a realtor I advise buying a house sight unseen. I have no problem showing one of my listings to qualified potential buyers.
Kevin, I think buyers agents will submit offers with their commissions. When I listed my flips I used to put 2% on the MLS. But when I received offers the agents would write in 2.5%. So if I wanted that buyer I had to accept the 2.5% commission.
Great Video. Definitely the best explanation of current events, I've heard so far. Love Kevins videos!!!!
Buyers agents don’t exist in Australia and no one has ever complained. 1-3% commission to the sellers and they run it all.
Does the listing agent have a fiduciary responsibility to the buyer? The special thing we had their is that both sides had someone who had a legal obligation to look out for their interest. The listing agent does not have to look out for the buyer's agent past disclosing what they know about the house's physical attributes. Buyers can get eaten alive by not studying areas, asking the right questions, having a good inspection, etc.
Well, here's the problem here in the States. If that seller's agent is now helping the buyer, they are now legally bound to represent that buyer. Even if they have no contract with that buyer, if that buyer even thinks that the agent is working on their behalf that makes that listing agent liable. When things go south for the buyer, that listing agent has just made himself legally liable. That's why listing agents do not want to speak with buyers unless they are getting paid to do so. They risk their livelihood by being Mr. Nice Guy by offering innocent advice. In the U.S., you will find that real estate is one of the most litigious industries. Why would you want all that liability and stress for low revenue? Plus, you've just doubled your workload for 1/2 the price.
I think realtors should be paid per hour for visiting homes and a flat fee for closing a deal.
Basing their pay on the value of the home is stupid
Use a "Broker Pre-Screen Form" sheet to pre-qualify brokers to be sure that you can work with them.
*_Never sign a general exclusive right to buy, which obligates you to pay a commission to the broker even when you find and buy the property on your own._*
You can sign a *"specific-transaction exclusive right to buy"* when your broker is the procuring cause (he found the property for you).
If you use a broker to list your property, then you will sign an exclusive right to sell, but keep the term limited so you can change to a new broker when you are dissatisfied with the efforts of the previous broker.
Specify in the listing sale terms of "all cash" only (no FHA, VA, conventional or seller financing).
You can still sell to a financed buyer, but you're not required to do so.
In my experience, real estate agents are only concerned about themselves and they do not have the buyer or seller’s interest. They just care about one thing: the commission. That means to close as fast as they can. That means suggesting to the seller that they lower the price and to the buyer that they raise their price. That means hinting that their client is willing to go higher / lower. The only thing of value that the seller’s agent brings is to list it on the MLS. Usually, it’s not even them who greet at the Open House but one of their friends who is looking for a Buyers agent. Also, they are nowhere to be found during Closing. Their job is done by that point. Again, this is just my experience.
When the government gets involved, prices go up.
So this new system wants to drive buyers directly to the listing agents. Great for the seller and their agent who benefit solely from selling at the absolute highest price possible with the least amount of seller concessions/credits if any. 😂 buyers screwed again.
No, smart buyers will pay their attorney a $1,000 and be much better represented. Realtors are scumbags
Great vid, thanks Kevin - I learned alot
Buyers will simply call the seller’s agent directly. That simple.
When the buyer gets to due diligence without representation, they will either back out every-time or claim they got screwed over after the find out things in the homes that aren’t perfect and sue the agent.
I think business will be booming for real estate attorneys in 2 years when buyers are suing sellers down the road because they find something "wrong" with the house that wasn't disclosed and they didn't get a home inspection. Oops! Not the Seller's responsibility to hand hold the buyer. Buyers trying to go it alone are very brave! Ignorance is bliss, I guess.
Why not just use the seller's agent if you find a house you like?
I'm a send 70-year-old lady and have bought properties over the years many times. The trick to getting the house you want is don't have a buyers agent. Go directly to the selling agent. She will be more than happy to make sure that you get the house Because she wont have to split her commission. She can't represent you but someone else in her office can. In the old days we would hire a real estate agent and agree on a commission that we would pay her from 4% to 6%. If someone a buyer to her listing, she would then have to split her commission. The best way is leave out the buyer agent altogether.
Thanks for sharing! I love the way you explain and break things down. Makes it so much easier to understand!❤
List the property yourself and encourage buyers to contact directly or be represented by a R/E attorney. Then hire an attorney for a pre-negotiated capped fee unless you have one already to review the sales agreement and advise on any potential liability or transactional issues. The rest is handled by the inspector, city clerk, contractor (if repairs/remediation are required) and title company (who is also the escrow rep). That's all you need. Saves everyone money!
About time
Not that easy at all. Bought a house in AZ (for sale by owner), it was so bad, we had to hire a local agent in the area to help the 'sellers' do the paperwork. The paperwork, disclosures, and details are not that easy as people think.
You think hiring a attorney and paying a hourly rate will be cheaper looks like you never worked with a good attorney.
The reason there are realtors is because they only specialize in property transfer law. They are cheaper than a lawyer, there is no way you can negotiate a Lawyers fee to be cheaper than a real estate agents, no lawyer will do that workload for cheap
Oops! Forgot the lender! Bonus points if you know all the contingencies involved in the lending piece of the transaction.
Houses were bought and sold for many years before the buyer's agent scam. No need to have a buyer's agent.
Exactly. No one can give a reasonable explanation for why this arrangement is in place.
Many first buyers get screwed
But ok
I never had a buyers agent and was able to negotiate directly with the sellers agent. Considering i was 29 at the time, i felt kinda smart about that.
Paying an agent to buy a house is fleecing.
"Houses were bought and sold for many years before the buyer's agent scam" .... what years, explain?
I believe the unintended consequence will be that sellers will still offer to pay buyers agent commissions. It will make for a form of corruption where the buyers agent can double dip as he will get paid buy the seller + his client . It's small community among agents and everyone will know where to steer their clients . Bigger brokers do it already. PMZ buyers agents aren't allowed to show homes from discount agents who pay less than 2.5-3% commissions. I suspect other big brokers do the same . I'm speaking as a 16yr realtor/ 25yr investor/landlord myself.
Best video!! thank you for taking the time to explain house buying and selling in this new market.
If you have worked with a FSBO as a realtor, you know that the people who think they can sell their home on their own are precisely the ones who should never do it.
You're partially wrong, the seller also gets screwed because buyer's agents simply will not show their home and it will take longer to sell and they will reduce the price and they'll get less money. Many many buyers cannot afford any additional fees., buyers will also get screwed because they will have no representation in the transaction. A good buyer's agent can save a buyer thousands and sometimes tens of thousands of dollars. I know this from 28 plus years experience.
Who needs an agent to find a house when there’s Redfin and Zillow.
I think buyer's agents will be hired on fixed fees from here on. Because as per the court rulings, hint/ indication of any commission from the seller or his agent to the buyer's agent is now punishable.
So buyer and his agent will decide their fixed fees based on their budget and then the buyer's agent will fight/ negotiate more fiercely with the seller's agent on price. Also Buyer and agent can have an arrangement about commission based on potential savings.
Yup, agree seller/agent will also get screwed; Kevin is wrong.
Buyers don’t need agents to access MLS now with Zillow and all the other sites featuring the property, it’s 2024 not 2010
I think most buyers nowadays look for homes at Zillow and Redfin. The days of realtors showing you the binders of the house are gone. If the buyer wants to buy a house, they would find an agent who would help them get that house. When I bought my house, I mostly did the most of the work to file the offer. My buyer agent just opened the door and filed the offer for me.
well explained.
My Buyer's Agent found a home listed in the newspaper and decided not to show it to me because it was a FSBO, and the owner was not offering a commission.
I also found that home in the newspaper and asked my Buyer's Agent about it.
Long story short, I bought that home and directly paid my Buyer's Agent.
I will never use agents again.
Good for you but this story sounds like it's from 1985.