NAR - Much ado about nothing? Realtor's Commissions.
 

NAR - Much ado about nothing? Realtor's Commissions.
Thanks to the many people who have asked me about the proposed changes in Real Estate commissions this summer.
The answer isn't very complicated.
Regardless of the 'rules', Realtors predominantly charge Home-Owners/Buyers a 6% commission based on the eventual sales price of the home.
Some say it's the Seller who pays because the final 'Net-To-Seller' is reduced by, for example $24,000 on a $400,000 sale.
Others say that it's the buyers who pay, because they are paying $24,000 more than they would for a direct "Seller-To-Buyer" sale.
For home buyers and sellers the proposed changes are a simple reminder that you set the commissions.
In the typical transaction, sellers pay a Realtor $12,000 for the simple process of typing the listing info into the local Multi-List.
(This, by-the-way, is less work than an Appraiser does for $500.00).
The other $12,000 goes to which ever Realtor makes the sale.
Is there a significant, mandated to change?
NO!
The plan is to prohibit the Listing Realtor from typing in the commission split they are offering to the Realtor who makes the sale.
That's it!
The other side of the deal is to force buyers to sign an agreement with their Realtor. But that agreement can simply say that their Realtor is being paid, just as they always have been.
Is there any likely positive outcome?
In my opinion there could be if Owners/Sellers would wake up!
Its the selling Realtor who does the work and gets the sale.
A 'Listing Factory' gets a $12,000 fee for a $500 job.
What to do?
When your listing expires, maybe there is.
Ccall a State Certified Residential Appraiser who is also a Realtor.
Give them $1,000 for a basic appraisal and entry of the data into the Multi-List.
Whomever gets you a buyer gets, the (3%) $12,000 commission.
The Seller saves $11,000.
The buyer saves $12,000
Who's the loser?
Not our Home Buyers and Sellers.
That's who we should be protecting isn't it?

Protec the buyers and sellers? Good! Like a diner. One person takes your order, delivers your plate. Chef/owner does all the work preparing the item. Same effort to order then deliver plain hamburger or steak sand or lobster roll. The kitchen does the critical part along with owner having to invest in all associated costs.
Listing agents do minimal work compared to the buyers agent. Jmho.

A good listing agent knows or gets to know the owners, their habits, how they treated their home, what improvements they made even the small seemingly insignificant ones, they provide quality photography and if the owner is not happy they change the photos, they will advise how to make the home more impressive, help with a little staging or suggest some changes, provide comparable recently sold figures and information on similar homes on the market, set up a realtor open house, as well as public open houses, the prepare the description for the listing, and they provide advertisement. They also show the home to their prospective buyers and those that make contact with them due to the listing and advertising. That is what a "GOOD" listing agent does. Now comes the buyers agent if not sold by the listing agent, he/she brings their client and attempts to convince them that this is the home for them and to make an offer. In my opinion there is value to having a "GOOD" listing agent, they are at least as important if not more important than the buyers agent. Just one man's opinion from past experiences.

I am not sure how this works today. Assuming a 6% commission is it customary for the listing agent to get 3% and the actual agent that made the sale get 3% ? If the listing agent is the agent that made the sale does that agent get all 6% ? If this is true then your statement about being who is the winner/loser doesn't quite paint the whole picture. Under the new rules if the buyer purchased from the listing agent (let's say an open house walk off the street situation) there would be no buyers agent ? Only 3% would be the total commission. If a significant amount of sales today are made by the listing agent and that agent gets the full commission of 6% now that agent is only entitled to 3%. Is that correct? If so the listing real estate agents are the losers here. Everyone knows ultimately the buyer is paying the commission today - it's baked into the price the seller is willing to accept.

I don't understand your math. How can the seller save $11,000 and the buyer save $12,000? That is $23,000, but a 6 percent commission would be $24,000. Where do you get the additional $12,000 to pay a 3 percent commission?

Also, it seems as though your premise is that real estate agents are pretty worthless at selling houses at higher prices, so that they do not earn their commission. If I believed that, I would never hire an agent.

You missed the part where the inspector (who normally gets $500) also lists the home (and then gets another $500). Both paid for by the seller...

Imo, it all comes down to what a seller is willing to pay an agent. The lawsuit provides for competitive pricing.

Buyers agent? Not all needs one. Anyone can go on MLS and choose the homes you like. You can easily find the price history. Do a drive-by yourself. Why bring a stranger along? Any homes that interest you, call the listing agent(s) to see the interior. Hire your own inspector and use a real estate attorney to close. Both will protect your interests.

I am certain Realtors are going to try and twist the new law to bait those who are unaware. SELLERS will have the final say in how much an agent will get paid. I hope ALL realize this. Enormous pay for showing houses is a thing of the past.

Apparently, the OP thinks that any commision paid to an agent just reduces the amount of money that goes to the seller. If that is true, then a seller would be foolish to pay any commission. Also, regarding a buyer's agent, as a seller, I would never allow a buyer's agent to receive any money from my side of the settlement statement. If a buyer wants to be represented by an agent, the buyer would need to negotiate and pay their own commission or fee.

NOW, there will be that option. This lawsuit places the fees paid (and how) into the hands of the seller. Where it should have always been. Maybe, for sale by owner will be more popular and accepted once everyone understands the new rule.

There's so much more the listing agent does.....this post is short sided.

There is so much mis-information in the original post, that it is scary.

You are 100% correct

One baby step above click bait.

Buying or selling financial products, stocks, bonds at one time generated fees much higher than now, granted a very different industry, even so the communication revolution of the internet has made many changes and that continues, the ability of a seller to list and have wide exposure is going to change the sales model as more and more people sell their own home. I don't doubt that real estate agent can be a great help and do many thing that are not apparent to the seller, but how can events do anything but put downward pressure on the current fee system ?

Not saying changes are bad, but your over simplification of what realtors do (simple process of typing the listing info into the local Multi-List) is almost laughable. Obviously you have no idea what is involved and required for the profession.

I had a Villages sales listing agent that came recommended by a friend. His house sold itself in a day during the covid gold rush mass exodus to Florida phenomenon. I THOUGHT she was good based on my friend's experience with her. Boy was I wrong. There is no way to know "GOOD".

This villages sales agent realtor attempted to slip in a 6 mos sales contract as if I were oblivious to contracts. She did nothing but trash talk my 3 yr old home in DeLuna at the only open house SHE did.
Note to Village realtors, neighbors do go to open houses to check up on you!

Closing number two she had someone else do for her while she was on vacation. The last of her obligated three, no one showed up to do. She was always a day late on connectivity as well.

It made me sick to pay her commission at closing. She fought with me on price from the get go. Tried to convince me a house at the southern tip of TV new area at the time , which was on the north side of the turnpike at 470 was worth more than one a mile from Brownwood via golf cart. Wake up call... incorrect!!

Glad I stuck to MY guns relative to her obnoxious, condiscending pushiness, I did great. It astounded me that after 5 days she thought I should drop my price. Deeply regretted using her as an agent as the last thing a seller needs is the stress of a useless agent.

The Buyer agent is the one who brought the sale. Who needs a selling agent other than as a data entry clerk for the website. I didn't. Mine was useless! Was glad to hear she was moving out of T V and state. Saves other sellers in T V from a lot of frustration!

FSBO + appraiser + title company is all you need. 6 houses bought / sold since 1984 and haven't paid any realtor commissions as a buyer or seller. 6% commission is ridiculous especially as prices have risen. Would you pay a $3000 commission to sell your used car? There is simply no reason that any party (or parties) should collect $36000 on a $600,000 home sale. That's most of an annual salary for many people.

It would be interesting to hear from one of our British neighbors. My understanding is they pay significantly less fees in Britain. Wondering if there is a difference in the level of service. Just curious.

Wow...long thread....basically a world of caveat emptor....do your shopping as a seller or a buyer....

What I really want:
1) as a seller, I always do my own home inspection to uncover any problems in advance (DIY fix). Hand that report to the buyer avoids nit-pick price reduction.

2) as a seller, I won't pay 6% in the modern age of online listings. The agent only has to take (sometimes shoddy) cell phone pics and enter onto the MLS. It's more work on buyer's side to setup a search filter

3) as a buyer, I don't need an agent to help me search (some may do). Again, things have changed with realtor.com (don't believe Zillow). I want to deal directly with the seller with minimal back and forth. The title process is now a lot simpler.

Bottom line: the traditional sales model is broken. NAR agents need to change methodologies.

Me? Former manager of real estate software listing business for print media (now a dead market)

The % of the sold price used for the realtor’s commission has always been negotiable and often been based on the market & region.

Hot markets with little supply of desirable homes with rising prices & lots of buyers often have lower commissions. A homeowner should always interview several realtors before signing a contract. During the interview, the homeowner should ask if the commission is negotiable. If the contract includes both buyer’s & listing realtors (as it has been), the commission should be equal between the two realtors. IMO

So, if you’re selling your home for “X” and agree to a 6% commission with your listing agent, why do YOU care if s/he agrees to split that commission with someone who brings you a viable buyer? That is, a BUYER’s agent. Your home still sells for “X” and there is NO extra $ out of your pocket. Again, WHY DO YOU CARE !? It’s only fair that s/he gets paid so why do care how—it doesn’t affect you. That buyer probably couldn’t afford your home if they had to come up with another $12000 out of pocket. All this lawsuit does is diminish the buyer pool…especially first-time homebuyers. It is NOT going to make homes more affordable as they claim. Why? Because you’re still going to sell your house for as much as you can regardless of commission!

Because a seller is paying the broker for legal representation. A buyer's agent does not represent the seller. An agent who is representing a buyer is not required to negotiate the best terms and price for the seller. As a seller, who is paying a 6 percent commission, I want every licensed agent who is involved in the negotiation of the sale to be representing me, the seller. That is what I am paying for. I don't care how the commission is split, as long as all of the commission goes to agents who represent me. And, I don't believe that an agent who represents the buyer is capable of negotiating on behalf of the seller and to get the best price for a house.

Leave it to the media to attempt to ruin peoples livelihood with lies and deceit, then the govern/pres to promote price fixing.

All this discussion seems to forget the broker. The commission is paid to the broker and the broker splits their “half” with the agent. That split may be 50/50 or not. Many companies work on graduated splits where the agent receives more of their 3% based on cumulative sales. Novice agents may start at 30% of 50% whereas seasoned, high volume agents may be paid as much as 90% of 50%.

Depending on the state,
area, company, appraisers do not sell "123 Main Street" and appraise "123 Main Street" it is or could be a conflict of interest.

Listing agent/realtor
 

I had a bad Realtors , a married couple . list my house back in Chicago. . Big mistake , should have sold it by owner myself .
First of all they listed my house
on the MLS on a Friday at 10:30 pm and planned for an open house on Sunday. They sent a young man around with flyers Sunday morning about the open house to all my neighbors . So no real traffic of buyers just neighbors not interested in buying for only 2 hour open house . They Over Priced the house , no appraiser. There apparent plan was to do nothing and let other realtors bring a buyer . They never brought one prospective buyer client of their own . Basically didn’t do a lot for me other than pressure me to reduce price by $25,000.
I suggested they go to the monthly realtor association meeting where other realtors , investors, contractors etc meet and network. I was told they couldn’t go .
My house had a VA mortgage ( due to divorce) 30 year fixed at 2.399 % assumable. I sent them contact information on every VFW and American legion in the Chicago area attention post commander alerting them to help a fellow veteran out and assume
a 2.399% mortgage and buy a large 4 bedroom 2 bath house in a
good school district. They told me they couldn’t discriminate????
I would get a text from the MLS
requesting a showing sometimes same day which required 2 hours of prep work on my part .
In the end they started pressing me to drop the price another $25,000 which I replied if you drop
your commission rate and was told they had two kids in college and couldn’t do that , but I could cancel and pay them a fee per our contract which I said no chance of that I’ll ride out the rest of the 6 month contract before I would give them a dime . In the end , it was a good thing my house didn’t sell as I am now I am remarried and every time I pay my monthly mortgage my balance goes down $900 . Like an investment.

And I am sure you were compensated in your profession- whatever that was. Do you take into consideration not all buys can just drive by- maybe they are out of state- in this case agent may spend months find a home all the while doing the drive bys - taking videos- maybe taking months to FINALLY make a sale of $12,000, their broker may get half ($6,000), agent then pays taxes, mls fees, errors and omissions insurance and wear and tear ON car gas driving around PLUS this may take a few months to find that house and hopefully make a small commission to feed their family. ??????

I would be curious what you think all the things a listing agent is required to do other than hire a photographer , list house on MLS and hold a 2 hour open house ?

Sale by owner only
 

Not my problem. Never again would I use a realtor to list my house . I would be willing to pay a buyers realtor agent 2 possibly 2 and a half percent commission.
Think about all the houses that sold in a day when the market was hot and buyers were paying
over asking price . How much work did the listing agent do for $12,000 ?

A seller has a lot of leverage when negotiating a listing contract. I never accept the broker's boilerplate contract. At a minimum, I want a written marketing plan for selling my house, a 3 month contract (not 6 months), and the right to fire the company if I lose confidence in them, with no penalty for doing so. If the broker won't negotiate the contract, I will hire another broker. Also, I want to hire one of the most successful agents in the company. Why hire an inexperienced sales agent when they all charge the same commission? And, I want the agent to recommend the listing price. That should be their job.

I have found this thread very interesting. I have been a realtor for 27 years. I have always provided excellent service. I make sure as a listing agent that the home is listed properly, meaning that all the laws are followed and all the information is correct. I have insurance that I pay for that insures if I make a mistake that it is on me, not the seller. Many pitfalls that can be fallen into in Florida. Insurance issues, flood zones, sink holes, cdd, housing for 55+. etc. I also believe after 27 years, I know what photos are going to attract a buyer looking at an internet photo in Michigan is going to see and like, and is going to put your house on their list to see. I also believe that working with and compensating a buyers agent is a good thing. I am a great negotiator, when you have multiple offers I am able to professionally guide you through the contracts and help you accept a contract for the best price and one that will make it to the closing table. When you get one contract, I will be able to help you negotiate for your best interest. I know lending, inspections and how to negotiate repairs. I have many people you can rely on to help you get your house ready and to make any necessary negotiated repairs. I do believe many agents may not be doing everything they should be and they may not make it in this new environment. I believe people will still see my value. As a buyers agent, navigating loans, repairs, a different climate, area, insurance, cdd, taxes there are many confusing new things are all my job to help you with. Opening a door is just the beginning. Maybe I am wrong. I can tell you my job is a full time endeavor and each sale is different. I still run in to unique circumstances every week. Makes me believe a novice may not be doing much right. Good luck all. I’m not worried. I believe I am worth my commission.

Pricing, preparing, staging, marketing, understanding offers and which are good. That includes knowing fha/va requirements, checking proof of funds, understanding appraisal issues. Negotiating. Making sure dates are met for contracts. Remember you are paying for experience as well as time.

If you THINK being a listening agent is “simply typing in info to MLS “ is all we do, then you are a highly uneducated individual . You have No idea what regulations rules of conduct, laws, codes of ethics we use and apply and advise sellers how to best sell their homes.
Not to mention the thousands of dollars spent a year advertising promoting our clients homes getting them the best money,deals conditions available. Not to mention vetting want to be buyers with sketchy credit, flimsy lender, letters, and bad deals being written to purchase our clients homes. 90% of a sellers agent Work starts once a contract is presented If you think it’s so easy, get your license and give it a try I’m sure your opinion will change.

Total Misinformation in your post!
 

Your post is absolutely not the correct information regarding the real estate proposed changes.. It’s obvious you’re not a licensed Florida real estate agent. The commission has always been negotiable. The only thing this agreement is doing is to make it clear of who gets paid how much. Also, it will protect the buyer’s agent to make sure they are being paid for the transaction. If you think the listing agent only enters the listing and that’s all they do, I would love for you to shadow a productive REALTOR one week! Overall the successful REALTORS will make more money because they will be able to show Customers their value. If you have any questions about the agreement, feel free to private message me. Yes I am a licensed Florida real estate agent here.

Much ado about nothing?
 

Obviously this person has no idea what a real estate agent does. There is more than simply putting a home owners home in the MLS and having open houses. It is people like this that cause lot of problems for everyone in our industry to have problems because all of a sudden they think they are experts in everything going on and yet they know nothing. Leave the real estate agents to do there job, just like an accountant knows his job and doctors know there jobs. Would you take your car to a dentist for repairs or your boat to a barber shop to be fixed? Well this is the same and taking information on a site like this from some one who knows nothing about what a professional real estate agent does or spends money on to get your home sold is the same thing!

With your vast experience how many actual hands on work hours would you estimate you put into the average sale here in TV in today's environment ? If possible for us laymen could you break that estimate down into major activities. At a very high level - example 4 hours at a closing, 3 open houses = 6 hours, maybe 12 hours total telephone time, etc.

You want to break it down to hourly pay. It doesn’t work that way. What hourly rate for never having a weekend or vacation off? How about the pay for answering the phone at 6 am for a seller asking some question that had no urgency, or at 10 pm. How about the years of experience you are paying for. Or the marketing the realtor spent money on? Or the pictures she laid out $800-1000 up front out of pocket. How much is it worth for you to never have an uninterrupted meal? To leave date night with your spouse because you have to take this call. To split that “hourly pay” with the brokerage and maybe the referral realtor? I’m not a realtor but my wife is. You folks think it’s such an easy money maker job then go for it. Most people fail in real estate.

You took the words right out of my mouth.

Well it’s really simple, the selling buyers agent needs to get a commission agreement from any buyer, and include a “fee”
I don’t see anyone wanting to pay a fee to an agent. Now what I do see is companies like Zillow taking over the market of selling homes and marketing themselves to buyers agents who will show homes for a fee they dictate. I predicted this would happen years ago. Altisource back in the last recession had a selling site and a closing company plus it used in-house contracts electronically.
All I see is that expanding.. no one will take buyers out for nothing.

First I was just curious - simply seeking an education
Second you just described many jobs in America some of which put their lives on the line