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.