I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quiet mediocre neighbourhoods. Then you’ve got Better, average sized homes in nicer neighbourhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Personally, I can connect to that. When I began working with a fiduciary financial counsellor, my advantages were certain. I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2021 this time with guidance, Long story short, its been 2years now and I’ve gained over a million dollars following guidance from my investment adviser.
This is huge! think you can point me towards the direction of your advisor? been looking at advisory management myself.. seeking ways to invest and make more money with the uncertainty in the economy.
‘’Aileen Gertrude Tippy’’ is the licensed advisor I use. Just search the name. You’d find her webpage and necessary details to work with to set up an appointment.
This is interesting and somewhat confusing because 20 years ago when I bought my house I was “required” to sign an agreement and told the commission percentage was basically nonnegotiable because all agents charged the same. I was also told not to offer anything lower than the asking price because it was such a hot market. To be fair that was at the beginning of the crazy market when lending institutions were basically throwing money at people and that didn’t work out so well for them and many buyers. It was also the only house that I had found, yes I, because I drove by it, saw the new sign in the yard and called my agent. I don’t remember now if I wrote a separate check or how it was paid. I was a single woman on the higher end of middle age and had never bought a house or been involved in the purchase of a house before. I don’t lie and trusted others to be honest too, especially if they were supposed to be working for me and on my behalf. It turned out to be a valuable and expensive lesson in several ways and one I haven’t forgotten.
Learned this expensive lesson myself with my neighbor of 25 years who is a Realtor. Since I was not married (divorced) she told me I couldn’t bring anyone with me to sign the documents and to trust her. I ended up paying her $43,000 or 6% on the sale of my home. She did everything possible to let me know she was the boss and knew better than me. I sold my home but was left homeless living in hotel’s for months. I’m still trying to heal from it. Don’t punish yourself for the past. Learn and move forward. Blessings to you!
"I was “required” to sign an agreement and told the commission percentage was basically nonnegotiable because all agents charged the same." A business has a right to make their own policy requiring you to sign documents before they work for you. You have the right to refuse, and they will tell you goodbye. The brokerage is free to negotiate, that doesn't mean that they HAVE to. You have the right to keep shopping around for another agent. "I was also told not to offer anything lower than the asking price because it was such a hot market." This is ADVICE. You as a buyer have the absolute right to offer below asking if you wish. The agent isn't your boss. Some agents will tell you this to coerce you into submitting an offer which is likely to get accepted so that they get paid. In many cases they're trying to close a deal, not save you money.
The agent that had been referred to me wanted me to sign the documents before he could work with me. I did not do that on the spot as he would’ve liked. I’m not the smartest tool in the shed and I am just thankful that I read and reread until I understood it and told him goodbye.
Agents are overpaid. Most buyers have already found their home,research the market, assessed rates, and know what they want. Agents process paper work and makes 5-6% of the value of an overpriced home. Maybe agents earned commission in the 70’s and 80’s but technology has changed everything and that earned commission doesn’t amount to the work agents are putting in.
I hear ya perspective...and you aren't wrong in some situations. There are agents that earn every penny of their commission....a lot do not. I always suggest any seller to interview at least 3 agents before hiring anyone (do research)...and negotiate commission/structures. As a home owner, you can always sell your house FSBO. I would just understand the pros and cons of doing so.
So true. The owner/broker used to be the listing agent obtaining comps by doing days of research at City Hall, the showing agent, the selling and closing agent. Now we have the internet with all that info at our fingertips. The owner/broker, listing agent, showing agent and selling/closing agent are all separate agents with a buyer’s agent thrown in and they all want a full months paycheck for doing 1/4 of the work. Biggest rip off “profession” (I use that word lightly), basically well-dressed pretty people pushing contracts across the table.
I asked my buyers agent how the settlement would affect things. She said the lawsuit was Totally bogus, commissions have always been totally negotiable. Later, in the conversation, I asked her what she would accept in terms of compensation. She said she was instructed by her broker, not to accept anything less than 2.5% For the buyers agent commission. So much for “totally negotiable”!
@@andreavandekleut6379 I thought about representing myself, but the reality is that not all of us have the knowledge or the personality to represent ourselves in such an important transaction.
Agents the majority are really immoral. The max charges should be no more than 1 percent. Mas 1.5 period. The buyer has to set the tone not the Agent. There are thousands who will take the 1% gladly. My broker sd BS is just that bs. Also never let the selling agent also be able to be the buying agent. I had a nightmare agent who held my property hostage until she could be both. Dirty and so corrupt. If you do your homework u don't need a agent. Seek a real estate attorney its cheaper.
Been following this story for a week or so. This is the best breakdown and explanation I have heard. Thanks for sharing your thoughts and knowledge on this subject.
Looking forward to paying 2% max in the future for selling any home. With online mls agents have not done much for me in my last 5 home purchases. Other than setting up a mls automatic emails. I did that myself with online searches, and would tell the realtor let’s see these homes. And I have been a better negotiator than the realtors that are usually talking to each other behind the scenes. There are lots of unethical realtors out there, just like any other profession.
I hear ya...unfortunately you're not wrong. There are a lot of good realtors out there. You just got to find them. You may want to watch this video I did on do I really need buyer's agents: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-VNLtxpHGNT8.htmlsi=lEDp1hVhiEpo5a3Z. If you are going to represent yourself, you may get some helpful tips.
I'm in CA, if you have time you may want to get your license it's super easy only 3 classes and you take a test. Most community colleges offer these classes. You will save yourself a lot of money, even if the only transaction is your own home. You can hire a real estate photographer, hire someone to paint the house and a stager for next to nothing in what you will pay in commissions.
@@AudraLambert Even the “good realtors” are only worth 1.5-2% total commission. Never the 5-6%. If they want the whole commission then they are going to have to work for it; Listing, Selling and Closing agent on the whole transaction. If they only want to do part of the transaction, then they only get a percentage of the 1.5-2% total commission. Going forward I see brokerages will try to keep the whole transaction in their brokerage and not piece meal it out to other brokerages. Keep all the commissions in-house.
ln my experience there's more shady realtors than most other professions have shady people. Realtors tend to conflict of interest and lie worse than most professions by far in my experience..
Another great quote in this video at 10:57 mark… “The buyer and seller are finally aware that they can negotiate those commissions. Ok, it’s kinda always been a secret thing.” You are literally admitting that the ability to negotiate commissions was kinda kept secret from the buyer and seller. That was a major premise of the lawsuit and you just said that it occurred. Crazy.
OKAY...as I stated in my video, the buyer's agent did not need to disclose to the buyer in the past what commission they were making...it wasn't a requirement. Now buyer agent commissions are published on most real estate websites. I have always been upfront with my sellers regarding why I charge what I do for my services. Where the commission game became a problem is some agents would tell their prospective clients that commissions were set (these agents were very upfront about that statement). What I think most seller's didn't know is that they could negotiate their commission...they assumed it was a set amount. That's where the problem lies.
@@AudraLambertThank you for your response. We are in agreement that one of the most egregious practices occurred when listing agents were presenting to their seller clients that the commission was set and not negotiable. I think this will be a learning experience for everyone.
If you are just a sheep and don't try and negotiate everything including brokers' fees, that's on you. If it's $10 mil property you are buying, don't you think there's wiggle room? Yes. $60k property? No fat on that bone.
I am 65 years old and I have bought and sold six homes. From my perspective the only thing these realtors represent, buyers or sellers, is themselves. The quicker they can get that home moved, the sooner they canSpend time on a new transaction, that’s making more money. It seems to me that a 6% commission is ridiculous also. What do they do to earn 6%? A lot of them on driving around in Lincolns, BMWs, and Cadillacs. What does that tell you?
Unfortunately, there is some truth to your statement. However, there are great agents out there that earn every bit of that commission. Unfortunately, there are a lot of agent out there that don't have the property education/skills earning commissions that are not in line with their performance.
Thank you for this information. It is very helpful. As you said, transparency is the key in any transaction. I never quite understood why a seller paid the buyer's agent a commission when in essence the buyer's agent is working against them so to speak. I appreciate all of the information you provide as well as your perspective.
This is a false statement. They do a lot. If you sit in a room with a true agent for a day you'll see that it's constant work even late nights. They have to do so much that the buyer or seller doesn't see to put out fires and negotiate terms and show property, write contracts and much more. They may work with a client for a year before they get paid from the sale. That's all of the costs of being a real estate agent. They have to pay for everything from the Brokers to their gas to show property. They have to pay for leads that aren't always good leads. They have to put together open houses and spend money to accommodate the guest. They have yo pay for their own marketing and they even have to win over a client because client is jump around between agents When they work for a month trying to get a home for a client, they find a house they like but the agent tells them what to do and they dont listen. They miss out on the house and the agent had to start over and it may take another month or 2 because they can't find a house that the owner likes again. Clients are so difficult and there are a lot of moving pieces. There are many things that can screw you when buying a home. it's the biggest purchase of most people's entire lives and it is easy for an uneducated person to get screwed. People get a professional to inform them on new HVAC system, 10-30 thousand dollars so why wouldn't you get a professional to help with 3-6 hundred thousand dollar investment that your going to pay on for half your life.
Audra, at 3:00, not sure about all states, but brokers have never been required to be part of an MLS. But they ARE required to be a member of the NAR to have access to the MLS, the data of which is given away the Zillows of the industry. Brilliant move! And why are commissions commensurate with property values for the agent services that are virtually identical for all residential properties? Using the example: $500k vs $5m property/$30,000 vs $300,000 total commissions respectively. What precisely are the agents doing differently to justify the additional $270,000 commission? Are there that many more documents? Does the escrow process cost more for the agents? Are they driving 10k+ miles to show homes?
Hello there. YOU ARE RIGHT...thanks for catching that!! Brokers are (proposed )not required to be members of NAR. Ugh..sorry about that. The premise behind commissions are based off of sale price is a few things: risk and liability is greater. It usually takes longer for higher priced home to sell than lower priced homes (more work)...except for the last 3 years lol. The homes I sell have have a broad price range $750k-$4m. The higher priced homes require a heck of a lot more prep, attention, knowledge and skill. NO LOCKBOX on higher priced homes. Higher priced home sellers usually will pay a higher fee for the highest quality realtor. Marketing materials and exposure is also more expensive. Also, the concession amounts on higher priced homes is usually greater than on lower priced homes (agents throw in commissions to assist with the transaction...no always, I know).
One other part driving a percentage is that in areas with $5m homes, the cost of everything is higher. The office will have higher rent or property taxes, accountants will be more expensive, and yes, Realtors will be more expensive. Do you want a Realtor who has always lived in apartments giving you advice on a $5 million purchase or sale? The Realtor may not be living in a $5 million house, but there probably are not any $300,000 houses anywhere in the area. To interest people to become and contribute bring a Realtor living in representative housing of the area, it has to be worth their time, as opposed to other occupations. You see what Audra is wearing, I doubt her clients would be impressed in the latest fashion found at Target. I'm not saying that the relationship is necessarily linear, but there will be a higher cost to get a quality Realtor in a higher cost of living area.
@@AudraLambertThanks for your response. I respectfully disagree with you on some issues: Risks and liability are not greater. Liability costs are fixed for an agent, limited to their brokers deductible. Brokers costs are fixed, limited to their E & O insurance premiums. But liability is zero if they do their jobs correctly. Off the top of my head I can't think of another industry in which the clients agree to spend huge sums of money in part because there's a possibility that their highest quality realtor might screw something up terribly. Longer to sell? More work? The principles of marketing properties in all price ranges are the same. And the vast majority of marketing is done automatically. You're not spending $20k-$30k on marketing materials and exposure. And you're certainly not stomping the pavement everyday marketing your listings. Most days are spent passively waiting for a showing request from the same digital exposure. Homes sold through anything other than this exposure are rare. Then at some point the seller offers a concession or price reduction if the property lingers. This exists in all price ranges. "Heck of a lot more prep, knowledge, attention, skill?" Those are assertions to justify inflated dollar value on commissions. Every moderately competent agent has the same skill sets for their respective markets. But you're doing nothing groundbreaking nor remarkable in yours. Explaining to the sellers how to prepare their homes takes less than a day. Let's call it two 8-hour days. Then most of the actual preparation is done by others. No lockbox? Fair enough. But driving to show your listing doesn't require a lot of skill or time to justify an additional $270k in my example. Concession amounts are usually greater because valuing custom homes is extremely subjective. You convince sellers their homes are valued at e.g. $5m. But if it doesn't sell they lower the price $200k-$300k. Doesn't seem to say much about the valuation skill sets of those same highest quality realtors you alluded to. Tradition is the only reason agents and brokers are defending the archaic commission structure. Now that buyers and sellers are educated on how the industry works, they're realizing they have other options. But the luxury market will likely not be affected nearly as much as homes in the lower value markets. The industry has been agent/broker centric for decades and is in need of changing. How it will end up is anyones guess. Appreciate you taking the time.
Yes, I live in Silicon Valley, I think you don't really need an agent here, but you need access to the MLS which you can't get without a license. People here generally know the value of the house based on location and school district. Agents are grossly overpaid for what they do in the Bay Area@@ThisIsTheMajor
@@RG-cz1tcIn my area the high end homes are not far from lesser expensive homes and agents will represent all, but the price spread is $800k to $2.5m. The more expensive homes do get more high end marketing and can take longer to sell. But higher end sellers can recognize that the costs do not scale in proportion to the value of a property and negotiate a flat rate or lower commission than the standard. You also want to get an experienced agent with good reach and savvy to find the buyer and negotiate a good deal for you. My agent has saved me a lot and shielded me from challenging buyers and sellers.
Not every buyer need buyers agent. Almost anyone can go to mls and look for homes in their desired area and see the sold houses data to compare. So buyers can save a lot of money.seller don’t need listing agent bcz they can put their own property on mls on a nominal fee. Looks like another mafia is going Down.
Every state is different. Real estate agents are governed by state statutes and administrative rules. Additionally, the mls’s have specific rules, and brokerage firms have different policies and practices. No two agents are alike. They have different levels of experience and background before becoming agents. Some specialize with different types of properties or specific neighborhoods. Now the buyers will paying their own brokers. My best advice is to interview three brokers. Be prepared with specific questions. A professional broker will also want to be a good match with you.
I recently bought a house. My wife haunted Zillow for weeks, only once was our Agent available to show the houses, mostly we just drove by or met the Sellers agents. We found one we liked, our Agent was not available except to give me the number of the escrow company. There was a little back and forth over the inspection, all handled by email. We closed without our Agent ever having seen the property. For which I presume she got 3%. Not sure how much liability I'm really incurring as the buyer, but since I have to hire the Inspector, and the Escrow Company, and my wife is doing the heavy looking .... what exactly do I need a Buyers Agent for at all? Or if I do need one to walk me through the process I'd a lot rather pay by the hour then a percentage of the purchase. I suspect there will soon be Buyers agents or Lawyers who are willing to do that
Hi Mike...first off, so sorry to hear about your experience. That is just awful!! I am primarily a listing agent. I can't tell you how many times I am doing the buyer's agents duties (because they aren't available or showing up). Often times, I don't even meet the buyer's agent. Now that is not the norm..but it does happen. There are a lot of changes out there right now. You get to negotiate the commission with your buyer. You can negotiate a base fee, hourly fee, a commission fee. A good buyer's agent is worth their weight in gold. Sounds like you weren't working with one.
Hi , Mike , I have same experience like you . I found the house on Redfin , went there to see multiple houses during the house hunting time . Agent never go with me . We found the house , close transaction in a month . They got easily 3 percent which was 50k at that time 😅 I don’t understand why. All they did was to help us put in an offer 😱
@@EmEmEm579 Remember, Redfin's agents are employees. They do not make commissions they may make some bonuses. You get what you pay for sometimes. Zillow can take up to 40% of their agent's commission. I am not a huge fan of Zillow and Redfin agents...only because they don't manage their business like a real business...they are running their business like they are employees...just showing up...looking at their app...following their marching orders. I am not saying their aren't good Zillow/Redfin agents out there...but if they are good, why are they working for another company who is gauging their commission. I don't get it. Most the on line agents from these types of companies are meeting their buyers at the property for the first time. Drives me nuts. I would highly suggest you interview 3 buyers agents before selecting one. Its important.
@@AudraLambert Hi, Audra, actually I wasn't working with a redfin or Zillow agent. I was unable to interview one. I was force to work with a "relative /friend". They know you are buying and want to represent you. But all they care about is to make quick money not truly helping you. . I closed two house in two month . We put offer in in one week . minimum work being done, agent walked away with big bucks (About 70 to 80k in commission). The house had so many issue (It past inspection but a whole underground 10ft pipe missing!) I was so angry. Agent don't care, they got the money and moved on to next transaction .... Thanks for listening ...
@@EmEmEm579 Oh..that's just terrible. I am also not a fan of hiring a relative/friend. Creates way too much drama.Truly sorry for your experience. That is a lot of money in commissions...did they offer to pay for the whole underground 10ft pipe that was missing? If not, I'd ask. That is not cool!! Always good to hire a pro...and order that sewer line inspection. Ugh. So sorry.
I had an agent (friend) many years ago say in a booming market, “I don’t negotiate my commission because there’s high demand for my services.” Then when the market went down he said that times were tough and he wouldn’t lower rates because he need the money (paraphrasing). Sure seemed fishy to me. I was too young to know better then. And still, having lived in Silicon Valley with outrageous housing costs, the realtors didn’t have to negotiate. Sigh.
If they see that you'll walk away from a signing with them, they'll lower their commission rate. I saw it happen when we interviewed three agents and sold a condo in San Jose near Milpitas way back in 1997. When we told one agent that we were going with somebody else, he offered a commission reduction to win us back. Please keep in mind that this was at a time when the market in north San Jose was very hot. We received a massive amount of offers and sold it to the highest bidder.
Audra, you are obviously a top selling agent for a reason. You have a ton of knowledge, like the warranty insurance, which I have never heard mentioned by any other agent. Also the fact that you stage for your clients. I would have no problem paying an agent like you a higher commission. Another awesome video.
We've used a buyers agent 3 times. The first 2 times, I was surprised they even made $500 off the deal. WE did all the legwork. The 3rd time we did as well. No buyer's agent found the property. However, the third time is a charm. Our agent got us access ahead of showing and helped us undercut the best offer. Could I have done the same myself? Probably. But who cares, the seller was paying. However, this new ruling. Maybe, finally, As a future seller of property #2. I'll get the benefit of a lower commission.
Thanks for sharing. Commissions aren't set...they are negotiable...even today. There are some great realtors out there...and some not so much. The realtors that negotiate down their commission too quickly may do the same when it comes to selling your home...or may not negotiate enough on the purchase side. Really be selective on who you hire...it really does matter. OR find someone who will do it cheap and you can tell them what so say...lol.
Perhaps...but I am never selling my house...I have a 3% mortgage rate. Most homeowner aren't selling because they love their mortgage rate...not necessarily because they can make more money. Heck, if they sell, their profits get eaten up from capital gains tax. Its a pity.
Audra, Thanks for your take on what is going on. I do think that we will see many part time agents leave the profession. This is probably a good thing and could be an opportunity for other agents to have more volume. What I would like to see as a seller is more agents listing services ala carte….like photography, staging, private showings and open houses etc. I’m not in this field, but in labor/legal issues with HR. My husband and I understand all the processes to buy and sell real estate. We have been on both sides with and without agents, but we do always use our real estate attorney. I think that all involved in the transaction should know all the fees, commissions, and or concessions. Do you have any opinions that you would like to share about the necessary contract with a buyers agent? Since it seems that they will no longer be compensated at the closing table, what if their buyer/client fails to pay them? Does the brokerage sue the buyer/client for the money? How will selling agents handle open house going forward? I think that this solves some problems and maybe creates different problems. 😂
You make very good points. To be honest, we are working out the details every day. In the California Real Estate Buyer Broker form, the buyer and buyer's agent can decide how they are paid. We have escrow in California so the payment can be processed through escrow. If the buyer does not agree to pay the commission through escrow, its a trust thing. The contracts are always between the Broker and the principle. The broker would go after the buyer's agent if they refused to pay. It does create different problems. I am sure that the listing agents would have a blank buyer/broker forms available to fill out for buyers who want to make offer on the house who do not have representation. I bet you will see a lot of hard copy buyer/broker agreements out there using ink not Docusign. Nuts!
This is an excellent explanation of this commission issue that has now become a part of legal contention. As you intimated, we mustn't lose sight of where the money for the transaction comes from and how it will be distributed. I like the term "concession in escrow" you used, because that really tells you where the action takes place. Selection of a really good escrow company is extremely important, but the escrow instructions to be carried out are drawn from the purchase agreement. Pay special attention to the purchase agreement and be certain you can live with its terms. I fully expect a flood of sellers and buyers who will think they now have the power by court order to low ball agents on commissions. That would be a big mistake. Understanding how to arrive at a fair commission for all parties involved in the sale for services provided must be the goal. Have you done a video on how to choose an escrow company and what are fair fees for an escrow company?
Okay..you get 5 stars for that comment. COULD NOT AGREE MORE WITH YOUR STATEMENT! Well said. Thank you!! I have not done a video on how to select escrow companies...its on my list. That is a very very good topic as well. Really appreciate your comment.
You're welcome! I always enjoy watching your videos, Audra. You get me to think. I look forward to your next video, be it on escrow companies or something else.👍👍👍 @@AudraLambert
Keep in mind, the buyer and seller has a right to pick their own escrow, however, it will be costly to each if they are different escrow companies. Again, a buyers agent would help negotiate with the seller to use your escrow company! I think if I were a buyer, I'd look for the most experienced agents as opposed to the cheapest agents. Good luck getting rid of a bad agent, once you sign a contract. Most agents willing to work for below fair commission wages will be a challenging agent to work for. They will be focused on quantity and not quality!
When we bought our current home the agent really did not listen to us. We ended up searching MLS to tell her the houses we wanted to see. Anytime she took us to a house she chose, it was not in the area we told her we were interested in. If fact, she did not show us some houses we requested because she said they were pending, when if fact, they weren’t. She lied to us and still got paid a ton of money.
I think a lot of consumers are really angry about paying high commission to agents that didn't serve them well. I don't think this settlement is going to devastate our industry. However, if you are readying the comments on this video..WOWZIE! We have angry consumers. I do think the industry should do a better job of producing high quality, professional agents. Really appreciate your comment.
In my opinion this should have happened decades ago....why should the seller pay for everything. Buyer and seller should pay there own costs. Good explanation by the way.
@@AudraLambert One other question comes to mind what if the buyer sees a for sale sign and calls the listing office does the buyer have to sign an agreement with the listing office to see the property? I am thinking yes under this new arrangement?
I can see how seller agents put work into selling a house. A seller agent’s best interest aligned with the seller’s. But if buyer agents commission is based on a percentage of the sales price, wouldn’t that be a conflict of interest to whom they represent?
Great point! And yes, you are right. However, most buyer's agents aren't going to negotiate the sales price up just to get the highest commission possible...they are more concerned about just getting paid...even if its a bit less, they still would rather get paid. All realtor's don't get paid until they close a deal. Their motivation is to get paid! That also has a conflict of interest attached to it...indirectly.
Love all your videos Audra. Thank you for all the information. As a buyer, if I choose to go directly to the seller’s agent and not utilize as Buyers Agent, will I need to sign the Buyers Agreement with the listing brokerage? If so, will they charge fees? Thanks again for all the effort you put into your videos….and you are Funny 🙂
Glad you think I am funny!!! Yes, you would need to sign a buyer/broker agreement if you went directly to the listing agent..BUT...you could negotiated the commissions with them. I always write into my listing contract that if I represent both sides of a transaction, I reduce my commission by 1% or more depending on the price of the home. I let the buyer's know my agreement with the seller if they wanted to use me as their buyer representation...the commission would then be processed through the transaction. Hope that help.
I think I got bamboozled, I signed in a rush, an agreement 6% for 6 mos. I ended up splitting the property acres and sold the raw land but not house acres. I questioned the way the buyers agent got paid and she said she split her commission with the buyers agent. I asked didn't the buyer pay for her own agents commission and she said no, she was paying from her commission. So 3% each. I didn't know all of this three months ago, my fault. I do now! I'm thinking of taking my home off market and renting. Thanks for the awesome content, I'm learning a lot!
Audra, you make fantastic videos! Thank you for the information you provide. My husband and I are planning to list our home within the next two months. We interviewed a couple different realtors three weeks ago. I just had a Zoom call with one of them, and asked whether it would be possible to offer a "negotiable" buyer's agent commission (in other words, when the buyer makes an offer on the house, we'll let them specify what percentage should be paid to their agent). The realtor told me they no longer are interested in working with us as clients and practically hung up on us!
Well, it sounds like you shouldn't hire that agent...lol! The answer of course is YES you can. A lot of the agents out there are still adjusting to the changes. You'll find the right agent for you...they will work with you. Its good you are weeding out the bad ones. Best of luck to you...you'll do great. Thanks for watching my videos.
Sellers agent can open the door. My theory as to why this came about is due to bidding wars, cash buyers, and pricing average buyers out of the market. So, after bidding on 40 homes and no closed deal, buyers agents want to be paid whether there’s a deal or not. Hire an attorney. Now you’re legally represented.
Well..I am not disagreeing with you...but what do attorneys know about real estate? I have sold and bought properties with attorneys as my clients...they had NO IDEA what they were doing...they honestly didn't really understand the contract either. Just something to think about.
Thanks for saying the truth out loud! Negotiating commissions was a tightly kept secret. Agents have been known to say things like "My office practices industry standard of 6% - you'll have to use a discount broker to pay less." As a seller I would prefer to offer a Buyer concession rather than pay a Buyers agent to negotiate against me. As a Buyer I have no problem paying a Buyers agent for services outlined in a contract. I appreciate your tip about signing the Buyer/Broker agreement for a single property, rather than an allotted length of time. This lawsuit and NAR settlement has educated consumers and eventually everyone will be the better for it. Thank you for another informative video👍
so , If i represent myself , ( no buyers agent in the deal) . will the seller/ sellers agent now NOT show us any properties? i realize all things we need to do on our own. Bbut the main question is the same will the seller not show any properties now , eventhough we or I represent ourself? there is no law against being my own buyer representative, as far as i can remember.
So the problem lies with how are you as the buyer going to make a formal offer? What contract are you going to write your offer on? If you just pull up a form on line and fill out a few blank spaces and present it to the seller, they may say NO WAY! I know I would. Your state's purchase agreements are solid. They are tried and true and have every provision thought of in their contracts. Even if you were to get ahold of one of these contracts (which usually has an agent's name at the bottom of the form), there are other forms that are required to close the transaction...which you do not have access to if you are not a realtor). You may find a seller that would entertain an offer like this...but if the seller has an agent they are working with, probably not. Only because you don't have the proper forms and knowledge on what those forms mean. There is literally about 100+ forms we fill out for the buyer and seller to protect each party. A buyer doesn't need to have representation...but the seller can refuse to work with you.
Great video. I think these potential changes will also encourage buyers to consider taking a real estate class/get licensed. Not only can you represent yourself or "refer yourself" and earn a commission if you have a real estate license, but they'll also be able to follow along with the transaction more confidently so they can feel confident with the process.
Hello there! Buying a house sounds easy....but its the details that are very important. I would just do your due diligence...make sure you know what you are buying and signing. Most people do not. Best of luck to you.
Audra, you are fabulous. I've been a mortgage LO for over 20 years. Big difference between commission and concession for buyer. Seller concessions are limited by program and LTV so if a large chunk is going for commission, that may not leave enough for fixed and % closing costs. Please realize that if you are in a lower priced market than CA, it makes a difference % wise. 3% of $350,000 is very different than 3% of $2,000,000. Also changing the price to cover commission affects appraisal and down payment requirements, and the buyer, who requires a mortgage, doesn't get the funds required to pay the commission out of pocket. You end up with a higher priced home with potentially higher insurance and property taxes. Unless you are a cash buyer or have deep pockets, you are not benefitting from paying a higher price to have your commissions paid. Additionally, many agents are required to charge a brokerage fee on top of commission for both sides, which drive buyers and sellers crazy when they see the CD and they are listed below the sales commission. Basic insult to injury. BTW, go easy on the mortgage industry. Just like in RE, there are good ones and bad. I can't tell you how many times I had to train RE agents or deal with non-compliant clients.
Hi Jennifer, thanks for you comment. Trust me there are some great lenders and realtors out there. My beef with the lending industry is that the loan officer really can't effect the loan approval process...but most consumers think they can. Its the underwriting department who makes those decisions. I just finally closed on a transaction for a buyer where the lender was making all these unrealistic promises...of course they did not have the authority to do so. The day of closing, the lender couldn't close. Buyers were in a moving truck for a week. Good gracious. The requirements/restrictions on loans are getting tougher and tougher....and I still can't believe it takes 17 days for receive loan approval with conditions...and you still don't know if those conditions are going to get approved. You never know if a loan is going to fund until it does. That's no fault of the loan officer...just the process. Regarding the Concessions, I would bet the guidelines would have to increase regarding concession limits. There are going to be a lot of changes across various industries who are related to real estate. I do agree with the LTV values being tighter on a lower valued home. Really appreciate your comment!! Thanks for sharing. your perspective.
Yes, Audra, you are SUPERIOR indeed, with the HIGHEST ETHICS I've ever seen in this profession. I've seen realtors take buyers into a home and then just let them walk around un-escorted, never explaining anything....what a poor representation of an industry that deserves more professionalism. Not sure, just a feeling.....I think that here in Florida, there is an extremely tight-knit community within this profession.
HI Flo, thank you so much for your kind comment. I do know there are a lot of tight. knit communities in some areas. Thanks for your continued support.
EXACTLY!! They are still working out the details. I would assume the local real estate associations would be auditing the files. The brokers would also be required to document the buyer/broker agreements. Great question. Thanks for commenting.
Is it legal to tell my buyer agent, "your commission is 1/2 of what you negotiate off the house listed price". Now the buyer agent can point out flaws in the property to convince the seller to lower the price, "Now that the failing septic system is known, you can't pretend you didn't know about it if you try to get another buyer. You need to lower the price to compensate the buyer for repairs"
Hello there, remember the buyer's agent doesn't work for you. The buyer's agent works for the buyer. When you are giving a commission (posting on MLS) to the buyer's agent (currently) you as the seller do not get to negotiate the commission with the buyer's agent. Now you can put no commission in MLS and try to negotiate with the buyer...however, the seller and the buyer's agent don't negotiate. You could always offer a concession amount to the buyer and tell the buyer this is all I am giving you to cover repairs and your commissions. That is the way it looks to be trending.
Great video From a VA buyer perspective, this seems like a bad outcome. Before this, the commission would most likely have been covered plus still get concession for closing costs or am I misunderstanding? Sachs Realty and Real Estate Mindset also good
Yes, you are right. However, remember you can always negotiate with the seller concession amounts. Before it was very difficult to negotiate your buyer's agent's commission if you were buyer. Now you can hire a buyer's agent at whatever a buyer's agent is willing to be hired for. The seller concessions can assist with covering your buyer's commission and any additional repairs. If the seller isn't offering concessions, you can alway request it in the offer. If the seller won't work with you on your offer price and details...go find another house. The key to this settlement is negotiations are at play way more than they were before. Find a good agent who can negotiate for you.
8:10, Audra, you state, "we're already doing that right now." This is because you were forced into doing go. Perhaps the outlier agents practiced this. But it has never been standard practice. I'll try this for a third time. Before this lawsuit and since you've been an agent have you always advised your BUYERS prior to or anytime during escrow that they can negotiate with you the commission you're being paid by the seller's broker?
I'm confused. As a buyer, I have never paid any agent anything. The seller paid out any commissions to both the listing agent and the buyers agent if it was different. If am going to be forced to sign a contract and pay an agent to find me a house, I'll just work alone. This sounds like expenses that would be tough to calculate. I looked at 100 homex with my last purchase.
You got that right! I think a lot of buyers will take that same approach. Just remember dual agency isn't allowed in every state. You. may want to watch this video on the topic: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_ASlo5X4lAk.htmlsi=UTXfIVntYYHme8BJ.
Whoa. I have the luxury of delaying the sale of my home. I was going to sell it but I've decided not to sell. I am reluctant to rely on any real estate agent. There are too many who are not ethical. As a consumer, I am responsible to do my due diligence. I can see in past negotiations, my realtor was not honest with me. I didn't do my homework to know any better. It's like the clerk who hands you the food at drive in fast food asking for a tip. NO THANK YOU. It is beyond time to say no.
This deal is done ! The NAR had to settle. If they did not and the court found conspiracy then the NAR would have been liable for treble damages, effectively driving the NAR into oblivion. I can tell you that in the course of buying and selling my primary residences the Realtors always implied that commissions were set by law. The Realtor cartel is finally over !
I’m so new to all of this. If I put my house for sale right now, will I be paying the buyer commission? Did that change in January and if so then my agent will only get around 3% unless I decide to make any concessions? Would it be beneficial to wait for a decision on this topic?
I can answer that for you. None of these proposed changes will take affect until at least July. And this assumes that the proposed settlement is approved by the court. You should list your house now if you want to sell your house now. It is in your best interest to incentivize buyer agents to bring buyers to your house. You will get more offers and probably a higher price.
Hello there! Great question. First off, you are not required to pay anyone anything unless you want to hire an agent to sell your home. You can sell your house yourself. Lots of people do it everyday. Just want to make that clear. If you decide to hire a listing agent, you will want to negotiate with them their listing fees..ask them what they are offering for their services. As a seller, you can offer a commission to the buyer's agent now..or not. If you do not offer a buyer's agent commission, the buyer may ask you to assist with their buyer's agent commission..you can always say no. The key here is you have the ability to negotiate. I wouldn't hold off on selling your home waiting for a settlement to clear. You never know what may or may not happen. If now makes sense for you to sell, then sell. Agent commissions aren't set...so I cannot tell you if 3% is the norm. However, I can tell you that a 3% listing commission is a lot...the listing agent should be doing a lot for a 3% commission...make sure you ask them what's included in their commission. Interview at list 3 agents for the job..you'll thank me later.
@@Starfish2145This is mostly bad advice. Buyers are finding the homes they want online, and they didn't particularly care how much their buyers broker is getting. How long would a buyers broker last when they decline to show an interested buyer a house because it only offers 2% to the buyers agent? Still, buyers are frequently strapped for cash and buying something at the top of what they can afford. To not offer some concession to those buyers will eliminate the people right at the edge of affordability, and people who can afford more are probably looking at more expensive houses. The buyer and their agent will need to have a serious discussion if a property offers a 2% concession, but they signed a 3% buyer's agent commission, and the buyer can't afford it. Will the buyer's agent drop their commission, or will they lose all of the commission if the deal doesn't go through. Or, the buyer could propose a 3% concession and leave it up to the seller to decide what to do. This is bound to make for difficult negotiations between buyer, seller, agents and brokers.
@@AudraLambert does the buyer really need his or her own realtor/agent and if so, can the sellers agent also be the buyers agent? And if that is the case, what are the pitfalls for the buyer? Thanks for your time.
@@bobwilliams3502 Hi Bob, every state is different regarding dual agency (listing agent representing both the buyer and seller). You may want to watch this video on the topic: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_ASlo5X4lAk.htmlsi=UTXfIVntYYHme8BJ. The problem with the buyer not having representation is that they do not have the forms and the knowledge to complete the transaction. I will reduce my commission if I represent both the buyer and seller. It makes it financially beneficial for the seller...and the buyer is directed through the process with the correct representation/guidance. Thanks for your question.
I'm seriously interested in knowing why years ago the realtor fees were split between the buyer and seller. Why does the seller pay all the realestate fees?
@pamr.3723. It's all semantics. Ultimately the Buyer pays for everything. The closing costs, commissions, taxes, other nonsense are all extricated from the Seller's cut at closing. That whole regime is made more arcane by this proposal.
@@LABoyko Semantics? Tell that to the seller whose net worth dropped by the amount he paid in commission. When the buyer pays his portion of the commission I don’t think he’ll conclude it’s only a matter of semantics.
@@KAZHE63real estate agents scream to the roof tops and hundreds of videos are probably being removed right now, that say exactly what they have been saying for years….”you should hire a buyer agent because it doesn’t cost a thing, and why pass up representation when it’s 100% paid by the seller?” Now all of a sudden they want to change their tune and start saying the buyers were always paying for it. Can’t have your cake and eat it too. The problem with telling everyone your service is free is that no one values it. Realtors have made their bed due to resistance to change….time to sleep in it a while.
@Audra. Three questions as potential seller that I ask you respond to. 1. Are terms Listing Fee and Commission the same, and only apply if the house sells? 2. Are virtual staging and drone coverage prepaid or paid only if house sells. 3. Without fogging into the "well, that depends on this and on that" responses, what percent range would an experience realtor such as yourself charge for Listing or Commission for SFR around $500k with pool? And Virtual staging and drones? Robert P.
@2023Red. You are the one with the asset. You hold the advantage in any negotiation with anyone. You aren't pre-paying for a damn thing. Listing fees, drone shots, staging, all that crap comes out of their commission and they don't get paid until closing. RE agents need you a lot more than you need them. Never forget that.
Hello there! Answer #1: In the California purchase agreement we use the terminology "Compensation for services" to designate commission. Not sure where you live..you'd have to check with your agent. Listing Fee and Commissions can be used interchangeably BUT...Trust but verify. See it in writing and make sure you know what you are signing. Answer #2: I pay for all my marketing, drones photos, staging upfront at no cost to seller EVEN if I don't sell the property. That should be a service your agent covers. If they don't, run for the hills. They are making a lot of money...they should cover this. As agents we are in a high risk/high reward model. Answer #3: For my full service I charge 2.5%..HOWEVER, if the price point is significantly higher I may charge a 2% commission. I don't want to gauge my clients...but also want to be fairly compensated for my services. If I have a seller that does not want my full service (wants lockbox, a few photos, no open houses, no marketing), I may charge a 1.5% commission....Really depends (thought you'd like that last statement.). Let me know if you have any other questions Robert P. Have a lovely day.
Thanks for the comment. The settlement is a 4 year payout. The terms of the settlement I believe are set in place moving forward. We are still in the settlement stages...lets see what happens in July.
Thank you so much for this video- i’m extremely interested in the part where you mention about MLS’s and no longer mandatory membership for brokers Can you please go into more detail on that?
Yes! Brokers are not required to be a member of NAR...even today without the lawsuits even being finalized. I believe I said they don't have to be members of the MLS..which they don't today either. However, if the brokers are apart of NAR then they are covered under the settlement for any further lawsuits (if its settles). A broker doesn't have to be apart of MLS..but it a bit difficult to sell properties if you are not participating in MLS.
The NAR Settlement requires Cooperating Broker Compensation to be off-MLS. Some states have multiple types of agency; not just Buyer Agency Compensation.
Wait... did Audra say the buyers agents were established back in the day to protect the buyer? That does not comport to my experience where I had to sign documents that said I understood that the buyers agent is paid by the seller and is therefore a representative of the seller... and has no reason to fairly treat the buyer. These changes are a good thing in my opinion.
Hello there, not sure how it works in other states, but both the buyer and seller sign representation agreements stating they are acting on behalf of the client they are representing in California. The buyer should be protected through this process. Its an important decision...they need not be taken advantage of.
@@JoeKubinec Hello again...yes, I don't know much about real estate in Maryland...other than its beautiful out here. Have a good day and glad I could help.
Will a buyer/broker agreement requirement limit viewings and deter bidding wars, multiple offers, and wasted time viewing properties? How does it affect open house?
Well, we've been using this buyer/broker agreement since the beginning of the year. It doesn't appear to limit bidding wars, multiple offers etc. If I had to guess, at open houses the listing agent would have buyer/broker agreements printed out at an open house ready to fill out if a buyer wanted them to represent them in a sale. We are still navigating through the process.
It may end up where there are concessions listed in the MLS "broker notes" which can be used to pay the buyer's agent, but there's another possibility. Up utill now, the only way a buyer's agent got paid was through escrow, and the fee was determined by the seller. This required buyer's agents to show countless homes for FREE, until there was an actual closed sale. Many "buyers" think nothing of wasting an agent's time looking at homes for fun, just to kill a weekend. I watched it happen selling my own house recently. I'd like to see a model evolve where buyer's agents charged per showing with maybe a 2% commission paid at closing by the buyer. That would kill off a lot of time-wasting fake buyers and also make sure that buyer's agents were never wasting their time showing homes to people who never end up actually buying.
Great comment!! Really appreciate your perspective. You aren't wrong. I am primarily a listing agent. When I do take on buyers I let them know I am in the business of selling homes...not showing homes. If they are serious, then I will work for them and give it my all. If not, I am out. I am fortunate that I have earned the respect of my clients due to my past history/reputation in the business... but most agents don't. I can usually tell right away if someone is serious or not...its something I can read right away. Less experienced agents may not pick up on the non-serious buy signs...or may be in a position where they feel desperate and are hanging on to every last crumb. My recommendation for any agent out there is find the motivation of the buyer....its very telling.
I see the value of an well connected agent. I bought my current home before it hit the market years back. Not sure how much I paid for the buyer agent but it worth every penny of it. (not 3%, I dont think)
Finding the right agent is extremely important. If you find the right agent, they are your lifetime agent. Now the buyer can look up the buyer's agent commissions...sounds like you weren't sure what they were getting paid. So glad you had a good agent to represent you.
So, if someone is out there today with a "Buyer's Agent" and are made to sign that agreement, agreeing to PAY the Buyer's Agent to represent them...I want to know wht happens on MY end as a seller of the property, who already agreed to pay their agent 3%.....In other words, how is my contract with my listing agent changed?
Okay...remember this is just a proposed settlement so nothing has changed yet. If you already signed a listing agreement and your property is online with the commission amounts posted in MLS, you can always ask the listing agent to adjust the commission structure (there would need to be an addendum created). If you accepted an offer already, then the buyer's agent's commission is to be paid at the agreed upon amount. A buyer can always request the seller to offer concessions amounts to the buyer to cover certain costs: closing costs, repairs, commission. The seller doesn't have to agree..but the buyer can always go find another house. If you do not offer a commission to the buyer's agent, the buyer may request that you assist with covering their commissions via a concession agreement. Once again, you can always say no. The listing contract has not changed YET..but you can modify the terms in you are not under contract.
The concession limits are rather high currently...also, the government may increase those limits due to the new changes. We are still is in the proposed stages. There is a lot of details that still needs to work out.
What about Open Houses, where the buyer encounters the seller’s agent? If the buyer walked in & already saw the house, the seller’s agent, who might be a Transaction Agent, wouldn’t have already had the contract signed by the buyer. What a conundrum!
That's your opinion..just giving my opinion. I am navigating with buyers and sellers right now having to explain it to them...making offers/accepting offers. Some of this isn't about research its about experience.
@@AudraLambert it isn’t about opinion it’s about fact, and your facts are wrong. Your experience should express the importance of research so that you can provide accurate information. Experience is not exclusive to transactions, it involves education, research, and proper implementation of all. also am experienced (25+ years full time) and am navigating transactions as well -
DOJ sees money and wants it. That's been their M.O. for the last 3 years. I wouldn't settle with these thugs. I signed a buyer's agreement 30 years ago. Your videos are great.
Yes, its a huge concern. There are going to be sellers who work with you on the buyer's agent commissions and some sellers that won't. Buyer are having to come up with a lot of money upfront. This is just another cost they have to occur. I think most first time home buyers are going to have to ask the seller to assist with their buyer's agent's commission.
So if I sell my house for $1mil, then id it reasonable to give 15K to my realtor and 15K to buyer's realtor? Yes, the seller is me still paying for both sides, which total 30K (3%), instead of 6%.
Hello there James, you can offer whatever commission or no commission you like. You have to find someone to work with you on the listing for that amount...and the buyer may ask for more commission to offset their cost for their representation through their offer..but its a free world..lol. Always has been, you probably just didn't know you could negotiate commission. If I am offering my full services to you, I wouldn't agree to the $15K commission on the listing side. I usually put $6-7K..even more in some circumstances..wouldn't make sense for me ( I have other holding cost I incur as well) But if you told me you didn't want great photos, were good with a lockbox, no open houses, and required very little marketing, I may consider it...especially if your house was in good shape and you were fair on your asking price. It really depends on the services you want on your property and if someone is willing to work for that:) Best of luck.
This is malarkey! There is no way I’m signing a BBA. The “buyer’s agent” will have ZERO incentive to get seller to chip in now. And sellers are not lowering their already ridiculously over-priced structures prices. I don’t have time to go sign a new agreement for each house I view, and likewise- I’m not signing a 30-90 day commitment to buyer’s agent. VA buyers are not allowed to pay for these things!
Well if the settlement gets approved, I promise you the VA rules will have to change too. I hear you regarding not wanting to sign a bunch of buyer/broker agreements. I am just trying to protect you not being roped into a long term contract with a buyer's agent who may not be great. I agree the process is a bunch of Malarkey...but it is what it is unfortunately.
What I find ironic about this whole thing is that ultimately ALL of the money is coming from the Buyer in the first place?! The Seller is not actually paying anything. All closing costs, including transfer fees, commissions, etc are subtracted from the money paid by the BUYER! Tomato, tomauto!
Great post. Partially tomato/tomauto, partially tomato/watermelon. What is disingenuous is that brokers/agents claim that sellers AND buyers have always known that commissions are negotiable. Partially true. Most sellers know this. But buyers agents almost never tell their buyers that they can negotiate their commissions down. Audra is clearly a top tier agent of the highest caliber. But I've asked her if she tells her buyers that her commission is negotiable. If so, has she done so since she's had her license? And does she do so with every buyer? She doesn't respond.
Wrong. The money is coming from the buyer in trade for a huge asset, a home. It becomes the sellers money at that point. And too much money was coming out of the sellers pocket at closing for commissions. This opinion sounds like another bias realtor talking point. Do you ever sell anything of yours and say it still belongs to the buyer? No you don't. It's the sellers money when commissions are paid. The seller could just go find another buyer. Just like the buyer can go find another home. Realtors all use the same lame talking points that they are trained to say in their meetings..
Excellent explanation of how we got here. Ultimately having the buyer, who in the end, let's face it, is putting up the cash to pay for everything in the sale, have transparent bargaining power over their own agent should make for a more efficient marketplace, but no doubt that will take some time. I can imagine at some point in the future a buyer will pay a base amount to their agent whether they ultimately make a purchase or not, which seems fair given the amount of time and energy agents must put into the search.
Well, that's the problem...commissions aren't set. That's what the main elements of the lawsuit specifies: No fix commissions. I do think the buyer is the one who is effected the most. Its a pity.
@@AudraLambert The industry (including NAR and MLS) has long known price fixing is illegal. I’m amazed they got themselves into this situation. There should be no set commission and every consumer should be educated that they can negotiate. And equally as important, individual agents need to change their long held beliefs that they are worth excessive commissions. If the agent is walking away from the closing table with an excessive check and a smile on their face, they are the problem.
If you're so smart, why would I bother and write up a contact if I'm not even sure if I'm going to get paid! What's going to happen is companies like Zillow that have big money and offer buyers 1%! Thanks for taking away our commission for paying our NAR, CAR, MLS, Supra key dues! Not to mention revewing our license. Who would ever want to be a Realtor!! I'm a listing agent, but I'm smart enough to see the value of a buyers agent! They close the transaction for the seller! What a mess our industry has become! Nice to find out NAR was getting a kickback from MLS on our backs! I'm disgusted with our industry and how they take, take, and take from Realtors!
Well, I do agree that everyone wants a part of our commissions as a realtor.The problem with our industry is we do have a lot of terrible agents out there...its just a fact. Half the problem out there is that we have consumers paying a lot money for inferior service. NOT ALWAYS. I believe the good agents rise to the top...but I do think our industry should put a focus on producing the best agent out there (which it is not). I promise you that 80% or more of the agent out there still don't know how to write a contract nor could they explain the details to their client about what they are signing. That is a disservice. A good buyer's agent is an amazing experience. Unfortunately, the bad ones have given the industry a bad name. It truly is unfortunate. Let's also not forget most the top named brokers out there are taking 20-30% of agents commissions. That's a lot!!
Thanks. Good job. I'm an appraiser, and the "media" rarely helps. But wait, aren't you the media? ;-) Now, what am I going to do about these so-called concessions?
Hello Christopher the appraiser! Thanks so much for your comment. I am laughing about the concession comment...in your business that is a big deal. Never even thought of that! Your job just got harder!!!
@@AudraLambert FHA is saying, "No worries." "Since its announcement, FHA has received questions from its stakeholders regarding how the proposed settlement agreement will affect the treatment of seller-paid buyer real estate broker fees in transactions using FHA-insured mortgage financing. Under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a manner of state and local law or custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met." FHA INFO 2024-12 March 28, 2024.
If this settlement is approved, then Buyer's agents will be disrupted and I believe an a la carte menu will appeal to buyers. You show me X number of homes for $X with multiple tiers. Most people tell their agent the homes they want to visit. Next, contract review and advisement (explain in laymen's terms) $250-$350 for this service. Schedule the home inspector, $50. I see the two models evolving, one a low-cost a la carte item to show sellers that they won't have to pay for realtor fees because they have paid for the services, or they could ask for the $1,500 in fess as a concession. Next is a white glove agent that spells out the 3% commission and if they select a home that does not pay the 3% fee, the buyer will pay the fee or make up the difference that is being offered.
Hello there, you may be right. I think what no one is talking about is the risk the buyer's agent is taking one. Its not just about showing properties and doing inspections...its knowing what the heck the buyer is signing and the risk they are taking by not having an experienced agent to guide them. Just because there is an inspection completed, doesn't mean that more should be performed. Also, who's doing the inspection? You pay an attorney to read and create documents to protect in various situations. In my area, that is what the buyer's agent is doing for the buyer. However, I do know a lot of buyer's agents who aren't that good. The flat fee might make sense for some. In some cases, you get what you pay for.
There is growing concern about squatters taking over homes listed and vacant. What are the MLS, and ALL real estate Apps doing to protect listing information and WHO is viewing homes or rental properties. They need to have security! No one can leave their homes now for fear squatters will come in destroy staging and homes, and cost months of litigation for evictions or even oust real residence from their homes. This is a huge growing crisis! What is being done by the real estate industry (and the state of Ca DRE which you can’t count on) to combat this?
Great question. First off, I hear your concern and agree its a huge problem. Realtors are in the business to sell /buy homes. As a homeowner its your burden to protect your home. I know that was harsh..but you know I am being honest. If you want to put your house on the market vacant, then maybe you don't show vacant pictures. There is nothing we can do to stop the reach the MLS has....its a curse and a blessing. At a minimum, I would put up cameras and have neighbors check in on the property and/or your realtor. You can also invest in virtual staging so the house looks occupied. We have no rights to your property so there is little we can do to protect against anyone squatting on your property. Home ownership does have its risks. It is a huge problem. Wish there was a better solution.
@@AudraLambert That is a caring concerned response. I’ve had realtors say they could sell my home if I left. Further, I’ve seen on the news beautifully staged homes destroyed in Beverly Hills by squatters saying they had a phoney lease. I don’t think it is wise for realtors to suggest to homeowners that they can leave and safely sell their home. Cameras can be taken down and destroyed. Patrolled services may be a viable solution, but in these times, owners should stay on their property until sold, and visitors should be escorted through a viewing without phones and with liability waivers. There is just too much money at stake for homeowners to do otherwise. DRE needs to get on this growing problem and express their duties and homeowners duties more clearly. This will impact the Real Estate industry negatively among the many other blows it’s been taking of late. Thank you for your thoughtful and intelligent response.
@@kerrym5424 You are very welcome...and you are not wrong with your perspective. I do think its is our responsibility as agents to express the risks of selling a home vacant. Very good point. I think I am going to do a video on this subject. People need to be aware of this..thanks for the inspiration.
I’m curious if the lawyer only charged 3% for his services I hope he didn’t make more money than that. I am sure he wouldn’t want to charge more money. 💰
Hello there! Not sure what lawyers charge...where I live the agents do all the work. I know in some states the agent don't even write the contracts or do any paperwork...sounds like heaven...lol.
Ahh...The seller should agree with the listing agent a commission for their representation. The buyer should agree with their buyer's agent a fee for their representation. The buyer and the seller don't get to negotiate the other party's commission. That would be like a couple going through a divorce and telling each attorney that the couple has the ability to negotiate the other's attorney fees. Ahhh...NO. Commissions have been decoupled.
@AudraLambert You are being dishonest by omission. The reality is that real estate agents do not compete in the free market for their sales because the commissions are fixed or set by the real estate agents. The free market should determine the commission and not be set by those who benefit from the commission. Otherwise, it is a conflict of interest and does not force real estate agents to compete in the free market for sales, which is essentially a protection from the free market, which gives you an unfair advantage over everyone else who is forced compete in the free market system, including home buyers and sellers. Your argument is akin to saying home buyers and sellers should be able to fix the profit and discount they get when buying or selling a home. Which of course is ridiculous, because the free market determines the value of a home sale, not the buyer or seller, which of course real estate agents readily accept as legitimate and fair when negotiating with buyers and sellers. All of the real estate agents I have dealt with have fought me on setting the price of my home sale or purchase, so the real estate agents expect and demand home buyers and sellers be forced to the free market forces, yet their commissions be exempt. You are just used to the corrupt system that has been in place for too long and are trying justify it as fair and legal, because you profit from not having to compete with other real estate agents. Same goes with the health care industry which fixes the prices for health care so they don't have to compete in the free market.
@@LABoyko Why is it impractical for real estate agents to compete in the free market for their commission? I think you meant to say that competition is difficult and that difficulty is impractical for those agents used to fixing their commission and not having to compete in the free market?
Hey, free is acceptable...you just have to find someone to work for free. If you listen to the video, I was quoting those percentages because that was what I have heard so many of my viewer and past client use as a commission reference point. All commissions are negotiable. The NAR lawsuits aren't about lowering commissions..its about transparency and the ability to negotiate commissions. Most home sellers and buyers don't know that...now they do.
The root of the problem is that real estate agents are independent contractors, and not employees. As an IC, each agent is responsible for ALL aspects of their business - everybody is good at something, but very few people are competent enough at the wide array of skills required to succeed in real estate, and that's why 80% of agents only survive 2 years in the business. Having each agent do everything is like replacing the assembly line at General Motors, and having each person follow the frame down the assembly line, 1st putting the wheels on, then attaching the engine, then the seats, and then the body and windows... HUGELY inefficient! The real estate industry is decades (or centuries) behind the rest of the economy! Changing to an employee-based structure can dramatically improve efficiency, and reduce the cost of marketing and closing real estate by 50-90%! The National Assoc. of REALTORS has no incentive to improve efficiency, because they collect more dues based on their membership numbers, and if their membership drops 90% they'll be hurting big-time!
Hello there! To be fair, the NAR dues really aren't' that high in comparison to the money we make...or at least I will speak for myself. However, there are so many NAR members, it definitely adds up. Redfin has agents who are employees. Not to bash their structure but there is a much different experience with agents who are employees compared to ones that are not. I work 80+ hours a week, 7 days a week, and haven't had a vacation in over 17 years. Yes, I know I need balance and probably could use a mental health day or two. However, I would never work that hard if I was an employee. The issue I see in my industry is that most agents don't treat their job like a real job. They have very flexible hours and I would say work very part time. The industry would be a much different place if agents worked minimum 40 hours a week like the rest of the world out there. If you want to make the real estate a commoditized industry, your service levels are going to go way down. To be fair in some areas the service isn't great already. The key is to find a great agent who will represent you well.
You better know some Brokers FORCE the agent to get a minimum! I puposely work with a Broker who allows me the freedom to charge whatever commission i want to negotiate. Im fair. I ask for 2% for both sides! I've been told buyers agents will not show if they dont see 3% they will steer the buyer away! Buyer better be aware!
Call me crazy but your not going to get buyers to pay the fees. If that seller doesnt have a built in fee for the buyer that that house will sit. time will tell.
Well, I don't think most buyers can pay for their commission fees. I think the buyer's offer will have their commission fee included in the offer. Time will tell.
True, which is why when you are purchasing a house you can ask the seller to assist with your buyer agent's commission. If a seller wants to sell to a buyer...they may need to cooperate. I do believe most will.
lol. All your desperate sales pitch only work for old grandma and grandpa who don’t about AI. The 6% commission age is gone forever. The process will be more and more streamlined. Only US has this ridiculous 6% fee. None other country has it. It is time to adapt, realtors! Or find another job.
I can honestly say, I don't think I have EVER signed a 6% commission agreement. Just saying. In my area it is very competitive, commissions have been coming down for years. I do know that in some areas that is not the case.
@@AudraLambert I purchased my home in 2020 from an old lady. We became friends. I knew she paid 6%. The agent knew how to manipulate older people. Honestly the agent did nothing. The house was not even cleaned and smelled badly. I was the only buyer. Of course my agent did nothing. I found the house. I could lower the price by using the seller agent as she hinted. I let my agent made easy money to do him a favor. He helped me to buy a rental in 2008 and managed it for me. There are good agents who at least did some work. But there are so many house wives and part timer. Time for those to leave. In a seller’s market like Silicon Valley, seller agent is more important. But in other less crazy areas, I would rather pay more to buyer agent as seller. If I am buyer in Silicon Valley, I will pay the buyer agent as buyer, as long as he can get me the right house. 20 years ago I worked with an inexperienced agent and couldn’t get a house after more than 10 offers. So I had to go to seller agent directly. This just prove how bad this industry was. Agents cared more about their commission than their customers.
No buyer should never agree on concessions !!!!@! Nonsense. So make sure in the agreement no concessions agreement !!!!@ other wise buyer again ripped off
Teresa, so there is no buyer's agent commission listed in MLS soon and your are recommending no concessions....What? How is that a bad thing? Something is better than nothing. Not sure you are understanding this properly.
Sellers are dishonest, this is why as a buyer you need a buyer’s agent that TRUELY represents you, not some agent just to make a quick sale. Buyers would just be better hiring attorneys to represent them before buying a home.
Well, there is some truth to what you are saying...but what do attorneys know about houses/inspections/escrow processes? Most do not. They may be able to help you with the legal stuff...but better to avoid that and have the proper representation to veer from scary situations. Just saying. Also, is it just me or is it impossible to get attorneys to respond to you? Just my experience.
@@AudraLambert I reached out to an “experienced” Real Estate Agent and he told me I didn’t need to disclose a past water leak. The attorney I contacted told me to DISCLOSE DISCLOSE DISCLOSE. I feel like the attorney was giving me better advise than the “experienced” realtor.
@@TheCoolOwen Oh good grief, who is your agent. Of course you need to disclose the past leak. Knuckle head agent. That is very bad advice. Not cool. So sorry for that.
@@AudraLambert the seller who I purchased this place from didn’t disclose the convector AC unit wasn’t functioning properly. He never properly maintained the unit.
I agree that the buyer is additionally burdened. The buyer is already saddled with bank costs: surveys,appraisals, credit reports, etc. I am a former realtor and my thought is, if it ain’t broke, don’t fix it.
Hi Dale, I hear ya on the buyer being burdened with cost. In fact, the crazy thing, the buyer is the one bringing in all the money to close the deal. Most sellers aren't dishing out cash upfront through the process...they are usually paying for any concessions by the equity they have built up in their homes.
lt was a very broken system with greed, lack of transparency, and conflicts of interests. That's why there was a lawsuit and the NAR didn't even stand up to it...
REAL-TOR... Not REAL-A-TOR please! Had most Realtors practiced like most State laws and COE required since the mid-1990s nothing is going to be much different. I respect you but a lot of your explanations are a little off base from actual history. Sellers for the most part never paid buyers' agents. Sellers paid listing brokers who by the listing agreement was authorized to pay a portion to the selling agent (in varying amounts).
Hello there..Dang, I though i was getting the Real/Tor pronouncing down. Apparently not. For simplification purposes, I did not go into that deep of detail. The listing contract is between the seller and the broker. In that listing contract the seller designates how much commission they are willing to offer to the buyer's brokerage and the listing agent's brokerage firm. In that contract, there is an area where the broker is instructed by the seller to pay a certain percentage/dollar amount to the buyer's agent brokerage.
Thanks Audra... It does go both ways. A listing Broker may decide not to take on a seller client that doesn't see the value of offering compensation or limited compensation to cooperating agents. Incentives in business is a good thing in most cases.
“Call you crazy?” Ok, you are crazy if you think this isn’t a big deal. “Has the (settlement) changed the way we do business?” Again, you are crazy if you think “not necessarily” or compare it to how you pronounce the word tomato. NAR doesn’t lose a class action lawsuit and then agree to pay $418mil settlement if they think only a couple tweaks to the process is needed. The only reason the settlement hasn’t been approved by the judge and the DOJ is because they are reviewing whether it goes far enough to fix the collusion and undue influence NAR has over consumers leading to an inflated commission structure which it was found guilty of doing. If nothing changes, there will be more attorneys, more lawsuits and likely more settlements.
Perhaps I wasn't clear in my video, this settlement is not going to change the way I conduct my business because I have been transparent with my clients and I am not afraid to negotiate. The lawsuits have never been about terminating the buyer's agent....and putting more money into the sellers pockets. The main issue in the lawsuits was commission fixing. The settlement does resolve some of these issues. I am a negotiator...I have often times negotiated commission with the buyer's agent when I was the listing agent...and they agreed (asking them to throw in commission...some have said no...but can't hurt to try). No too many agents think do that because they weren't trained to. If sellers want to be successful in selling their homes, they are going to have to cooperate with the demands of their buyers. Trust me, this market will adjust on its own.EVERY consumer should have the proper representation in a real estate transaction...but they should know the fees and understand they can be negotiated.
@@AudraLambertAgain thank you for your response. We all can be a little crazy at times and personally I never have liked tomatoes. My comments on your video and others on here is not to disparage you or your profession. If it was taken that way, I apologize. You provide a service that has its challenges and I’m sure your clients are happy with the results. I just think realtors need to understand that some past practices were wrong and learn from them moving forward. If I was a realtor (which in all honesty I am not), I would be more upset at NAR versus say plaintiff attorneys, the media, or know it all jerks on here like me. See, NAR essentially requires real estate agents to become realtors and then charges them exorbitant fees, encouraged bad behavior and did nothing to stop it. That is why NAR was a target defendant in this lawsuit. NAR owes its realtors an apology before anything else. Because then, realtors might be able to apologize to clients for being apart of what the industry has become. I wish you the best of luck moving forward.
