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A new class-action lawsuit takes aim at real estate agents and their 6% fee

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Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#31

Post by cwyers »

andrewtbham wrote: post #2

currently, it is illegal to pay anyone a commission for selling your house except a licensed real estate agent. If you got rid of that restriction, imagine the opportunities. you could let your friends sell your house by sharing a link on social media and they could get the commission. Also in England, real estate commission fees are about 1% vs. 6% in US. As the article states, in the US a lot of agents won't show F…

If I was a realtor, I probably would refuse to show FSBO as well. I bought a house about a month ago, and when I was looking at houses, it was fun to go to a neighborhood, see five houses for sale, and to try to figure out why the FSBO house was selling for 25% more than every other house in the neighborhood. Spoiler: It's because the people who go FSBO often are FSBOing specifically because they want to get a higher price than what a seller's agent thinks the house should list for.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#32

Post by koolba »

bkohlmann wrote: post #19

Where you stand really depends on where you sit. My wife recently became an agent, and prior to that I was all about disrupting the industry. But I’ve come to see the 3% on each side as an almost market clearing price. It’s really hard work, with low barriers to entry, and significant upfront costs. In a tight market, being a buyers agent can be a blessing or a curse. She’s been working with one client for nearly a y…

> Where you stand really depends on where you sit.

There's really only two seating sections. The one's paying the outrageous commissions or the one's receiving them.

> But I’ve come to see the 3% on each side as an almost market clearing price. It’s really hard work, with low barriers to entry, and significant upfront costs.

The vast majority of the upfront costs are a moat dug by the established players. Everything from mandatory trainings, registration to insurance requirements.

> In a tight market, being a buyers agent can be a blessing or a curse. She’s been working with one client for nearly a year, submitting over 20 offers and going all over the metroplex with nothing to show for it. On the other hand, she’s had buyers who found something within a month. It works out to a decent standard of living, but it takes a long time to develop a pipeline. Most agents quit within a year.

That's the natural pros and cons of sales working on commission. When you're making money it's great. When you're not, it's not. There's nothing special about real estate.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#33

Post by freewilly1040 »

T_D_K wrote: post #23
tacomonstrous wrote: post #6

The model's pretty broken now, when anyone can look up listings on realtor.com or Redfin, and get customized alerts based on preferences. I mean what special skills do agents even bring on the buy side? I can mediate things with the seller myself, thank you very much. On the sell side, an experienced agent can be much more of a help. Even there, we used Redfin the last time we sold, and the difference in commission w…

Having a real estate agent as a buyer can be extremely useful. Time savings: they'll actively search out properties that fit your needs, handle negotiations, schedule inspections and work with the city or county, etc. They're also experienced with all of the legal aspects, and work with mortgage and insurance companies. "Tech Bros" have a stereotype of thinking they can do everything themselves. Sometimes they should…

The tech bros are right about searching out and notifying you about properties, computers do just fine at that. As far as title, legal, etc, certainly something best left to a professional. But it should be fee based, not 6% of the value of the asset.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#34

Post by vkou »

benj111 wrote: post #10

I'm from the UK where it works differently. If you're a buyer, what does the realtor do? Do they sort the legal stuff? Or are you (/seller) paying 3% to find you a house? How does the legal mechanics of this work, do realtors have an obligation to work in the interests of the person that engaged them, or the person that's paying them? Presumably its who engaged them, as they won't know who's paying them. Why then are…

> Do they sort the legal stuff?

No, you pay a lawyer to do that.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#35

Post by runako »

elteto wrote: post #26
newhotelowner wrote: post #20

I couldn't buy a house without a realtor even though its a house that found myself and was paying 100% cash. 3%-3% is a lot of money if I don't use any service from a realtor.

What prevented you from buying it yourself?

Not the OP, but some things I've seen:

- seller is using a realtor, so it doesn't matter whether the buyer is using a realtor or not.

- seller is locked into a 6% commission, whether or not you choose a realtor. So there's no way to get the 3% buyer's commission back as a rebate.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#37

Post by siggen »

jayess wrote: post #4
andrewtbham wrote: post #2

currently, it is illegal to pay anyone a commission for selling your house except a licensed real estate agent. If you got rid of that restriction, imagine the opportunities. you could let your friends sell your house by sharing a link on social media and they could get the commission. Also in England, real estate commission fees are about 1% vs. 6% in US. As the article states, in the US a lot of agents won't show F…

This is a state-level law. And real estate agent lobbying is extremely powerful. I don't see it changing any time soon.

The issue is more complex and nuanced than simply paying agents 6% commission and feeling you did not get your money's worth. One could argue that a lot of buyers agents and sellers agents are horrible at their jobs.

However, having met an exceptional agent, I would gladly pay this fee than deal with long term non-obvious issues that come with a property and then being upset with everyone involved in the purchase of the house. I don't think my "friends" know enough about what to look for in a house to recommend whether it is a good or a bad purchase for me. There's more to than just showing a property around to a buyer.

Also, all the marketing that a seller's agent does to sell the property, including renting furniture, artwork, presentation, print material, etc. is going out of that 3%. There's also an agency fee that the agent pays out of that 3%.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#38

Post by everdrive »

T_D_K wrote: post #23
tacomonstrous wrote: post #6

The model's pretty broken now, when anyone can look up listings on realtor.com or Redfin, and get customized alerts based on preferences. I mean what special skills do agents even bring on the buy side? I can mediate things with the seller myself, thank you very much. On the sell side, an experienced agent can be much more of a help. Even there, we used Redfin the last time we sold, and the difference in commission w…

Having a real estate agent as a buyer can be extremely useful. Time savings: they'll actively search out properties that fit your needs, handle negotiations, schedule inspections and work with the city or county, etc. They're also experienced with all of the legal aspects, and work with mortgage and insurance companies. "Tech Bros" have a stereotype of thinking they can do everything themselves. Sometimes they should…

> "Tech Bros" have a stereotype

Calling a group of people "tech bros" is itself a stereotype.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#39

Post by sl1ck731 »

tracer4201 wrote: post #24
sl1ck731 wrote: post #15

Earlier quoted context omitted.

I purchased my first home in 2017. I absolutely would not have known half of what to do without my agent. In retrospect there are some things that he swept under the rug that I'm paying for now, but all of the paperwork and having someone who knew what to ask for was invaluable. If I was left to my own devices I would have made some probably very stupid offers and lost the chance at my property. This might just be be…

What were the things swept under the rug? A home purchase is arguably the largest purchase most people will make in the US. This is an area where I would actually want some laws requiring the agent to work on behalf of/ in the interest of their customer instead of only their own wallet.

We couldn't test the furnace due to the gas being off when the inspector came.

I didn't think anything of it since I didn't know anything about furnaces but my realtor put an extra contingency in to get another inspection of it paid for by the seller. The closing was within 30 days and they never got around to it in the week or two left after the first inspection, once I signed it was just forgotten. Maybe it was my job to get them on top of it, but he should have at the least brought it up near the signing to postpone it a day and enforce the contingency.

I ended up replacing it the next year. It wasn't terrible for me since I moved in with extra cash ready for such things, but could have been very bad for someone else who put everything into the down payment.

There were other things he was on top of though. He got the seller to come back and fix some wiring that the inspection had missed free of charge on my part which was fantastic. Not a safety issue, just usability. I didn't like what some of the switches controlled so I know they had no obligation to do it. The company who remodeled my house sells a lot of houses around here, so I suspect he has a rapport with them.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#40

Post by koolba »

T_D_K wrote: post #23
tacomonstrous wrote: post #6

The model's pretty broken now, when anyone can look up listings on realtor.com or Redfin, and get customized alerts based on preferences. I mean what special skills do agents even bring on the buy side? I can mediate things with the seller myself, thank you very much. On the sell side, an experienced agent can be much more of a help. Even there, we used Redfin the last time we sold, and the difference in commission w…

Having a real estate agent as a buyer can be extremely useful. Time savings: they'll actively search out properties that fit your needs, handle negotiations, schedule inspections and work with the city or county, etc. They're also experienced with all of the legal aspects, and work with mortgage and insurance companies. "Tech Bros" have a stereotype of thinking they can do everything themselves. Sometimes they should…

> Having a real estate agent as a buyer can be extremely useful. ... handle negotiations ...

I'll never understand how anyone can think someone who get's paid only if you agree to a deal could have their best interests in mind.

Even the seller's agent generally have perverse incentives as pushing to close a deal for $N,000 more only get's them $N,000 x %C vs. losing 100% of it if the deal does not close.

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