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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

#51

Post by [deleted] »

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…

[deleted]

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

#52

Post by s_dev »

pseudometa wrote: post #25

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower pri…

It being % based means the incentives of the agent are more aligned with the seller than buyer.

If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.

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

#53

Post by benj111 »

vkou wrote: post #34
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.

3% seems a lot just for finding a house then, what's the value add? Or is just that buyers aren't paying (directly) so they don't care?

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

#54

Post by ak217 »

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…

If she adds value and the price is really market clearing, then surely she will thrive without the monopoly on brokerage that real estate agents have achieved.

Personally, I have seen what real estate agents do, I refuse to pay their fees, and I resent their stranglehold on the market. I consider them part of the cause of the housing affordability crisis. I'm happy that online platforms are cutting the fees, but I won't be content until the brokerage charges a flat fee or charges by the hour.

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

#56

Post by rplst8 »

I'm generally OK with commission based sales - if there are guarantees. There's very little due diligence on the part of the Realtor or real estate agent. They can't really be held responsible for anything related the to condition of the house if something was hidden or missed by a home inspector. They'll put anything on the market, and typically make suggestions to sellers that while intended to improve "curb appeal" and "showability" often cover up bigger problems that the property might have.

Purchasing a home is always "buyer beware."

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

#57

Post by noneeeed »

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…

Is there a significant difference between what an "estate agent" (UK) and a "realtor" (US) do?

Are they more involved in the actual legal side of things (the sort of thing a conveyancing solicitor would do in the UK), or are they still just there to advertise the property and show people round?

If they were doing a lot more of the legal side of things I could understand the difference, but a four or five percentage-point difference seems ludicrous if they are basically doing the same job.

For context for those outside the UK, an estate agent here just works for the seller, and normally gets a 1 to 1.5% fee (paid by the seller) for advertising the property and showing people round (and good ones will give you advice on tarting the house up etc). Once you make an offer on a house it's pretty much all in the hands of the solicitors and mortgage company from then on.

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

#58

Post by planteen »

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?

In a hot market (e.g., Denver last year), the seller's agent would not return your calls for a showing if you didn't have an agent.

I suppose you could visit an open house and then submit an offer. Some houses never do open houses, or will already have offers before the open house. You would probably be competing with 2-3 other offers all over asking for a properly priced house. The odds of them choosing your offer would be lower since the seller's agent would not like it (it would be a lower offer on paper, since it has 3% less commission). They might go for it if it was all cash, but probably not with a mortgage.

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

#59

Post by tacomonstrous »

sl1ck731 wrote: post #39
tracer4201 wrote: post #24

Earlier quoted context omitted.

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…

These seem like useful services, but the seller paid at least 3% of the home value towards them. Wouldn't you have rather just had that as cash instead?

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

#60

Post by bootlooped »

s_dev wrote: post #52
pseudometa wrote: post #25

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower pri…

It being % based means the incentives of the agent are more aligned with the seller than buyer. If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.

There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients.

The reasoning they gave was that the difference in the realtor's percentage between a lower total price and a higher total price was not meaningful enough for them to do extra work or take extra time to get it. It is better for them to sell more houses for less, rather than fewer houses for more.

So yeah, the percent means the incentives are more aligned, but maybe not aligned enough.

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