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

marketwatch.com

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

#61

Post by gnopgnip »

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…

In contrast to other systems used, The US system ensures the buyers are able to make a competitive offer without forgoing representation(because the buyers agent is paid for even if the buyers are unrepresented), and that almost all transactions have both the buyer and seller represented by separate agents. If the buyer is unrepresented, the listing agent is in practice representing them, and the seller still pays 5-6% so most buyers would want their own agent. Buyers agents usually sign an exclusive representation agreement outlining their duties to the buyer, and state law also covers their responsibilities to the buyer even if the buyer is not paying them directly. Real estate agents are only compensated when a sale closes, unlike real estate attorneys, or most everyone else in the real estate industry who are compensated when a service is rendered. This aligns the incentives of the real estate agents with the home buyers and sellers. Real estate agents are spending a lot of money on marketing, which is what allows for sites like Zillow to exist and for buyers to find homes for sale without directly involving an agent.

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

#62

Post by singlow »

sjg007 wrote: post #43
bkohlmann wrote: post #30

Earlier quoted context omitted.

I’ll also add value I’ve seen she adds from a buyers perspective: -she has access to a lot of off market listings via her networks. Sellers will somethings keep things off market so that when they sell, the tax base stays relatively the same - the appraisers don’t see a sale in the official pipeline -my wife also is really good at sending bespoke letters to target homes of folks not yet willing to sell. She’ll ID a g…

"the appraisers don’t see a sale in the official pipeline" huh? tax appraisals are based on recent sold values.. not MSRP pending. You have to record the sale with the county to transfer the property so there's no way to escape the ta x man.

You dont have to disclose the price paid, at least in Texas. They'll ask but its optional.

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

#63

Post by Latteland »

benj111 wrote: post #53
vkou wrote: post #34

Earlier quoted context omitted.

> 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?

They usually don't add any value unless you are maybe a naive buyer. They goal is complete the sale at any cost, otherwise they get nothing, and that's a bad incentive. At this point there's no real basis for a percentage commission.

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

#64

Post by tathougies »

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…

I mean, the risk a realtor takes on 2million/100k times the risk in selling a $2mil house versus a 100k house. If the realtor makes false statements on accident, etc, they can be sued up to the total amount in consideration -- which is the price of the house.

Moreover, it is likely more work to sell a $2mil home, because there are proportionately fewer buyers, which means more work in sourcing buyers, more work in retaining interest, etc.

This comment is written by someone who's never sold a home. In general, it's very easy to look at someone else's job and say 'that person basically does nothing!'. I mean, half the time I look at software engineers sitting their typing and I think to myself "I could do that!".

Plus, if you're selling a $2million home, you can afford $120k.

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

#65

Post by Latteland »

I just realized this is about the same situation as "financial advisors" that you pay a percentage of your assests to to "manage them" and that get hidden commissions when you buy things. They insist that they are doing all for your benefit, and they further insist they shouldn't be held responsible for making advice that helps you (it's too restraining or some other bs).

This field is just like that. Unneeded middlemen who could help but in the vast majority of cases just soak up your money.

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

#66

Post by jefftk »

runako wrote: post #35
elteto wrote: post #26

Earlier quoted context omitted.

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.

You can get half of the buyer's commission back as a rebate if you work with Redfin.

(That's what we did when we bought our house in 2015)

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

#67

Post by tathougies »

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…

> I can mediate things with the seller myself, thank you very much.

Yeah, but if you use an agent, you can sue them when things go bad. You have to eat your own losses. People often pay others to take on risk.

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

#68

Post by T_D_K »

koolba wrote: post #40
T_D_K wrote: post #23

Earlier quoted context omitted.

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.

I understand all that, which is why I said the industry has room for improvement. What I'm arguing is that they have value -- they save you from taking on what is essentially a part time job that you're going to be bad at, and that they have potentially years of experience in. Whether the way in which they're compensated is fair or not is a different argument.

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

#69

Post by mbesto »

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…

> It’s really hard work, with low barriers to entry, and significant upfront costs.

So then pay by the hour.

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

#70

Post by sl1ck731 »

tacomonstrous wrote: post #59
sl1ck731 wrote: post #39

Earlier quoted context omitted.

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?

I don't really follow the proposal. Are you saying that there should have been just their realtor and I keep the 3% I would have paid to have my own representative?

I don't expect their realtor to act in my best interest if so. Our goals aren't aligned. I almost fell into a situation where the realtor I was choosing was the buyers representative as well, which a family member who is a realtor as well as my bank advised was a terrible idea.

If you're proposing that realtors are just half price then I don't have a problem with paying less for things :)

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