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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

#141

Post by tfehring »

pmiller2 wrote: post #87
s_dev wrote: post #52

Earlier quoted context omitted.

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.

Then what’s wrong with buyers’ agents taking a flat fee, and sellers’ agents taking a percentage? That right there could almost cut these types of fees in half.

I'd rather see both sides take a flat fee + a higher percentage of the difference from some benchmark. Say, $2,000 + 20% * (Zillow's estimated value - sale price) for the buyer's agent. I have no strong opinion on whether the second addend should be floored at $0 or not.

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

#142

Post by berdon »

We bought our house with a realtor who found and walked us through listings. Ultimately, we found the house we ended up buying. Our buying agent was helpful and did a good job but the questions she answered and information she gave was available online.

We sold our house without a realtor and had no real issues. Buying agents tended to stray from our listing and most would communicate with us first to make sure we would "pay their fee". Most also tried to sell us on their agency.

Overall, I probably won't use a realtor again. The value for my price point was not worth the %.

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

#143

Post by noveltyaccount »

olyjohn wrote: post #128
noveltyaccount wrote: post #101

Earlier quoted context omitted.

I still don't see why your experience means the pay should be percentage-based. Why not a flat fee? Why not hourly? Or a base fee plus hourly? The advice the realtor gave you was obviously valuable - but it shouldn't vary if you were purchasing a $100k house or a $2MM house.

The market for a $2 million house is going to be much smaller than for a $100k house. That big ass house can sit on the market for a lot longer, and have much pickier buyers. Houses like that also get a LOT more marketing. Would you spend 6 months unpaid working for a $3000 commission, or would you rather only list cheap houses that turn around more quickly for the same price? Besides, if you can afford a $2MM house,…

I still think you're describing hourly work for the challenges of selling a $2MM house. Charge the seller hourly for open houses, pass through marketing expenses, etc.

At least I think we can agree that buyers and sellers should have choices! Today it is difficult to find anyone who doesn't play by the 6% rule, and realtors like keeping it that way.

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

#144

Post by pmoriarty »

nrclark wrote: post #136
pmoriarty wrote: post #132

Earlier quoted context omitted.

Maybe it is their fault. In my opinion the entire business model is fucked up. If it was up to me, I'd charge for every single hour of my time, charge for advertising and any other money I spend towards selling the home (or build it in to my hourly fee), and charge a commission on top of that. But from what I understand an agent can't do that because it's against the law. As for exclusivity contracts: agents don't ju…

Exclusivity contracts are also the norm for buyers.

You don't have to have an agent as a buyer. Real estate listings are easy to come by, and you could just even drive around a neighborhood and stop in to any home with a "for sale" sign yourself.

But if you've hired an agent, why wouldn't you pay for their time?

While you're window shopping, they drive you around (or at least drive to the homes with you in their own car, paying for the car, maintenance, gas and insurance), they give you their advice on the homes and neighborhoods you see, answer questions about the home, about how the sale will go or any other questions you have about real estate, giving you the benefit of their years of experience in the industry.

They take time out of their life to give you rather than being with their families, or with clients who are actually serious about buying.

I honestly don't understand how someone could take all that from others without trying to compensate them for all they've given you.

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

#145

Post by planteen »

singlow wrote: post #62
sjg007 wrote: post #43

Earlier quoted context omitted.

"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.

That's not typical in the western US. Most western states have a public recording of the sale price and often the amount financed held at the county recorder. There can be a small tax (on the order of 0.1%) levied by the county that is a percentage of sale price.

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

#146

Post by om3n »

I'm a software engineer, and I started my career at a well known mortgage company in Detroit. Views are my own, BTW.

I bought a house a couple years after I started working there, and I wanted the full home-purchaser experience. I used my company's services for everything, and as an employee they hooked me up with a real estate agent (among other things).

I was honestly appalled at what little my real estate agent did for me through the whole process. I had what seemed like simple requirements: I wanted to live west of the city, I wanted at least 1 acre, and an outbuilding. The outbuilding is what threw off the search tool the agent was using to find houses for me; he rarely found good ones in my price range that had outbuildings.

I ended up finding the house I purchased. I'm honestly not sure what he did at all.

When it came time to sell my house, I did it by owner. It was super easy to do everything, including getting my home on the MLS with a service called Reozom, for a couple hundred bucks. I used several sources to come up with comps for pricing.

However, the purchasing agent who represented the buyers of my home was an absolute MONSTER to me; extremely rude in nearly every email or phone call. I think she was so horrible because I was proving how absolutely unnecessary she was in the whole process. I sold the house for a little under asking price, plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. The funny thing- she didn't notice the 2% in the purchasing contract until after it was already signed.

What I've anecdotally learned is this: real estate agents don't provide enough useful benefit for me to use them, and can be hostile as their industry is increasingly proven to be built on little or nothing.

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

#147

Post by gnopgnip »

benj111 wrote: post #90
gnopgnip wrote: post #61

Earlier quoted context omitted.

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-…

You seem positive about the situation? As a point of reference in the UK it's around 1% commission to sell your house, they do the marketing, including on a variety of websites.

There is a noticeable difference having agents as a buffer when buying or selling a home. For many it is an emotional experience and without representation the sale would not close. There is also a difference between transactions where everyone is represented by an attorney who is paid even if the deal falls through, or where they are represented by agents who are only paid when the deal closes. Having a financial incentive to have everyone represented is overall a positive.

In the US the realtors recommend repairs or other changes before listing the home, sometimes handle staging the home, arrange a professional photographer, pull data for comparable recently sold homes, call the listing agent on pending home for sale to get the contract price(likely will be closed by the time the appraisal is happening) and have knowledge of the local market to help you decide on the list price. After listing a home they handle showings and setting up the lockbox, and this includes screening potential buyers, usually requiring that they have a mortgage pre approved before viewing a home. Really the buyers agent is doing most of the work showing homes. In many cases the listing agent will hold an open house to get more people to view the home, but this is more for the agents benefit than the seller. After getting an offer the listing agent still has a lot of work. They will negotiate counter offers. They will help with preparing the required disclosures. There is a lot of following up with third parties, the loan officer at the bank, making sure an appraisal is scheduled, being present with the home inspector, following up with the buyers agent to get contingency releases, negotiating repair requests or other amendments. Then there is last minute stuff that needs to be done, driving a contract somewhere to get a wet signature the day before closing, getting the county to confirm a deed was recorded today, so escrow can be released before 5pm.

Buyers agents are used in the UK too, mainly by the wealthy. Less well off clients go without because they cannot afford it and still make a competitive offer. 1% is on the low end, and it does not include VAT. If you go with a full service estate agent they are charging 2.5%, and you are paying 3% out of pocket for a buyers agent. 1.5%, and paying 1.8% total inc vat is closer to the average. In a lot of cases that is not far off from what is paid in the US. Another big difference is the US has the MLS, with virtually every home listed, and the UK has multiple marketplaces and not everyone will see every home. To reach almost everyone you need to use multiple agents and pay a higher fee, if you use a sole agent, you are not reaching all registered buyers. This is more of a problem in a buyers market, if you have a home in a hot market you will find a buyer either way. Multiple agency is not needed in the US.

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

#148

Post by jrs235 »

ak217 wrote: post #86
chrisseaton wrote: post #76

Earlier quoted context omitted.

> It's more a question that is it worth paying 60,000 when selling your house? It's not. So why does anyone use them? Other people must think they bring more value than they cost. And if they're too expensive why aren't people undercutting?

They are undercutting. Online brokerages like Redfin and Opendoor are challenging the 6% fee. Their success has led to the "standard" fee now being 5% in many markets, but if you use these platforms on both the seller and buyer side, you may now be able to get down to 2.5%. I expect the fees will continue to drop. As the article points out, the realtor cartel works to de-platform individual realtors who undercut the…

I keep seeing people incorrectly using the word 'Realtor'. A Realtor is a member of the National Association of Realtors. Not all real estate agents are Realtors. And not all Realtors are real estate agents (some are appraisers, home inspectors, etc.) The "realtor cartel" will not de-platform individual Realtors as much as they will deplatform non-realtor real estate agents. To get access to MLS you must be a Realtor though.

They do not have to be a Realtor to broker real estate sales. They need to be licensed real estate brokers. Being a Realtor is optional.

Source: am a non practicing licensed sales person in my home state. I can't do anything without a broker supervising me. Also I am no longer a Realtor, I was when I was an agent for a broker who was and required NAR membership.

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

#149

Post by jrs235 »

planteen wrote: post #139
blacksqr wrote: post #98

Earlier quoted context omitted.

In my home state at least, a sellers' agent is legally and professionally obligated to present all valid offers received to the sellers. Failure to do so can result in legal liability, fines, loss of license etc. If your state is similar, then if you had made an offer by any means, like via the agent's voicemail and the agent didn't tell the seller about it, then you would have had cause for legal action.

I never made an offer. I was simply trying to see the house without an agent of my own. The house in question was near where I was renting and had been on the market over a week without an open house. It went to pending a week or two later. The seller's agent never got back to me at all. It's funny you say that about legality though - some of my relatives recently put in a low-ball offer on a place in AZ. The seller'…

It was legal if the listing contract instructed the agent to not show the seller offers below a certain amount.

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

#150

Post by ak217 »

jrs235 wrote: post #148
ak217 wrote: post #86

Earlier quoted context omitted.

They are undercutting. Online brokerages like Redfin and Opendoor are challenging the 6% fee. Their success has led to the "standard" fee now being 5% in many markets, but if you use these platforms on both the seller and buyer side, you may now be able to get down to 2.5%. I expect the fees will continue to drop. As the article points out, the realtor cartel works to de-platform individual realtors who undercut the…

I keep seeing people incorrectly using the word 'Realtor'. A Realtor is a member of the National Association of Realtors. Not all real estate agents are Realtors. And not all Realtors are real estate agents (some are appraisers, home inspectors, etc.) The "realtor cartel" will not de-platform individual Realtors as much as they will deplatform non-realtor real estate agents. To get access to MLS you must be a Realtor…

Thanks for the correction. I'm not in this industry, so still learning and dialing in my terminology :)
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