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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

#201

Post by ska »

scarface74 wrote: post #164
Justin_K wrote: post #151

Earlier quoted context omitted.

She was hostile because a real estate agent's approach is to black ball any for sale by owner listing, or any for sale by Redfin / Zillow, etc. Agents around my area always blackball these listings and will NOT tell buyers about these listings unless buyers specifically ask. This is nonsense and not in favor of buyers and is an attempt to bring failure to reform. Fortunately, more and more buyers are realizing they c…

Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living. Edit: oops meant buyers agent - corrected.

You've corrected the buyer vs. seller agent thing, but I still can't make sense of this. The seller was always going to pay the buying agents commission (they hoped to negotiate a lower rate) - so why is that agent hostile to the sale and/or blackballing the listing? The only reason seems to be to protect the system they benefit from, at the expense of the buyers and sellers.

In such a situation the embedded interests (agents) may well be antagonistic to change, but it doesn't mean that change isn't globally a good idea....

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

#202

Post by kbutler »

philwelch wrote: post #119
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…

(Disclaimer: I work for a tech company in the real estate industry. Opinions are my own.) > 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. Negotiating a $100,000 purchase or sale is an order of magnitude less lower stakes than negotiating a $2,000,000 purchase or sale. If you're a real estate agent and you're abl…

$2M house. Seller's realtor says, "Drop the price $200,000 to get a sale". Costs seller $200,000. Gains realtor $54,000 (costs $6,000 from .03*$2M). Or hold out for the sale at $2M. Nets seller $200,000 and increases the realtor's commission only $6K additional with all concerns of delay, potential withdrawal of sale, etc.

This is an immediate and unpreventable conflict of interest that impacts the realtor's fiduciary responsibility to act in the principal's interest.

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

#203

Post by brightball »

chrisco255 wrote: post #200
om3n wrote: post #146

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 di…

Former real estate agent, now software engineer. Doing a FSBO (for sale by owner) is as old as time. There's nothing wrong with this approach, but you are limiting your market (and you might therefore be selling at a lower price anyways) and it's highly dependent on your: patience, financial situation, free time, marketing skills, general sales skills, local housing market, tricky property situations, ability to assi…

Yea, I find the fees for buyers agents to be entirely worth it just based on the time investment in showings with no promise of sale.

Listings themselves...not so much.

But fee wise, those are always negotiable.

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

#204

Post by kbutler »

scarface74 wrote: post #164
Justin_K wrote: post #151

Earlier quoted context omitted.

She was hostile because a real estate agent's approach is to black ball any for sale by owner listing, or any for sale by Redfin / Zillow, etc. Agents around my area always blackball these listings and will NOT tell buyers about these listings unless buyers specifically ask. This is nonsense and not in favor of buyers and is an attempt to bring failure to reform. Fortunately, more and more buyers are realizing they c…

Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living. Edit: oops meant buyers agent - corrected.

Realtors have a fiduciary responsibility to act in the interest of their principal, even when it is against the interest of the agent.

"This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest." https://www.nar.realtor/sites/default/files/handouts-and-bro...

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

#205

Post by jacquesm »

chrisco255 wrote: post #200
om3n wrote: post #146

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 di…

Former real estate agent, now software engineer. Doing a FSBO (for sale by owner) is as old as time. There's nothing wrong with this approach, but you are limiting your market (and you might therefore be selling at a lower price anyways) and it's highly dependent on your: patience, financial situation, free time, marketing skills, general sales skills, local housing market, tricky property situations, ability to assi…

> Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that.

3% of the value of a house is hardly 'a tip', a common fee in Europe for selling a house is around 1.5 to 2%, a typical buyer will not use a realtor at all. Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party. The real estate market in North America is ridiculous.

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

#206

Post by manny_hasyrs »

jliptzin wrote: post #181
nugget wrote: post #179

Earlier quoted context omitted.

In your model you’d simply shift (even more) corruption onto the appraisal process.

Still, even if a home appraises for 25% less than it otherwise should, that's still a vastly better compensation scheme than our current system.

This will make buying a home very unattractive as an investment.

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

#208

Post by cmancini »

There are some startups trying to fix these issues and price at flat fees to mixed effect (Trelora in Denver comes to mind as an example).

I think the true solution will come not by lawsuit but by mass scale market-making by companies like OpenDoor and Zillow. When you want to sell your home you can go to these companies and get a check within a few days, and when you want to buy a home these will have built software and systems to make purchasing a straightforward processes.

They may not serve unique and luxury real estate in the near future, but for the 'typical' suburban home it seems like consumers could see a benefit.

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

#209

Post by cmancini »

There are some startups trying to fix these issues and price at flat fees to mixed effect (Trelora in Denver comes to mind as an example).

I think the true solution will come not by lawsuit but by mass scale market-making by companies like OpenDoor and Zillow. When you want to sell your home you can go to these companies and get a check within a few days, and when you want to buy a home these will have built software and systems to make purchasing a straightforward process. They'll provide liquidity and take a cut, but with a couple of companies in the market the 'spread' will probably be lower than buyer+seller broker fees.

They may not serve unique and luxury real estate in the near future, but for the 'typical' suburban home it seems like consumers could see a benefit.

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

#210

Post by jedberg »

scarface74 wrote: post #167
jedberg wrote: post #162

Earlier quoted context omitted.

The commission shouldn't be based on the full price though. When a car salesman sells a car, their commission is based on the profit , not the total price. Selling a Honda can get you more commission than a BMW if you are good at what you do. To make the same for a house, the seller should say "this is how much I want" and then the agent gets to keep say 50% of whatever they get over that price. Then the incentives a…

So does the real estate do less work based on how much a house has appreciated since it was bought?

I didn’t say base it on profit for a house. I said base it on a price the seller wants. Like consignment.
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