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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

#241

Post by azhenley »

mattmanser wrote: post #223
jacquesm wrote: post #205

Earlier quoted context omitted.

> 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,…

It's funny to watch American films and TV shows where everyone seems to be a realtor on the side, or getting a realtors licence.

It isn't just on TV. A considerable portion of my friends on FB are or have been realtors.

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

#242

Post by chrisco255 »

Youden wrote: post #216
chrisco255 wrote: post #200

Earlier quoted context omitted.

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…

> and it's unfortunate you screwed this agent out of that. This makes absolutely no sense to me. Why on earth would I be obligated to pay the buyer's agent? What has the agent done for me? When did I establish a relationship with this person and agree to pay them anything? I would feel absolutely fine paying this person zero. If they want to get paid, they should take it up with the buyer because the buyer is the one…

They brought you a buyer. The buyer pays for everything in both cases. If you sell your house for $100K - 3% it's the same as selling your house FSBO for $97K.

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

#243

Post by chrisco255 »

mattmanser wrote: post #223
jacquesm wrote: post #205

Earlier quoted context omitted.

> 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,…

It's funny to watch American films and TV shows where everyone seems to be a realtor on the side, or getting a realtors licence.

Not that hard to get. A lot harder to make a career out of it.

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

#244

Post by gibybo »

chrisco255 wrote: post #242
Youden wrote: post #216

Earlier quoted context omitted.

> and it's unfortunate you screwed this agent out of that. This makes absolutely no sense to me. Why on earth would I be obligated to pay the buyer's agent? What has the agent done for me? When did I establish a relationship with this person and agree to pay them anything? I would feel absolutely fine paying this person zero. If they want to get paid, they should take it up with the buyer because the buyer is the one…

They brought you a buyer. The buyer pays for everything in both cases. If you sell your house for $100K - 3% it's the same as selling your house FSBO for $97K.

He sold his as FSBO. It's highly unlikely the real estate agent brought the buyer since they hate FSBOs. It's much more likely the buyer found the house himself/herself.

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

#245

Post by philwelch »

kbutler wrote: post #234
opportune wrote: post #228

Earlier quoted context omitted.

I'm having trouble following your math here, how can the seller's realtor gain money from selling the house at a lower price? How did you arrive at the figure of $54k?? It's true that a realtor might favor a slightly lower price for a faster sale but I don't get your numbers.

$2M house. 6% commission split 3% to seller's realtor and buyer's realtor. Seller's realtor gets $60K if it sells in 1 month or 1 year, same commission. No sale = $0. First week gets a 10% low offer of $1,800,000. If sale completes, that's $54,000 income for the realtor (.03*1800000). Or, could hold out for a better offer after for some months of additional work to hopefully get an offer for the full $2M, and the rea…

I suspect this actually starts to change at the upper end of the market, but only if you have proportional commissions.

There aren't that many $10,000,000 houses. You can't just dump a $10,000,000 house ASAP and list another $10,000,000 house next week. And at $10,000,000, every percentage point in sale price is worth a marginal $3000 to the sellers' agent. If someone comes in 10% below listing on a $10MM house, the difference alone is equivalent to the sellers' agent commission on an entire $1,000,000 house.

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

#246

Post by scarface74 »

jedberg wrote: post #210
scarface74 wrote: post #167

Earlier quoted context omitted.

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.

It’s still a horrible idea. If I know the market value of my house which is easy to find out based on comparables, how much over could the real estate agent sell it for? The buyer can’t get a loan for more than the house is appraised for. In most house buying situations, the seller,buyer, and mortgage company all know what the house is worth with only a little wiggle room.

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

#247

Post by one_creed »

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 agree. But what most consumers don't know is that there are other models[1] to consider when buying or selling. Some brokerages now charge a flat fee, some do trade ins and so on.

Plug: a friend and I created listingrates, a way for consumers to learn about these new models and compare fees.

[1] https://www.listingrates.com/blog/selling-your-home-in-the-2... https://www.listingrates.com/search?q=Flat%20fee

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

#248

Post by scarface74 »

kbutler wrote: post #204
scarface74 wrote: post #164

Earlier quoted context omitted.

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...

Yeah and people are completely honest when they swear to tell the truth in court too...

Good luck proving that the real estate agent just didn’t know about the house they didn’t show you.

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

#249

Post by elliekelly »

SilasX wrote: post #78
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.

Maybe, but there are better options. As o nate's comment notes [1], the vast majority of their compensation comes from the house getting sold at all, and the gain from anything beyond that is weak. So they're actually incentivized to just make sure the deal happens and not go for the extra. Edit: There's a similar issue with recruiters. [1] https://news.ycombinator.com/item?id=19432743

> the vast majority of their compensation comes from the house getting sold at all, and the gain from anything beyond that is weak

You might find this study[1] interesting:

>Our central finding is that, when listings are not tied to brokerage services, a seller's use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers' knowledge and expertise by a wide margin.

[1]https://www.nber.org/papers/w13796.pdf

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

#250

Post by airstrike »

kevindong wrote: post #74

I'm about to graduate college and move to NYC for a job. The unfortunate norm there is to pay a 15% fee (of the annual rent) to brokers to get a rental apartment. The cheapest the broker's fee gets is one month's rent, so about 8.33% of the annual rent. High end apartments sometimes pay the broker's fee on the renter's behalf [2]. Large apartment complexes sometimes have their own leasing offices, so there's no fee t…

Moved to NYC and paid a broker $8k+ for an apartment I had found by myself on streeteasy, and rent was around $3.5k... To this day my wife and I refer to her as "the parasite". She provided ZERO value other than showing me around the building, which any of the 20-person staff in the building could have done, and in any case certainly doesn't justify paying her more than TWO months' rent
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