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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

#321

Post by ethbro »

speedplane wrote: post #305
ethbro wrote: post #303

Earlier quoted context omitted.

> 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. Technically, in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly).

> in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly). I just went through this process. While the buyer's agent ostensibly works for the buyer, their main incentive is to get you to close. It doesn't matter if it's a good deal, a bad deal, or whatever. They take 3% so if you overpay or underpay by 10% of the appropriate value of the house that's on…

We're talking gradations of responsibility, now.

In the same way a lawyer works for you, a buyer's agent works for the buyer.

Emphasis on works for. My understanding is they are under obligations to (a) attempt to realize your stated goals & (b) ensure everything is done properly on the paperwork side.

If you say "I want to pay $750,000 for a house that appraises for $450,000", I don't think they have an obligation to say "You should probably pay less / not buy that property."

As you've rightly noted, there is a conflict of interest (mostly with speed of deal, rather than price). But ultimately it's the buyer's responsibility to set the terms of the deal.

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

#322

Post by gamblor956 »

iends wrote: post #271
gamblor956 wrote: post #239

Earlier quoted context omitted.

Most people can't afford to have a lawyer go over their home purchase/sales contract. They have to rely on their agent. So some training and insurance is absolutely better than nothing, which is what the comment I was replying to suggested.

I’ve been quoted $500 an hour and $750 an hour from various attorneys. I think that’s pretty easy to swing on a $100,000 house.

Sure, for a single hour. A real estate contract is dozens of pages long, and a good attorney would review all of those.

$500/hour for one hour? Doable for most people.

$5000+? That changes the economics of buying, especially if we're talking a $100k house, since that $100k is spread out over 30 years but the lawyer's bill is due in 30 days.

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

#323

Post by mbesto »

asciident wrote: post #264
mbesto wrote: post #77

Earlier quoted context omitted.

> Also in England, real estate commission fees are about 1% vs. 6% in US. Also in England...stamp duty.[0] Yaaaaa....no thanks. https://www.gov.uk/stamp-duty-land-tax/residential-property-...

You know that most states have a stamp tax as well? It's just hidden in closing documents, and sometimes named something else. Basically a percentage of your sale price goes to the state.

Ya but 6.5% though?

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

#324

Post by kevstev »

Justin_K wrote: post #151
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…

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…

I had a situation like that come up a few years ago, and it shocked me. I live in a condo building, I was looking to add a bedroom or two. The wife and I know what we want, and we came quite prepared with a list of units we wanted to see. One in particular, I thought would be very fitting. The agents kind of steered us away from it and showed us a few other units. None of those were quite the right fit, so I pushed the issue, and I was very direct and asked about the other. They both looked at each other and said "oh no, you won't like that one." I kind of tilted my head, but said alright fine and we went on our way- one of the agents was actually a neighbor in my building, so I didn't make an issue of it.

Something about the whole thing bothered me though, and a few months later, after a lack of success finding a new home, I went back and took a look at the listing. I found it, and noticed that I had found it through a zillow link. The lightbulb went off in my head- they didn't want to show it to me.

One thing to keep in mind in real estate transactions though- is that AGENTS REPRESENT THE SELLER. They do NOT have your interests in mind. The seller pays them, and at the end of the day their only motivation is to close the deal. Within limits established by law and regulations, they don't have to mention anything they know that may not help close the deal. Did this place get flooded by the last big storm? Do they happen to know that the plumbing isn't built right and you are going to have constant maintenance problems, or there is a mold problem in the attic? Maybe in a larger multifamily they know the insulation is crap and your heating/AC bills are going to be very high? They don't have to mention this unless you ask directly.

And quite frankly- don't trust a thing they say. If I am really interested in a place, like make an offer interested, I note down everything they say mentally that I can't really verify in a walkthrough. Then I follow up with "Hey Blondey McSalesy, We really loved unit 100 on 5 Some Street. The master bath was nice, and its really unique that the wall is tiled with marble from the North Pole! We really loved it when you told us the roof was made of unobtanium shingles and will last 2000 years. The furnace being a 2021 model made by Spacex, with such super high efficiency, that it will even spit out dollar bills from the vents in the winter, is a huge material factor for us. Based on the information you gave us and what we saw, we would like to make an offer. Let us know if we misunderstood anything!"

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

#325

Post by andrewtbham »

jiveturkey wrote: post #125
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…

> currently, it is illegal to pay anyone a commission for selling your house except a licensed real estate agent. I think you are confused about a realtor not being able to pay a finder's fee to anyone but a licensed agent. You, as a seller, are free to pay anyone any commission you like. Unless of course you've contracted that right away in an agreement with a seller's agent. But that's just normal contract law.

It's a gray area...

https://www.inman.com/2015/08/25/referrals-from-non-real-est...

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

#326

Post by kbutler »

diggernet wrote: post #297
kbutler wrote: post #204

Earlier quoted context omitted.

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...

Please note: That is for a "real estate broker ". Most buyers and sellers are dealing with a "real estate agent ". Agent is a lower level license, for which that duty does not apply.

That differences in fiduciary duty does not appear to be the case. For example

"Agents who represent clients under single agency owe a fiduciary responsibility to the client" https://www.thebalance.com/agency-relationships-in-real-esta...

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

#327

Post by kazinator »

> cost that would be borne by the buyer in a competitive market

There is no such thing; any such cost is a parasitic loss that comes out of the value of the transaction. Two parties are transacting, and in comes this little vampire and sucks away a bit of it, leaving both of them poorer.

Reasoning such as "the other party pays it so it makes no difference to me" is horribly irrational and innumerate.

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

#328

Post by will123195 »

kevstev wrote: post #324
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…

I had a situation like that come up a few years ago, and it shocked me. I live in a condo building, I was looking to add a bedroom or two. The wife and I know what we want, and we came quite prepared with a list of units we wanted to see. One in particular, I thought would be very fitting. The agents kind of steered us away from it and showed us a few other units. None of those were quite the right fit, so I pushed t…

> AGENTS REPRESENT THE SELLER. They do NOT have your interests in mind.

Absolutely not true. Buyer's Agents represent the BUYER and have a legal obligation to act in the best interest of the Buyer.

> They don't have to mention this unless you ask directly.

Again, you are mistaken. The Seller and the Seller's Agent are required by law to disclose any known material latent defects in writing...or risk litigation after closing.

The reason I got my real estate license was to bypass the outrageous fees and my lack of trust of Realtors. But in doing so, I've come to realize that Realtors do bring a certain level of ethics to an industry which is extremely prone all types of shenanigans. I imagine without Realtors there would be a lot more litigation since the public is largely unaware of laws regarding disclosures, discrimination, kickbacks, etc.

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

#329

Post by asciident »

mbesto wrote: post #323
asciident wrote: post #264

Earlier quoted context omitted.

You know that most states have a stamp tax as well? It's just hidden in closing documents, and sometimes named something else. Basically a percentage of your sale price goes to the state.

Ya but 6.5% though?

Fair point. The US stamp tax is way lower than 6.5%. I think closer to about 1% or a bit less.

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

#330

Post by vsl »

jacquesm wrote: post #205
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…

> 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,…

This is partially untrue. A typical fee around here, in Europe, is 3%.

Having only a single realtor involved, for the seller, is true. I don’t doubt property search services are offered, but it’s not a default.

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