Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

wsj.com

Post reply on HN
Print view View original

121–130 of 282 posts

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#121

Post by loosescrews »

koolba wrote: post #44

Good for them. On the list pointless middlemen, they’re definitely at the top. One of the dumbest parts of the real estate commission scam is purporting the lie that “the seller pays the commission”. Anyone with half a brain knows that if money is coming out of a transaction, it’s a transaction cost being eventually passed onto the buyer.

I think this assumes that the price of real estate is set by the post-fees price that sellers receive. I don't think that is true.

I think the strongest factor in real estate pricing is what buyers are willing to pay. In some cases that is influenced by how much the buyer was able to keep after selling a previous property, but I don't think that is the most significant factor.

Another factor that influences the sale price is the psychology surrounding the pre-fee sale price. Many sellers become fixated on a particular sale price. A common strategy for getting a lower effective sale price is getting sellers to include more in the sale price. One particularly notable example is seller financing.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#122

Post by conductr »

RHSeeger wrote: post #59
rubymancer wrote: post #7

There's not much to the article. > KANSAS CITY, Mo.—A federal jury on Tuesday found the National Association of Realtors and large residential brokerages liable for about $1.8 billion in damages after determining they conspired to keep commissions for home sales artificially high. > The verdict comes in the first of two major antitrust lawsuits that target decades-old industry practices and seek to drive down commiss…

I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf...…

Technically, the 6% goes to the Seller agent. They promote on the listing how much they're willing to share with the Buyer's agent; half is customary but not set in stone.

There are agents for your situation. They'll collect the 3% (or whatever it is) and rebate it back to you at or after closing; less some fixed fee ($600 in my experience). They are not going to do much for you, but if you already found the house yourself and are familiar with the buying contracts/process. It's an option that can save you a lot.

This may differ by state of course. My experience is limited to Texas. But I've bought and sold property using these type of agents. When selling, you just do all the work (hire a photographer $200-500, write the description $0+, and they load it to the MLS for you as the listing agent). I'm of the opinion that for most properties, the only value added marketing is the MLS. When they talk about their websites and portals and ads they run in print media I roll my eyes.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#123

Post by hn_throwaway_99 »

ransom1538 wrote: post #19
rubymancer wrote: post #7

There's not much to the article. > KANSAS CITY, Mo.—A federal jury on Tuesday found the National Association of Realtors and large residential brokerages liable for about $1.8 billion in damages after determining they conspired to keep commissions for home sales artificially high. > The verdict comes in the first of two major antitrust lawsuits that target decades-old industry practices and seek to drive down commiss…

Just sell it / or buy it yourself. It isn't hard by any stretch. You can use a $200 listing broker on a MLS site. That is the big secret. Then it gets on zillow,redfin, etc automatically.

I agree with this sentiment, and I'm especially in favor of selling where you purchase services "a la carte" (e.g. pay a fee for a real estate attorney, a separate one to the escrow company, photographers if needed, etc.).

However, if you say "it isn't hard by any stretch", I invite you to take a look at listings in your area and compare for-sale-by-owner listings with those listed by an agent. Half the time it looks like the photos on FSBO listings were taken by a flip phone from the early 00s, often times the pictures look like the person didn't even clean or there are garbage cans in curbside pics, the descriptions have glaring typos, etc. My point being that I believe it shouldn't be hard, but I am often dumbfounded about how the average quality of FSBO listings (at least where I live) is abysmal. These people are easily losing out on a lot of money by not putting a minimal amount of effort into selling the biggest asset they own.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#124

Post by flkiwi »

poulsbohemian wrote: post #78
bogota wrote: post #39

Earlier quoted context omitted.

Honestly just going to do a FSBO if i ever sell. The fact that I pay out 5% of my house price for what is essentially a few hours of data entry work is beyond stupid.

So go for it! If you believe you have the ability to market your house successfully, then by all means do so. As a realtor, if I had a house in a market where I don't do business, there is absolutely no bloody way I would try to sell my own home.

The concern is perhaps less one’s ability to “market” a house better than a realtor than it is whether the realtor’s services, both individually and as a combined effort between buyer and seller agents, is worth anything remotely like the fees charged. The answer is clearly no to the latter.

With prices where they are today and the combination of effort and skill demonstrated by the realtors I have worked with—each of whom was highly regarded—I would give them perhaps a 1% commission split between them. In all but the most unusual cases, even that would be an overpayment at a reasonable hourly rate for their education and skill level.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#125

Post by duped »

trey-jones wrote: post #93
RHSeeger wrote: post #59

Earlier quoted context omitted.

I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf...…

It's like this throughout the real estate and real estate development industries to be honest. Building my own house I expected plenty of savings over buying (and to be fair, I still did of course), but even beyond permitting (which is also more about who you know than what you know) I encountered things like this (roughly from most mind-boggling to least): - You can't build a septic system, you have to use sewer bec…

Those examples sound pretty reasonable, what's the issue?

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#126

Post by _ea1k »

notaustinpowers wrote: post #115
_ea1k wrote: post #106

The problem isn't just realtors, it is that the whole system is designed to maximize transaction costs. Who cares how much the attorney and loan paperwork cost when they are only 1-2%, you are already paying 5-6% to realtors, ~.5-1% in repair costs, and often a part of the buyer's closing costs too? But if you think about that wholistically, that means sellers are paying 8-10% of the cost of a house every time they s…

A huge hurdle with trying to cut costs is because of NAR themselves, and local Realtor Associations. Any Realtor is with NAR and a local Association, which heavily restricts what they can do. Not being in a local Association can remove your access to the MLS, reducing your visibility to other agents, and remove your access to the state-specific legal forms. Add in closing attorneys and home inspectors being brought i…

Good points. I totally forgot about the whole home inspection process and how ridiculous it tends to be. Even when they aren't in house, you know it will be someone that the realtor has worked with before. It will certainly catch things because it has to demonstrate its value, and those things will be worth at least hundreds of $$s. Unfortunately, it will also offer no real guarantee that those things were worth catching or that other things weren't missed.

You are right, a party trying to fix this will need great funding, large scale, and they can't be someone that will just sell out (ala zillow). With the NAR's ability to block out parties that they don't like, it might not even be practically possible.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#127

Post by sib »

ralph84 wrote: post #105
xyzelement wrote: post #97

Earlier quoted context omitted.

It doesn't sound like you negotiated well and is a sign you could use an agent :) But seriously, imagine you and I are both bidding $1,000,000 on a house. You have an agent, so if your bid is accepted, your agent and the sellers agent each get $30,000. I don't have an agent. In my offer, I write "the sellers agent gets the usual 3%, and I am allocating the 3% that the buyer's agent would get towards the seller instea…

The commission is spelled out in the listing contract between the seller and their agent. The buyer is not a party to that contract and can’t dictate changes to it.

Well, sorta.

The contract between the seller and their broker/agent definitely reserves (typically) 3% for the buyer side broker/agent. What happens to that 3% is definitely under the influence of the buyer. We negotiated a 50/50 split of the 3% back to us as the buyer in the most recent house that we bought. I guess we could have instead offered it as an incremental incentive to the selling party to sweeten the deal.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#128

Post by tylergetsay »

notaustinpowers wrote: post #115
_ea1k wrote: post #106

The problem isn't just realtors, it is that the whole system is designed to maximize transaction costs. Who cares how much the attorney and loan paperwork cost when they are only 1-2%, you are already paying 5-6% to realtors, ~.5-1% in repair costs, and often a part of the buyer's closing costs too? But if you think about that wholistically, that means sellers are paying 8-10% of the cost of a house every time they s…

A huge hurdle with trying to cut costs is because of NAR themselves, and local Realtor Associations. Any Realtor is with NAR and a local Association, which heavily restricts what they can do. Not being in a local Association can remove your access to the MLS, reducing your visibility to other agents, and remove your access to the state-specific legal forms. Add in closing attorneys and home inspectors being brought i…

Not only everything you mentioned above -- the associations control access to the homes themselves

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#129

Post by flkiwi »

jandrese wrote: post #48
notaustinpowers wrote: post #27

Earlier quoted context omitted.

Yeah, it is very high. Although, the real estate industry in the US is vastly different. - Agents do not receive salary, benefits, etc. Their only payment is when they close a deal. - Real Estate Agents are a dime a dozen since the licensing and training is pretty minimal. So lots of competition fighting over small supply, so it can be difficult to consistently get clients. - Agents can pay around $100/month to their…

Yeah, it's tough on both sides. Competition is fierce for leads, but the rates have to be sky high to support the enormous mass of realtors. If the fees drop a lot of people are going to need to find new jobs.

If competition is fierce for leads because there is a glut of workers due to nearly zero requirements to become one, one would expect rates to plummet. Which, I suppose, is why we have a collusion situation here.

Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages

#130

Post by ethbr1 »

ralph84 wrote: post #105
xyzelement wrote: post #97

Earlier quoted context omitted.

It doesn't sound like you negotiated well and is a sign you could use an agent :) But seriously, imagine you and I are both bidding $1,000,000 on a house. You have an agent, so if your bid is accepted, your agent and the sellers agent each get $30,000. I don't have an agent. In my offer, I write "the sellers agent gets the usual 3%, and I am allocating the 3% that the buyer's agent would get towards the seller instea…

The commission is spelled out in the listing contract between the seller and their agent. The buyer is not a party to that contract and can’t dictate changes to it.

FYI, here's what an example seller's contract from northeast FL MLS looks like:

>> Broker will cooperate with and compensate, as stated below, NEFMLS brokers and any broker who reciprocates with NEFMLS. For finding a buyer ready, willing and able to purchase the Property, SELLER will pay BROKER, no later than the date of closing, a broker transaction fee of 5% of the Purchase Price, whether a buyer is secured by BROKER, SELLER, or any other person. BROKER agrees to offer cooperating broker compensation of: 2.5% of the Purchase Price to a single agent for a buyer; or 2.5% of the Purchase Price to a transaction broker for a buyer; or 1% of the Purchase Price to a non-representative broker.

>> If no cooperating broker compensation is offered, the Property cannot be placed in NEFMLS. SELLER hereby directs closing attorney/settlement agent to disburse at closing all compensation to brokers payable hereunder

So in this case, the seller's broker is entitled to 5%, of which 2.5% is required to be shared with a buyer's broker, if existent.

In the event that no buyer's broker exists... it would be a conversation with the seller's broker as to how to dispose of the 2.5% (refund to the deal, etc.).

Post reply on HN