Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages • Hacker News Board

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

#161

Post by ajhurliman » Tue, Oct 31, 2023, 9:20 PM UTC

alwa wrote: post #80

poulsbohemian wrote: post #13

Here's the brief response I offered earlier today when asked what this actual does: I don’t really expect significant changes. We are in a more balanced market today than when these lawsuits were first filed. Many sellers will find it advantageous to offer buyer agent compensation. If/when we return to a seller-advantaged market, some buyers may need to pay their agents directly, which could involve rolling those cos…

I’ve never been involved with residential real estate in the US, so forgive me if I’m missing something obvious. Why will it be a higher cost to buyers? At the macro level, aren’t the transaction costs effectively priced in? Is the idea that the home has some absolute value that exists independently of the cost structure of the market it trades in (so the buyer paying commission directly is doing so “on top of” this…

In the US the seller pays for both the listing agent as well as the buyer’s agent. When you list your house, you agree to a commission for your listing agent and you advertise a commission to co-broke on the MLS listing, which entices buyers agents to show your house (or steer buyers away from it if the commission is low).

I think the biggest impediment to driving down costs to the consumer is the momentum of social convention.

Even for agents at fixed-cost brokerages, they know they can charge 2-3% so they do, and most people don’t know that it’s negotiable.

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

#162

Post by conductr » Tue, Oct 31, 2023, 9:22 PM UTC

_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…

My problem has always been with the percentages used on certain things; like commissions. Just make it a flat fee. Things that require agent's time like open houses; bill for that. It's the essentially the same effort on a $100K house and a $500K house and a $1M house. Maybe once you get to $5M+ houses the fees need to increase since this is a different class of RE with much smaller pool of buyers. But still should be fixed amount and not percentages.

In my area, since I bought my first house 10 years ago house prices have 4X'd. I don't think the wages of most professions have, the demand for housing makes it easier to sell, so why should agents be making 4X more?

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

#163

Post by SoftTalker » Tue, Oct 31, 2023, 9:22 PM UTC

conductr wrote: post #148

SoftTalker wrote: post #61

Earlier quoted context omitted.

You might not even need to do that much. I sold a home in a desirable neighborhood (I don't mean high-end, just a nice solid middle-class area with good schools, etc) by just putting a "for sale" sign in the front yard. Having commission be a percent of sales has some theoretical advantages. For example you might think the agent is motivated to get you the highest selling price. But in reality they are much more inte…

MLS puts a lot of eyeballs on it and likely can and will increase the sales price. A sign in the yard is not likely to ignite a bidding war. Although I'm glad this worked out for you, it seems like bad advice in general. > For example you might think the agent is motivated to get you the highest selling price. But in reality they are much more interested in making a sale at any price, because that lets them get paid…

> You have no obligation or liability to except a lower offer or reduce your list price, ever

That’s true but in my experience they will pressure you to do so.

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

#164

Post by weeblewobble » Tue, Oct 31, 2023, 9:23 PM UTC

tehlike wrote: post #43

scottwick wrote: post #41

Not really related to the article but something I've been wondering... In recent years the housing market has been so competitive that escalation clauses are often written into offers. They typically include a base offer of $X and then an agreement to escalate that value by increments (maybe $1-5k at a time) up to some cap. All the offers are collected by a certain date and then an auction is run behind the scenes by…

sadly the answer is honor code. There are also a lot of shenanigans realtors could be pulling. Example: Few years ago, we wanted to buy a house, we made a bid for 2.6, the realtor said they would not accept anything less than 2.8 as this was their competing offer. We said no, the house sold for 2.4. I suspected the realtor might have been double dipping, or bluffing, i don't know. But what I do know is they did not p…

Maybe there was something else unattractive about your offer and the 2.8 fell through? Happens all the time.

When I sold a house recently I took the second highest offer, because the highest offer came from someone out of state who had never set foot in the house

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

#165

Post by pixl97 » Tue, Oct 31, 2023, 9:25 PM UTC

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…

Why is number one the most boggling? Not dealing with sewage correctly is a public health hazard. In most places if there is a sanitary sewer hookup you must, by law, connect to it. Now in your particular case they don't have a sewage lift, but if one is ever installed it is likely you will have to connect to it if you ever need to do septic maintenance again. I certainly hope your municipality requires regular inspections of your septic so you're not flowing shit water into the local environment.

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

#166

Post by osigurdson » Tue, Oct 31, 2023, 9:25 PM UTC

If you think about the problems to solve in a real estate transaction are roughly as follows:

Seller problems: 1) Maximize selling price 2) Minimize damage to property / theft 3) Minimize cleaning / preparation for showings

Buyer problems: 1) Minimize purchase price 2) Minimize number of hidden problems with house

One would think that realtors might help to maximize selling price but their incentives are much more aligned with selling a property quickly as it is less work that way. For the most part, they solve seller problem #2 by acting as a kind of well dressed (and likely not very tough) security guard.

The pricing problem could arguably be solved by having something along the lines of a Dutch auction. Many of the uncertainties (largely not addressed with the current system) could be solved via insurance.

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

#167

Post by pixl97 » Tue, Oct 31, 2023, 9:27 PM UTC

duped wrote: post #125

trey-jones wrote: post #93

Earlier quoted context omitted.

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?

They want to be the reason why the laws are created, they don't want to have to follow them.

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

#168

Post by _aavaa_ » Tue, Oct 31, 2023, 9:28 PM UTC

conductr wrote: post #134

_aavaa_ wrote: post #89

Earlier quoted context omitted.

> Some selling agents refuse to do this because it's pretty shady, but definitely not all. This is a blatant conflict of interest. My god.

It will be presented to both parties. It's not a hidden conflict.

Hidden or not it still is one.

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

#169

Post by Turing_Machine » Tue, Oct 31, 2023, 9:31 PM UTC

LeafItAlone wrote: post #133

trey-jones wrote: post #93

Earlier quoted context omitted.

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…

Your list of “mind-boggling” items all seem extremely reasonable to me. Your city and neighbors don’t want to be responsible for or have to deal with your house falling down because it was improperly constructed. And having lived in neighborhoods with septic systems most of my life, a little neglect can go a long way. Unless you’re building in the middle of nowhere (far from anything labeled a “city”), there are obli…

> Your city and neighbors don’t want to be responsible for or have to deal with your house falling down because it was improperly constructed.

Why on earth would the city or the neighbors be "responsible" for that?

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

#170

Post by Willish42 » Tue, Oct 31, 2023, 9:32 PM UTC

_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…

Dumb, uninformed question here, but are there not some sort of For Sale By Owner systems that cut into the huge percents in closing costs? Or is the issue that you have to pay the buyers' realtor fees too and that's unavoidable?

I'm trying to figure out why nobody's figured out "DIY MLS listing as a service without having to pay for a realtor". Maybe everyone who does this just gets a realtor's license or something.