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

After a $1.8B verdict, the clock is ticking on the 6% realtor commission

cnn.com

Post reply on HN
Print view View original

191–200 of 220 posts

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#191

Post by dpierce9 »

evancox100 wrote: post #136
dpierce9 wrote: post #108

If a buyer’s agent gets any percentage of a sale, the buyer’s agent and the buyer have misaligned interests. They might ‘represent’ the buyer, but the buyer’s agent has the same economic incentives as the seller (higher price, faster sale, fewer contingencies).

Fundamentally you’re correct, but the much bigger incentive on BOTH sides is to close the deal quickly. If they spend twice the amount of time on the transaction, their earnings per hour get cut in half. That’s a much bigger impact then a few percentage points in price swings.

The point about speed would be true under pretty much any incentive model except an hourly rate for the buy side.

My point is when you are buying, your agent wants you to pay more. This is not what you want generally. It is fundamentally flawed.

I agree, on the sell side it creates an incentive for an agent to not push for marginal price improvements. The incentives are misaligned on both sides of the transaction.

On net you get round-tripped on misaligned incentives with the percentage model.

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#192

Post by intrasight »

dangus wrote: post #182
kangaroozach wrote: post #178

Earlier quoted context omitted.

On point! Been saying this for years. I bought my house and had sellers agent represent me. The seller went with our offer because agent made more commission. We were not the highest offer.

That’s another good point! Frankly, there’s really nothing stopping your seller’s agent from lying about the offers that are coming in or at least gently pushing sellers toward commission-maximizing offers, and the scenario you described is basically a push in the direction of buyers’ agents disappearing.

> lying about the offers that are coming in

Certainly they would not engage is such questionable ethical behaviour ;)

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#193

Post by slantaclaus »

akavi wrote: post #19

I read the article, but I still don't understand how the National Association of Retailers enforce the 5-6% total commission. Does anyone know? The incidence question (is the fee "paid" by the buyer or seller) is a semantic one, but if the cartel is able to inflate the total fees, that's something else entirely.

THEY DON’T

It’s a huge part of the law that commissions are to be up for negotiation, always. RE agents might forget that but it’s a foundation level principle that there are no set commissions. You could lose your license or at least be fined for even suggesting it to a client

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#194

Post by slantaclaus »

x86x87 wrote: post #22
akavi wrote: post #19

I read the article, but I still don't understand how the National Association of Retailers enforce the 5-6% total commission. Does anyone know? The incidence question (is the fee "paid" by the buyer or seller) is a semantic one, but if the cartel is able to inflate the total fees, that's something else entirely.

It's mostly due to the fact that in order to list a house or find a house you need to use a system called MLS. In order to use the system you need to be a realtor. It's quite simple actually

And buyers side commission split is a blank box that you fill in

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#195

Post by slantaclaus »

intrasight wrote: post #31

I see this changing really fast. Real estate firms and individual real estate agents are not gonna want to get sued for hundreds of millions of dollars. They are going to be SUPER careful to avoid that. I foresee the quick dilution of the power of the realtor trademark. I foresee new real estate agents entering the market and not using the realtor trademark. I see those real estate agents using very different busines…

The trademark within the industry is already crumbling. Real estate agents join NAR simply to use their local MLS

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#196

Post by userinanother »

jandrese wrote: post #91
UncleMeat wrote: post #60

Earlier quoted context omitted.

Title insurance is a real thing, but it is wildly overpriced for the actual risk.

Does anybody know of someone making a successful claim with Title Insurance? I've long been skeptical about how often those situations happen.

I’ve read stories of it happening but title insurance refuses to pay

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#197

Post by UncleMeat »

roflyear wrote: post #66
UncleMeat wrote: post #55

Earlier quoted context omitted.

Okay so that's a good service. Is that worth $20,000? $40,000? I'd love to pay by the hour for service. There aren't many such realtors.

Well, you're paying TWO realtors. Buyer and seller, so it's really half that. But yeah, I would say $10k is a pretty sweet deal in a lot of cases.

10k is 3% of 333k. Fewer and fewer houses are available at that price point. You can easily pay double or even quadruple this amount per agent. And two agents are getting paid.

How many hours did your agent spend with you? How did their hourly rate turn out? One of the totally shitty things about realtor pay is that you are subsidizing the pay for all the people who never closed. I'd be happy to pay an excellent agent $100/h for expert advice and to leave out the filler that I can do myself. But this is rarely much of an option, especially as a buyer.

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#198

Post by amluto »

> “There are buyers that aren’t going to know the steps to buy a home,” Davis said. “They have to pay for a down payment, closing costs, appraisals, inspections. If they also have to come up with money to pay for a buyer’s agent, some just won’t and they’ll get in over their heads or they won’t buy at all. Not having representation will make the market less inclusive.”

The entire buyer’s agent system is absurd right now. The buyer’s agent supposedly represents the buyer, but they have an extremely strong incentive to get their client to close on a purchase at all, and a secondary incentive to get their client to pay as much as possible. If anything, it seems to me that this is the wrong kind of inclusive — if anything, it pushes people to buy a house even when they shouldn’t.

There should absolutely be agents of a sort who can represent a person or family who is considering buying a house and for whom buying at all is not obviously the right decision, but the current fee structure does not encourage good representation of this sort.

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#199

Post by amluto »

rch wrote: post #72
pradn wrote: post #21

A good realtor can guide you through the market, inspections, and negotiation - all of which hugely affect the largest investment most people make. But that's no reason for them to demand a PERCENTAGE off the sale of the home! Closing fees plus realtor fees are a big reason why it takes so long for a home to break even for most people - something like 7 years in NYC. And one reason why there's so much pressure for ho…

I've never seen or heard of a real estate agent negotiating to transact a property below its previous sale price, even from the buy side. That says a lot.

They exist. I knew a fantastic agent (now retired, sadly), with a highly unusual business model. His clients would find a house on their own, via Zillow or whatever. Then they would negotiate a fee structure with the agent. The agent would help them inspect the house, help them negotiate effectively, and did not push for a purchase or a high price at all. If the deal closed, he would take his fee and write the client a check for any commissions from the seller in excess of the fee.

(But he would also offer to try to convince the seller to modify the terms to sell at the same effective received price but without paying a commission and the collect the commission from the buyer. This would usually be favorable from a tax perspective, as including the buyer’s agent fees in the “price” increases the transfer taxes.)

Re: After a $1.8B verdict, the clock is ticking on the 6% realtor commission

#200

Post by amluto »

b20000 wrote: post #122
pradn wrote: post #21

A good realtor can guide you through the market, inspections, and negotiation - all of which hugely affect the largest investment most people make. But that's no reason for them to demand a PERCENTAGE off the sale of the home! Closing fees plus realtor fees are a big reason why it takes so long for a home to break even for most people - something like 7 years in NYC. And one reason why there's so much pressure for ho…

in my experience buy side realtors are really on the selling side team. each time i wanted to offer below asking they refused and never presented my offer. there was no negotiation and i had to arm wrestle to see documents before making an offer. one realtor wanted a BLANKET SIGNED offer form. “i’ll fill it out for you”. no thanks.

Maybe there should be a corresponding lawsuit of home buyers vs NAR and buyer’s agents. I bet the damages are far in excess of $1.8B, and there might be juicier legal grounds for a suit.

(IANAL)

Post reply on HN