$1.8 Billion verdict (possibly $5.4 Billion) may break the real estate industry

Right up there with insurance brokers.

 

I think 6% made a lot more sense where house prices were 10, 15, 20 years ago. It makes a lot less sense today. After a massive runup, if I list my place for the $1M my neighbors are getting, is the realtor doing anything substantially different than they would for a $200k home in a different location? Homes here are still flying off the market in a matter days, and for above asking. To pay $60k to get an MLS listing is, frankly, ridiculous.

 

Agreed, wish GK was around to provide feedback.

 

Not sure I agree with the “value” of 3-5%, most listing are put on the MLS, little or no advertising is done, and a few hours every few weekends doing an open house, meeting with inspectors etc isn’t worth 5- 10k on average IMHO.

I know that agents generally don’t like the owners to be there for showings whenever I looked at a place I ordered it as most often the agent couldn’t answer simple questions about the property. They are also afraid the sale may go south if the parties don’t like each other.
All they really care about it getting the sale and they’re cut for the most part. They have created a situation where people feel like they must have an agent and in my experience they mostly don’t do that much for most home sales.

 

Well I agree not all agents are the same, the standard 6% commission is however.
Sure some by owner sales sit(usually over priced) or agents steer their people to listed properties.

My 4 buy owner sales took 3 months( had a contract in 2 weeks with an agent who tried to get me to assign the deal to a client and make a profit and a commission but I refused), 1 month, 3 months and then 9 months(that was one that I listed with agent for 6 months first , one of the best in our area.
None of my sales happened when the market was ripping either.

Like i’ve said for some people they’re great, if you’re selling a high end home prob need one, but for the average sale who needs them pay them 5-6% nope. If a buyer “needs” an agent then they should pay the agent for their services, should get 3% of the sale price. It’s a scam for the most part IMHO.

 

Probably also depends on what state the market is in. If it's a sellers market and supply is tight, interest rates are favorable, the seller can pretty much get what they want including knocking down the commissions. If it's a buyers market, then getting your house shown and marketed takes extra effort and maybe worth paying the commission to get it sold.

 

The only time I had a sellers agent it sat for 6 months and had zero hits. The contract lapsed so I went by owner and it sold in about 3 months. The buyers agent got a commission in large part because they won’t show a house by owner to the clients unless the seller agrees to pay them(that’s really self serving and not serving their clients best interest if the want the house is it?).

It’s very hard to get agents to drop their commissions but not impossible, if you’re willing to push the issue and walk from a deal it is possible. More often like I said most sellers agents won’t show by owner properties, I had friends who were agents tell me they just make up something to make the buyer not want to look at the house.

I still think if some wants the service of a buyers agent then that’s on them to pay them, but the system is set up this way for so long it’s hard to change.

 

settled for $418M

The $1.8 billion ‘conspiracy’ verdict that rocked the real-estate industry has turned into a groundbreaking $418 million settlement (msn.com)

NAR, which boasts 1.5 million members, has agreed to pay $418 million in damages to settle a wide range of lawsuits in courts across the nation, including the shocking $1.8 billion verdict awarded by a Missouri jury last October, which found that NAR and two other real-estate brokerages were conspiring to inflate home-sales commissions. That verdict gave rise to a dozen other antitrust lawsuits against NAR.

The suits have alleged that the organization inflated commissions by forcing sellers’ agents to make an upfront payment offer to buyers’ agents, and implementing rules that led to standard commissions across the industry.

As a part of Friday’s settlement, NAR said it will eliminate key commission rules, prohibit offers of broker compensation on the Multiple Listing Service (MLS), the private database where real estate professionals list homes, and require MLS participants working with buyers to enter into written contracts. The changes will go into effect mid-July 2024, pending court approval, and will fix what many consumer advocates have long argued is a major problem for the real estate industry.

 

I watched Michael Jordan play against the Orlando Magic live. He was older #45 and he still made things look easy. Good Realtors make things look easy. I hired a piano mover many years ago as I and three of my young, strong friends couldn't get the piano up the stairwell. They came, showed up and five minutes later the piano was where it needed to be. People who have skills make things look easy. Most people buy a home every 8-10 years; so, they are not experienced, they may have other pressures (to move out of town, etc.) and are not focused on the deal.

Before this verdict you could:
1. Sell your home yourself, FSBO
2. Work with a full service Realtor and pay 6%
3. Sell your home via Zillow or some other online platform.
4. Sell you home with a discount broker who puts it in MLS but provides little service.
So, where's the problem? this is an attorney in search of a huge judgement - which he/she got. People signed a contract then whined, and pissed and moaned they didn't understand it. Oy vey.

Did you read Gatorcountry's Terms and Conditions before signing up? Did you know your agreement allows them to scrape off 10% of your retirement funds every six years? No? Well, you should have read the agreement!

 

I’ve used a discount broker to sell 3 and buy 2 homes since 1994. His package was 4%. 3% to the Buyers agent and 1% to him. If you subsequently used him as your buyer’s agent, he rebated you the 1% selling commission back to you. Long story short; he made a fortune.

Agents are generally willing to come down on their commissions to finish a deal. This smells like nothing more than CA lawyers lining their pockets.

 

Me too! I miss him.

Im pretty sure we rubbed elbows in Gainesville in the early 80’s. We went the same places on the same nights for the same drink specials.

 

Not 6 or 7 percent.

 

Sounds like it is a win for the average home buyer/seller..

If for anything, because it brings attention to the fact that they can negotiate rates.

 

Just make it negotiable in all states and let the market and sellers set the %. No one is required to hire an agent.

Sold numerous homes. Some by myself and some with agents. I felt like I received worthwhile benefits from each circumstance as there were some issues with the homes. I negotiated my sales commissions before hand.

Particular incident I came across was I sold my family home (homestead) on a lake (.8 acres) by myself. It’s an old home with electrical, plumbing, and roofing upgrades needed. No lender would take the home as is.

I placed a sign out front and eventually got a serious response and showed the home. I made sure to disclose and show the buyers all issues which were a lot. During the showing I found out the wife was my neighbors sister. They had already gotten together and discussed living as neighbors. After some negotiation we came to a deal.

They asked that I allow them to bring by a friend who was familiar with homes in the area. Never told me she was a realtor until afterwards. Eventually as a favor to the buyers she agreed to write up the contract. When I read it she had included a 3% commission as the buyers rep. I called her and told her no, it’s a sell by owner and that I had found the buyers, showed the house, and negotiated a price. The buyers stood firm and I said no sale and moved on. Just that morning a couple came by and liked the house and property. Big time lake people with a ski boat, jet skis, all the lake toys imaginable. I ended up holding the mortgage for 15 years, selling to them.

Called a real estate attorney who drew up the mortgage, sales contract, and performed the closing at a much reduced rate than any realtor. Ended up being a blessing as I’m going to make a considerable amount of interest income over the 15 years of the mortgage. It’s in a trust that goes to my son should anything happen to me and my wife before the 15 years is up.

I’d advise people to hold a mortgage if they can get a sufficient amount of deposit, decent %, and 15 or less year loan. It’s easy money. If the buyer defaults you get the property back and start over.

 

I have always thought of real estate agents as not a whole lot more than leaches, and I have good friends in the business. I can’t understand why a realtor deserves hundreds or even thousands of dollars per hour for what they do versus what doctors or professional engineers do; not to mention the education and internship requirements to be allowed to hang up a shingle. Hell, one of my sons has his RE license and spent about six months in the business and he was really disappointed in so many folks in the business that he decided to discontinue that line of work. There are some instances where local knowledge or a remote sale warrant some assistance, but at what cost would it be reasonable? The level of effort per transaction has to be much lower today than a decade or more ago but the skimmed percentage hasn’t changed. Two of my four purchases had realtor involvement and two didn’t. The only substantial difference to me in those transactions was whether or not I had to pay realtor fees at the closings. Love my realtor friends, but they are no longer essential in today’s market and with the interweb resources available.

 

I get what you are saying but anyone that goes about it themselves is taking a huge gamble. My buddy lost his home in a private sale when he didn’t get a professional involved. He ended up with the deposit only. No way I do it without at least a real estate attorney. Too many scammers out there.

 

Sounds like in this case an attorney was needed not an agent.

Some agents are great, I think many people like the hand holding and if they want to pay for it great.

Obviously if you’re moving to a new area local knowledge is helpful.

As far as avoiding issues with a home that’s why you pay a home inspector a few hundred bucks.

You can actually get your home put on the MLS for a few hundred bucks too.

You don’t need to pay 3% to find a house and certainly shouldn’t pay a dime if you find a house on your own just becasue the sell has an agent.