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

The purchase of a property does require some professional assistance. Title insurance, appraisal (if required), closing agent who knows what he/she is doing, mortgage broker (if needed), etc., but a realtor doesn’t replace any of those functions. With or without a realtor it is caveat emptor. There would be more value in a few hours of real estate attorney time than a realtor can provide for ten times the cost.

 

Yeah, not sure about the regulations, but I would suspect that the best idea in the aftermath of this decision would be to form a one stop shop for home sales. Bring the lawyers/title, agents, brokers, inspectors, etc. all in house. I feel like realtors resisted this because their connections were part of what they sold. But agents can just become marketers and consultants working for the same firm now.

 

Paying a RE attorney a flat pre-negotiated fee is entirely different than paying an agent tens of thousands of dollars for very little. The legal advice may be well worth it particularly if the deal is complicated for some reason. The realtor, on the other hand, obviously cannot provide legal advice and in my experience it's likely they're simply out for any deal (whether good for you or not) because that's how they get paid. The $/hr worked for most realtors is insane.

I've always sold (3 houses) FSBO. Paid a flat fee to get the house on the MLS and hired a professional photography firm to take pics/videos and make some slick fliers. Offered 2.5-3% to a buyer's agent to get the sharks attracted to the bait. Worked every time and saved me thousands. Maybe I got lucky.

 

Good RE agents are very useful, but I estimate good agents comprise 5-10% of agents. And I'm being generous. My biggest problem with the industry is the payment structure. Why should it be tied to selling price? It leads to all kinds of problems and bad incentives. Agents should make a fee either per transaction or per hour, like most professions.

 

Real estate attorneys have value and they are relatively cheap.

 

Sold an office condo and buyer wanted half the commission to go to his agent who did nothing except just happened to be his son and was licensed. My agent worked his ass off and I told him I had his back. The son got a token share for looking over the paperwork. My agent found out the buyer pulled this trick several times in the past.