OT: NAR agrees to $418 million in damages. A boon to home sellers/buyers?

[XXtwindad]

Anyone in the industry that can comment? I know the NAR is not held in high regards in many quarters. On the flip side, our realtor has the utmost integrity and is one the most knowledgeable people I know.

https://www.nytimes.com/2024/03/15/r...ettlement.html

Housing experts said the deal, and the expected savings for homeowners, could trigger one of the most significant jolts in the U.S. housing market in 100 years. “This will blow up the market and would force a new business model,” said Norm Miller, a professor emeritus of real estate at the University of San Diego.

[Blown Reek]

Originally Posted by XXtwindad

"This will blow up the market and would force a new business model."

Good. The whole realtor game is a racket.

[dustyrider]

I won’t hold my breath for my refund.

[batman1425]

I know there are some R.E. experts here and I'm interested in their thoughts. I've always felt that that there is a clear conflict of interest in the representation of buyers with the current (soon to be previous?) compensation model.

[jlwdm]

Originally Posted by batman1425

I know there are some R.E. experts here and I'm interested in their thoughts. I've always felt that that there is a clear conflict of interest in the representation of buyers with the current (soon to be previous?) compensation model.

I am a Realtor, but I do not see where you see a conflict. When I represent a buyer my fiduciary duties are to the buyer not the seller.

Just because the commission will not be listed in MLS does not mean it will not be paid by the seller. It will just be more cumbersome.

Buyers that are getting into a starter home are barely scraping together a down payment. They are not going to be able to cover the commission also.

These articles on this subject talk about the standard 6% commission which just isn't true.

Realtors have all different levels of competency. Great Realtors will still get paid well. They add value and work hard for their clients.

Jeff

[batman1425]

Originally Posted by jlwdm

I am a Realtor, but I do not see where you see a conflict. When I represent a buyer my fiduciary duties are to the buyer not the seller.

That may be the case, but your compensation is based on how much the buyer spends, no? To me, it seems the system is constructed in a way incentivizes buyers agent to get a buyer to pay more, and push them to close a deal and it comes down to the individual agent. Not saying that happens in every or even most cases, but the incentive is there nonetheless.

In my (limited) experience, about half of the buyers agents I've worked with at some point in the transaction started either steering or in one instance, pushing (hard) us get us to ignore things that were deal breaker items for us that we were happy to walk away over. In the most extreme case, our agent was actively trying to minimize a significant environmental safety issue to keep a deal from going south.

[jlwdm]

Originally Posted by batman1425

That may be the case, but your compensation is based on how much the buyer spends, no? To me, it seems the system is constructed in a way incentivizes buyers agent to get a buyer to pay more, and push them to close a deal and it comes down to the individual agent. Not saying that happens in every or even most cases, but the incentive is there nonetheless.

In my (limited) experience, about half of the buyers agents I've worked with at some point in the transaction started either steering or in one instance, pushing (hard) us get us to ignore things that were deal breaker items for us that we were happy to walk away over. In the most extreme case, our agent was actively trying to minimize a significant environmental safety issue to keep a deal from going south.

Realtors that are doing the things you mentioned are not going to have long successful careers. Picking a good Realtor is critical. I see way too many Realtors working in areas that they are not familiar with. I have done transactions outside of my primary area and worked with an agent from the area to get advice. I pay them 20% of the commission on any sale in his/her area. They are surprised when they get paid for a the sale of a house I did not ask them about.

Jeff

[Gummee]

If the realtor doesn't sell a home, he/she doesn't get paid. Ditto with your loan officer. Neither get paid till the home settles.

There are very few if any real estate brokerages out there that draw and commission. Lots of those brokerages out there only pay the agent a percentage of the commission depending on their contract.

Real estate agents sell (on average) 2-3 houses per year. Year! It's not like most of them are getting rich on your sale/purchase.

M

[prototoast]

As a starting point, I think the first thing we will see is differences between states that require a lawyer for closing and states that don't.

I would also suggest that if the current fixed commission structure represented something close to the average value add of the agent and not a premium resulting directly from the anticompetitive behavior, we would see a significant subset of agents happy with the change as they could now get more commensurate with their above average value add.

I haven't seen that (yet, maybe it's out there) which suggests to me that even good agents know they have been benefitting.from collusion.

We've also seen drops in stocks of services like Zillow and Redfin, again suggesting that even service providers had been able to capture excess profits from the anticompetitive arrangement. Even though plausibly more competition among agents could increase demand for advertising.

[unterhausen]

Last time I sold a house, I had a really good realtor. Recommended by my sister. They did tons of work and didn't get enough money, even with the standard commission. No complaints and very helpful. I see stories online where the realtor just basically stood around and waited to collect their money and the result was big problems. But it doesn't have to be that way. Realtors like that are overpaid even if they only get $50

[verticaldoug]

I don't think it will change the price of homes.

I think you will get less transparency in the market as more listing agents will choose not to list on MLS and be both sides. Buying agents are probably the easiest to squeeze here. I don't see this as a boon to buyers maybe an uptick for sellers.

[pdonk]

Just remember everything is negotiable. Tell the agents that they can reduce commissions to make it work. This is especially true for high value units that have been on the market for awhile.

[prototoast]

Originally Posted by pdonk

Just remember everything is negotiable. Tell the agents that they can reduce commissions to make it work. This is especially true for high value units that have been on the market for awhile.

Everything is negotiable, but negotiations on how to set prices between unaffiliated service providers in the same industry is illegal collusion, and they shouldn't do that.

[jlwdm]

Originally Posted by prototoast

Everything is negotiable, but negotiations on how to set prices between unaffiliated service providers in the same industry is illegal collusion, and they shouldn't do that.

And it has not been happening.

Jeff

[prototoast]

Originally Posted by jlwdm

And it has not been happening.

Jeff

In that case nothing will change, and we don't need to be having this discussion.