Sellers, pls stop offering pay buyer's agent commission!

[Anonymous]

Anonymous wrote:What I’ll never understand is any buyer’s agent would be paid on commission. It takes the same amount of work to help someone by a $500k house vs. one that costs $1.5M or $3M. Why should the fee be 6 times higher because I’m spending more? If I cannot find an agent who will accept a flat rate, I won’t use a buyer’s agent in the future.

Why is it different for the seller's agent? Just trying to understand why you think a seller is justified in receiving a higher commission based on sales price, but a buyer's agent is not?

I wonder why commission structures aren't tiered more to reflect a "bonus" for selling above certain amounts, but a much lower commission for just selling for a no brainer price.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Lots of people will wrap the commission in the mortgage. Whether or not the seller pays the buyer commission totally depends on the overall offer and the competitiveness of the market. If list is $1 million and you want me to pay your buyer commission of 2% and you offer me $1,020,000, I’ll pay that commission. However, if someone else offers me the same amount with no request to pay a buyer commission, you’re going to lose.

Will lenders allow borrowers to finance this amount? There are limits on how much you can finance that is NOT the principal of the home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

[Anonymous]

Anonymous wrote:I’m a foreigner and have bought houses overseas. For comparison’s sake, agents in the UK and Australia act for the seller and in Sydney the typical commission is 2-2.5% while in London it’s 1.8-2.5% including VAT. Buyers agents are not common and probably are more used at the very high end of the market. Is there anything special or different about how the real estate market works here that would justify higher fees?

The US real estate industry violates trade laws designed to promote competition.

So no, no justification. It's just breaking the law.

See MOEHRL, NOSALEK, NAR Settlement Discussion/Q&A

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

How do you make this straight line statement. If my home is worth $1MM, I sell it for $1MM, not $975,000 just because the buyer represented themselves.

I guess it helps the buyer in a competitive bidding situation where I have to choose between two offers...one where I pay a $50k total commission and one where I pay a $25k commission...but the buyer is still paying $1MM for the house. Just they win the house compared to the next person.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What I’ll never understand is any buyer’s agent would be paid on commission. It takes the same amount of work to help someone by a $500k house vs. one that costs $1.5M or $3M. Why should the fee be 6 times higher because I’m spending more? If I cannot find an agent who will accept a flat rate, I won’t use a buyer’s agent in the future.

Why is it different for the seller's agent? Just trying to understand why you think a seller is justified in receiving a higher commission based on sales price, but a buyer's agent is not?

I wonder why commission structures aren't tiered more to reflect a "bonus" for selling above certain amounts, but a much lower commission for just selling for a no brainer price.

A commission incentivises the seller's agent to both achieve a higher price for the seller and maximise their own earnings. Their interests are aligned in that sense. A tiered structure is used in some countries to further incentivise the agent (eg 2% if sale price under $1 million but 2.5% if over). A flat % commission would incentivise a buyer's agent to get their client to push up their price to maximise the agent's earnings plus ensure they get the purchase. This is a potential conflict of interest?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

Buyers have NEVER been obligated to use an agent. You do understand this, right?

[Anonymous]

Anonymous wrote:I’m a foreigner and have bought houses overseas. For comparison’s sake, agents in the UK and Australia act for the seller and in Sydney the typical commission is 2-2.5% while in London it’s 1.8-2.5% including VAT. Buyers agents are not common and probably are more used at the very high end of the market. Is there anything special or different about how the real estate market works here that would justify higher fees?

yes - the illegal collusion between agents!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The whole concept is that ending the illegal restraint on pricing will result in lower buyer agent fees. When the buyer pays directly they won’t agree to 3%. Buyer agents will have to compete on price instead of automatically getting what the seller agent puts in the contract.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

How do you make this straight line statement. If my home is worth $1MM, I sell it for $1MM, not $975,000 just because the buyer represented themselves.

I guess it helps the buyer in a competitive bidding situation where I have to choose between two offers...one where I pay a $50k total commission and one where I pay a $25k commission...but the buyer is still paying $1MM for the house. Just they win the house compared to the next person.

Paying a commission to buyers' agents simply inflates the purchase price of houses but does not increase the amount earned by the seller.

It just increases the amount paid by the buyer as they have to cover the costs of yet another middleman. In a perfect world, if there were no commissions for buyers agents, the purchase prices should all come down. Neither sellers nor buyers would lose out. It would just eliminate one set of agents.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m a foreigner and have bought houses overseas. For comparison’s sake, agents in the UK and Australia act for the seller and in Sydney the typical commission is 2-2.5% while in London it’s 1.8-2.5% including VAT. Buyers agents are not common and probably are more used at the very high end of the market. Is there anything special or different about how the real estate market works here that would justify higher fees?

yes - the illegal collusion between agents!

Good God, move on. All the settlement did was say buyer agent commission cannot be advertised in the MLS. It did not ban buyer agent commissions from being paid.

Ultimately, things aren’t going to change all that significantly. And certainly not as much as you seem to fantasize they will.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What I’ll never understand is any buyer’s agent would be paid on commission. It takes the same amount of work to help someone by a $500k house vs. one that costs $1.5M or $3M. Why should the fee be 6 times higher because I’m spending more? If I cannot find an agent who will accept a flat rate, I won’t use a buyer’s agent in the future.

Why is it different for the seller's agent? Just trying to understand why you think a seller is justified in receiving a higher commission based on sales price, but a buyer's agent is not?

I wonder why commission structures aren't tiered more to reflect a "bonus" for selling above certain amounts, but a much lower commission for just selling for a no brainer price.

yes, I’ve been wondering that too. If the seller agent believes they can add value by increasing my home sale price, let the fee structure incentivize them working for that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

How do you make this straight line statement. If my home is worth $1MM, I sell it for $1MM, not $975,000 just because the buyer represented themselves.

I guess it helps the buyer in a competitive bidding situation where I have to choose between two offers...one where I pay a $50k total commission and one where I pay a $25k commission...but the buyer is still paying $1MM for the house. Just they win the house compared to the next person.

It works like this:

I am the seller. I list for $1 million and indicate I am willing to negotiate on buyer agent commission.

Buyer 1 offers $1 mil plus 2% agent fee.

Buyer 2 offers $1 mil plus 1% agent fee.

Obviously I go with Buyer 2.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m a foreigner and have bought houses overseas. For comparison’s sake, agents in the UK and Australia act for the seller and in Sydney the typical commission is 2-2.5% while in London it’s 1.8-2.5% including VAT. Buyers agents are not common and probably are more used at the very high end of the market. Is there anything special or different about how the real estate market works here that would justify higher fees?

yes - the illegal collusion between agents!

Good God, move on. All the settlement did was say buyer agent commission cannot be advertised in the MLS. It did not ban buyer agent commissions from being paid.

Ultimately, things aren’t going to change all that significantly. And certainly not as much as you seem to fantasize they will.

Lol honey.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off.

Well, why does anyone get a mortgage then by that logic?

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???

Well, this is a silly argument. At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years I don’t see how it’s not beneficial.
Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers

How do you make this straight line statement. If my home is worth $1MM, I sell it for $1MM, not $975,000 just because the buyer represented themselves.

I guess it helps the buyer in a competitive bidding situation where I have to choose between two offers...one where I pay a $50k total commission and one where I pay a $25k commission...but the buyer is still paying $1MM for the house. Just they win the house compared to the next person.

It works like this:

I am the seller. I list for $1 million and indicate I am willing to negotiate on buyer agent commission.

Buyer 1 offers $1 mil plus 2% agent fee.

Buyer 2 offers $1 mil plus 1% agent fee.

Obviously I go with Buyer 2.

Yeah…I get that…it’s good for the seller, but the buyer is paying $1MM for the house in both situations.

It’s just that Buyer 2 wins the house…so it enhances their competitive situation.