Agents Paid Hourly Rates

[Anonymous]

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Anonymous wrote:

Anonymous wrote:We bought using an hourly realtor (Spicer Realty). You can save a ton of money if you're buying a more expensive house (particularly in the $1mn plus range. Yes, you pay a lot to get taken to showings and stuff, but we still got a large rebate (enough to furnish 3 bedrooms of our house) since they don't take the full 3%.

Is this how it works? Say you buy a $1M house and the agent gets $30,000.
Do they take their $200 fee for writing the contact from that commission and you get the rest or do you have to pay them when they write the contract?

In theory (pre-settlement) what would happen is that the seller would pay less to the buyer’s agent than offered, then the difference (say 1% of the sales price) would go to reduce the price of the house or perhaps cover other buyer closing costs (to the extent permitted). When we bought without any agent (actually it ended up being dual agency) the seller agent took I think 4% commission. So the sellers got an extra 2%. We did not get any concessions (eg we paid the list price and all closing costs) but it was a very competitive market so it helped us get the house with no escalation.

Sorry to be dense but if the seller isn’t offering to pay the buyer agent, would we only have to buy the hourly agent $200 or so to write the contract? We wouldn’t be obligated to pay more? TY

Correct. Now what is *supposed* to happen is that the buyer contracts directly with the buyer’s agent for what the agent will be paid. So if you agree to hourly or a flat fee, that’s it. What’s a little more complicated is that you still CAN ask the seller to give you a “concession” to pay your agent - and some sellers may offer this up front. So the contract you have with your buyers agent could take this into account. Something like: “Buyers agent will receive a flat fee of a maximum of $8000 which may be paid directly by buyer or as a concession from the seller.” Basically you want the buyer agent comp to be concrete up front. Then if you can get the seller to pay part of it, cool. Or if the seller is offering 3% but your agent only gets 1% (per your contract) then that extra 2% becomes a bargaining chip for you.

There are a lot of different ways this could be handled through different types of contracts and negotiations- I’m not sure if there is any one standard! What IS true is that the buyers agent should not feel entitled to whatever the seller is offering. They are not negotiating for their own pay. You are negotiating an overall deal which includes paying the amount YOU have agreed directly to pay your agent.

This is spot on

[Anonymous]

stop paying agents 2.5-3%. Who is that stupid to pay such a high amount to agents? LOL

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We bought using an hourly realtor (Spicer Realty). You can save a ton of money if you're buying a more expensive house (particularly in the $1mn plus range. Yes, you pay a lot to get taken to showings and stuff, but we still got a large rebate (enough to furnish 3 bedrooms of our house) since they don't take the full 3%.

Is this how it works? Say you buy a $1M house and the agent gets $30,000.
Do they take their $200 fee for writing the contact from that commission and you get the rest or do you have to pay them when they write the contract?

In theory (pre-settlement) what would happen is that the seller would pay less to the buyer’s agent than offered, then the difference (say 1% of the sales price) would go to reduce the price of the house or perhaps cover other buyer closing costs (to the extent permitted). When we bought without any agent (actually it ended up being dual agency) the seller agent took I think 4% commission. So the sellers got an extra 2%. We did not get any concessions (eg we paid the list price and all closing costs) but it was a very competitive market so it helped us get the house with no escalation.

Sorry to be dense but if the seller isn’t offering to pay the buyer agent, would we only have to buy the hourly agent $200 or so to write the contract? We wouldn’t be obligated to pay more? TY

Correct. Now what is *supposed* to happen is that the buyer contracts directly with the buyer’s agent for what the agent will be paid. So if you agree to hourly or a flat fee, that’s it. What’s a little more complicated is that you still CAN ask the seller to give you a “concession” to pay your agent - and some sellers may offer this up front. So the contract you have with your buyers agent could take this into account. Something like: “Buyers agent will receive a flat fee of a maximum of $8000 which may be paid directly by buyer or as a concession from the seller.” Basically you want the buyer agent comp to be concrete up front. Then if you can get the seller to pay part of it, cool. Or if the seller is offering 3% but your agent only gets 1% (per your contract) then that extra 2% becomes a bargaining chip for you.

There are a lot of different ways this could be handled through different types of contracts and negotiations- I’m not sure if there is any one standard! What IS true is that the buyers agent should not feel entitled to whatever the seller is offering. They are not negotiating for their own pay. You are negotiating an overall deal which includes paying the amount YOU have agreed directly to pay your agent.

How did this go from us paying $200 to an agent to write a contract to us agreeing to pay an agent $8,000? Can't I just hire an agent and pay them to write a contract and not have to pay them more?

[Anonymous]

So no agents working hourly except Spicer who offered that before the lawsuit?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We bought using an hourly realtor (Spicer Realty). You can save a ton of money if you're buying a more expensive house (particularly in the $1mn plus range. Yes, you pay a lot to get taken to showings and stuff, but we still got a large rebate (enough to furnish 3 bedrooms of our house) since they don't take the full 3%.

Is this how it works? Say you buy a $1M house and the agent gets $30,000.
Do they take their $200 fee for writing the contact from that commission and you get the rest or do you have to pay them when they write the contract?

In theory (pre-settlement) what would happen is that the seller would pay less to the buyer’s agent than offered, then the difference (say 1% of the sales price) would go to reduce the price of the house or perhaps cover other buyer closing costs (to the extent permitted). When we bought without any agent (actually it ended up being dual agency) the seller agent took I think 4% commission. So the sellers got an extra 2%. We did not get any concessions (eg we paid the list price and all closing costs) but it was a very competitive market so it helped us get the house with no escalation.

Sorry to be dense but if the seller isn’t offering to pay the buyer agent, would we only have to buy the hourly agent $200 or so to write the contract? We wouldn’t be obligated to pay more? TY

Correct. Now what is *supposed* to happen is that the buyer contracts directly with the buyer’s agent for what the agent will be paid. So if you agree to hourly or a flat fee, that’s it. What’s a little more complicated is that you still CAN ask the seller to give you a “concession” to pay your agent - and some sellers may offer this up front. So the contract you have with your buyers agent could take this into account. Something like: “Buyers agent will receive a flat fee of a maximum of $8000 which may be paid directly by buyer or as a concession from the seller.” Basically you want the buyer agent comp to be concrete up front. Then if you can get the seller to pay part of it, cool. Or if the seller is offering 3% but your agent only gets 1% (per your contract) then that extra 2% becomes a bargaining chip for you.

There are a lot of different ways this could be handled through different types of contracts and negotiations- I’m not sure if there is any one standard! What IS true is that the buyers agent should not feel entitled to whatever the seller is offering. They are not negotiating for their own pay. You are negotiating an overall deal which includes paying the amount YOU have agreed directly to pay your agent.

How did this go from us paying $200 to an agent to write a contract to us agreeing to pay an agent $8,000? Can't I just hire an agent and pay them to write a contract and not have to pay them more?

Of course you can look for that. I think for some people who don’t know that much about it, the advice of a buyer’s agent on how to write a winning offer in the really competitive DC market may be worth it. May also be worth it to have them arrange all of the viewings for you. But yeah, it IS hard to see how that work (maybe 40s max for agent?) is worth more than 3-4k.

[Anonymous]

Anonymous wrote:So no agents working hourly except Spicer who offered that before the lawsuit?

Went to a Spicer open house on Sunday. The wife/owner was doing the open house and didn't know anything about her own house such as not knowing there was a sump pump next to the washer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So no agents working hourly except Spicer who offered that before the lawsuit?

Went to a Spicer open house on Sunday. The wife/owner was doing the open house and didn't know anything about her own house such as not knowing there was a sump pump next to the washer.

what makes you think an agent would know that?

[Anonymous]

Anonymous wrote:Spicer Realty will do this. No experience with them.

Late on this, but we used them (to be a home we had already found online and toured at an open house). Was very satisfied. Saved a ton of money on the commission.

[Anonymous]

use anyone that only charges 1% commission. Small agents are going to disappear and only the tough ones willing to accept low commissions would exist.

[Anonymous]

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Anonymous wrote:As a buyer is there a way to see the commission offered at all, or is it something that we’d have to write into our offer? Our agent, whom we like and trust, sent us a buyers agreement proposing 3% plus a $795 fee. That seems unusually high- we value her time and expertise but 30K for a straightforward transaction seems like a lot, especially when she will get close to that on the sale of our house too.

Wow, that's obscenely high. You're incredibly naïve to trust her or any realtor.

The whole point of the settlement is to end price fixing. This means the sellers don't offer a commission to the buyer's agent. You propose a seller's concession payment. The seller can reject, negotiate, or accept your offer. It would be extremely difficult to find a seller willing to pay 3% towards your agent. Most will pay 0 - 1.5% with a few willing to pay 2%. This means that you have to pay for the rest out of your own pocket if you use a buyer's agent.

I thought the point of the settlement was to increase transparency? So basically your realtor is saying she wants 3% and how that is divided between you and the seller is for you to decide. So figure out how much you are willing to pay her and negotiate, recognizing that you will be in the hook if the seller doesn’t want to pay anything. If she doesn’t agree, look elsewhere. Like anything else, you should shop around to find a realtor you are comfortable with in terms of price and service level. I don’t understand posters repeatedly commenting to go unrepresented and hire a lawyer; that may be a strategy but I can’t see it always working at least initially until the market settles.

If a seller knows their home will sell, you can agree to pay your selling realtor less, offer no buyer compensation, and not require your realtor to show because anyone who really wants the house will pay someone an hourly rate to do so. To some degree showing up unrepresented is a signal both in terms of your willingness to pay and ability to get the deal done smoothly. We sold a house that received multiple (double digit) offers last year in Arlington; we chose our buyer based not just on price but their circumstance/history (prior home owner v first time) etc bc we needed the deal to for sure close so we could get in our new house. It activated their escalation clause, but didn’t end up being the most money wise. Generally, as it shakes out though it should start to differentiate the realtors who are worth paying for (and how much) from those who are really useless.

The settlement was a compromise to prevent price fixing through the mechanism of commission steering. Commission steering is when buyer agents boycott listings offering buyer commission lower than 2.5%. The idea behind the settlement was, by preventing the advertising of a commission on MLS, buyer agents would no longer be able to "shop" for higher commissions.

There are of course ways around this which is why the industry is still being sued.

Didn’t the settlement also have to do with the standardized contract offering 3% to the buyer agent?

I'm not sure I understand what is meant by that.

Regarding the "standardized" 2.5%, Moehrl did address the overwhelming amount of transactions where the "negotiated" commissions were 2.5%. If the commissions are negotiable in a competitive free market, how then can it be the negotiated commission is almost always 2.5%? Plaintiffs alleged collusion to fix prices and presented evidence and expert testimony. The Jury agreed.

Moreover, contrary to Defendants’ characterization of Plaintiffs’ steering theory as abstract economic theorizing, Plaintiffs offer real-world evidence supporting the presence of steering in residential real estate transactions. Most prominently, Elhauge analyzes data regarding commission rates in the Covered MLSs and observes that commissions clustered around standard rates in each Covered MLS. During the class period, at least 90% of home sales in 17 of the 20 Covered MLSs featured buyer-broker commissions clustered around three standard rates. And 94% of sales in all Covered MLSs compensated buyer-brokers at rates of between 2.4% and 3.0%, with 85.5% of commissions in the Covered MLSs paid at one of four rates within that range: 2.4%, 2.5%, 2.8%, and 3.0%. [Citations omitted; emphasis added.]

~ Judge Andrea Wood, Moehrl v NAR

What's remarkable is that those are the Judge's words. It reads like an advocate for the plaintiffs.

Moving forward, lawsuits bringing this in as evidence can site a Judge.

It might be better to cite a judge.

That was a typo.

No, it wasn’t. That was not knowing the correct spelling.

[Anonymous]

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Anonymous wrote:What is the current expectation for using a buyers agent now? I'm looking this fall but the idea that I'm going to pay 2-3% out of pocket to a realtor for a $2M house is pretty rich.

Depends on the location. $2M gets you a semi-renovated older house or a 10 to 15 year old house in Arlington. Builders are now offering 1% to a buyer agent. Could you save another year so that you could get a $2.5 to $2.8 new house and get the builder to rebate the 1% to you? The builder's agent can write the contract for you.

I have been calling agents in MD and DC before I show houses and have not had one instance where the seller is not paying 2.5 percent commission(except one listing that was offering 3 percent). And I have three listings right now-all three offering 2.5 percent.

Call the new homes agents in Arlington and ask what the buyer agency comp is. One is even offering $5,000.

the comp is what the BUYER agrees to pay you now, buddy. eventually trying to negotiate your fee with the seller directly against your client’s interest is going to get you into hot water. I would never sign a contract where the buyer’s agent could decide which homes to show me based on what the seller offers for buyer agent comp, if that is what you are doing.

What if the buyer agrees to pay me nothing but the seller will pay me 2.5%. What shal I do Wizard Of Not A Clue?

The SELLER cannot agree to pay you anything without the buyer’s agreement. Talk about no clue!!! That’s not your money. It would be extremely unethical if not illegal if you made a side-deal with the seller’s agent without telling the buyer.

If buyer’s agents are really this dumb remind me again why I need one? Geez.

You have no idea what you're talking about. What the seller pays the buyer's agent is signed in a contact that has nothing to do with the buyer. You think the seller needs to consult with each buyer regarding what they have agreed to pay the buyer's agent? Are you really that dumb?