Biden admin going after realtors!
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Anonymous
You do know in many states like NY buyer and seller are required to have a lawyer. Real estate agents do not write up offers. NY calls that practicing law without a license. In NY realtors literally just get buyer. The lawyers do the work, |
Anonymous
Depends on the market conditions and time - prices always move in open markets, eventually. But let's assume you are right. If the seller is able to maintain the same price point, the seller would keep an extra 2.5% on the sale if they transact with an agent-less buyer. Where's the problem? This is fantastic for the seller: +2.5% more profit. That not great for an unwanted/unecessary buyer agent. You suggest the buyer will suffer:
The parade of horribles your describe is not the problem you think it is for many buyers. Using DCUM as an indicator, you don’t see buyers complaining about prioritizing prospective homes and economizing time. Indeed, when DCUM buyers use “terrible experience”, it’s invariably directed at a real estate agent.
Yes. The answer to your question is Yes. Yes if a buyer determines they want your services, yes the buyer should pay you for your services at an agreed upon rate. (I can’t believe this statement was necessary). Alternatively, for someone who determines your services are not necessary, then no compensation needs to be exchanged. (Again, it is remarkable these things need to be said/explained) So in short, real estate reform means Bad news for agents providing unwanted/unnecessary services. It means Good news (more money) for buyers and sellers. I prefer the latter. |
Anonymous
This happens all the time. Usually when one party has all the money. That is often the situation in homebuying situations. My spouse is a realtor, and I suspect that in the relatively near future, buyer agency will be pretty uncommon (as it was 30 years ago), since few buyers will be able to afford to pay for representation (sellers can usually only afford it because they can pay out of the proceeds of the sale). I don't think this will ultimately be good for buyers. It will save sellers some money over the long haul, but there is a cost to that for both buyers and buyer agents. |
Anonymous
That would be an example of the "specific circumstances" . The point is, it is never ideal be represented in an adversarial situation by adversary-funded agent. In the divorce context, if both parties can afford a lawyer, there is no rule that one party offer the lawyer compensation, as is the case with real estate.
Most often, yes.
Buyers not being able to afford to pay for representation is feature of the US real state industry practices not present in similar countries where the costs are much less. The remedy is not to offset unnecessary inflated prices through subsidies. That is simply waste, by definition. The remedy to make buying more affordable - to eliminate unnecessary costs- includes allowing the market to adjust to equilibrium. "The most obvious and first-order concern is a massive transfer in wealth away from consumers. Commissions in the United States are two to three times higher than in other developed countries such as Australia, Canada, Ireland, the Netherlands, and the United Kingdom. In 2019, realtors collected roughly $100 billion in commissions, indicating that U.S. consumers annually would pay about $50 billion less in fees if U.S. realtors charged commission rates in line with international norms. (Alford & Harris)" (emphasis mine) Let’s start there: buy lowering the cost of purchasing to the worldwide industry norms. Let's reform to truly allow services providers (attorneys, etc..) to compete for services by offering competitive prices without industry interference (seller/buyer "tying", anti-rebate advocacy, steering, minimum service requirement advocacy, etc...). If prices are still too high, we can address this by considering a subsidy structure by weighing our options.
What evidence is there that things would be worse for buyers? There is already massive a cost, with empirical data suggesting the social waste of the current system estimated to be in the billions (“between $1.1 and $8.2 billion” Hsieh & Moretti; “The cost of all this to consumers amounts to tens of billions of dollars a year.” Alford & Harris https://www.cato.org/regulation/summer-2021/anticompetition-buying-selling-homes) Regarding buyer agents, things would be worse for buyer agents relocating to the UK, Australia, or Canada where the US real estate industry isn't perverting market conditions. The remedy for that isn't to distort the market making if favorable to agents at the expense of the consumers. In that case, if buyer agents do not like the compensation in an open competitive market framework, they should be free to change profession. |
Anonymous
| GOOD. Realtors are over paid for doing almost nothing in this market. Most never even went to college and just studied and took the state test. |
Anonymous
Buyers don't need to pay fees. The seller pays 2% to the seller's realtor who shows the house to any buyers. Let them actually work for the commission. |
Anonymous
Spoken like a true idiot lawyer. The reason that top salespeople in all industries are among the highest-paid members of society is that "just getting buyers" is what makes the world go round. Filling out some nonsense paperwork that is the same in 99 cases out of 100 is in no way the "real work." |
Anonymous
The fact that you - clearly a agent apologist - characterize the real estate purchase agreement (a legal contract) as "nonsense paperwork" speaks volumes. |
Anonymous
Salespeople in every industry are ridiculously overpaid. |
Anonymous
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I think a good test case is the new construction industry. Because it is an industry where many buyers are already unrepresented. And speaking firsthand, you should see some of the horrible stuff builders get away with with unrepresented buyers or buyers represented by agents who are not knowledgeable about new construction.
In a new construction transaction in the DC area, if a buyer brings an agent to the transaction, the builder pays the commission for the Agent. Many times the agent is even able to offer a rebate to the buyer. Meanwhile, the builders around here, do not generally offer concessions to this buyers were not represented by agents. I’m sure builders would absolutely love to do away with the model where the seller pays the buyers agent. So basically, the only buyers, who will bring real estate agents to the table are those buyers who can afford to bring real estate agents to the table. And unfortunately, those are the people who probably least need a real estate agent. Do you really think that a builder is going to cut their sale price by two or 3%? They will not. They will price at the absolute highest at the market can bear. So, same sales price for them, higher profit because they are not paying agents. And buyer sees no benefit and has no representation unless they are willing to pay for it as they go. I think the problem is the overall analysis assumes that it is due to agent fees that home sales prices are inflated. But really, all the commission does is take money out of the sellers net profits. There is not a one for one correlation between agent fees and Home prices. You can see it in the industry today. For sale by owners always insist on the comparable price. Are you really going to list your home as a for sale by owner and price at 3% less because you don’t have an agent? No, you’re obviously not. You’re going to list it at the highest comparable price and probably still insist that you are not going to pay the buyers agent. This whole thing would be great for sellers, not good for homebuyers though, especially homebuyers who are first timers, and do not know much about the process and don’t have cash on hand to hire an agent. |
Anonymous
Clearly. When agents are asked, "We found our home on Zillow. What justifies buyer broker commission"? "Paperwork / Purchase Agreement", is an answer often provided. But we are also told that the paperwork is boilerplate; is "nonsense," and "in no way the real work". |
Anonymous
DP when I find the house I want to see and ask to see it then decide to buy it, exactly what are you doing for me? For $59,000 you write an offer that has me to waive an inspection, offer more than they’re asking and let the seller live in free for three months. What was worth $50,000 here? The key code to let me see the house??? |
Anonymous
| A quick fix to this mess would be that if a buyer comes without an agent- they get the 2.5 or 3% instead. Why isn’t that a thing? My sellers agent made me sign something saying that if the buyer didn’t have an agent, they’d make 6% instead. |
Anonymous
You could have picked an agent who didn’t require this. You can negotiate this. |
Anonymous
It’s not 50k out of your pocket though. You paid nothing for whatever services you received. |