Reply to Biden admin going after realtors!

Forum Index » Real Estate

Reply to "Biden admin going after realtors! "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote]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.

[b]I think the problem is the overall analysis assumes[/b] 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. [/quote]

[quote][b]This whole thing[/b] would be great for sellers, not good for homebuyers though[/quote]

What is meant by “overall analysis”, “this whole thing”? The pending NAR lawsuits and anti-trust action by the DOJ/FTC, I assume. Your post does not specify exactly.

[quote][E]specially homebuyers who are first timers, and do not know much about the process and don’t have cash on hand to hire an agent.  [/quote]

Your overall concern seems to be the outcome that anti-trust litigation – prohibiting realtor fee “tying”, “steering” regulation, etc.. - will have on builders of homes and [i]some[/i] buyers of new construction, buyers who require agents but cannot afford their services.

But if the current real estate practices violate anti-trust law, is the remedy to ignore regulations designed to promote competition and drive down consumer prices because the prosperity of the building industry depends on them being ignored? ( No if you are pro-consumer and pro-rule-of-law; Yes if you are pro-building industry )

The subset of buyers who require buying agents but cannot afford them will choose more affordable living alternatives. That mat not be ideal for the building industry, but that is a them problem; I’m confident the US construction industry would adjust to equilibrium and substitution effects.

Many countries do not have the real estate arrangements presently under scrutiny in the United States. As I understand, they build homes. They buy and sell homes, often at roughly half the commission cost. Those who cannot afford to purchase a home have the option to lease.

[/quote]

I don't think the outcome of the litigation is necessarily that buyer's agents will no longer be paid from seller's agents. [/quote]

It's not inevitable, but it is clearly the relief sought. An(other) out of course settlement could keep it in place.

[quote]It could be that the structure of the arrangement stays the same but the percentages are lower. [/quote]

The lawsuit alleges high commissions are a product of the arrangement. Doubtful that will be the outcome of this particular action is decided.

[quote]My guess is that realtors will come up with more ways to compete if they aren't allowed to prevent competition as they've been doing.[/quote]

The hope is that impediments to competition will be removed subjecting realtors to price compete in a downward price pressure context like every other industry.

[i][10] If NAR’s Adversary Commission Rule were not in place, then the cost of buyer broker commissions would be paid by their clients (home buyers). [b]Buyer brokers would thus have to compete with one another by offering a lower commission rate. The Adversary Commission Rule thereby restrains price competition among buyer brokers because the person who actually retains the buyer broker — the home buyer — does not negotiate or pay the commission for his or her broker.[/b]

[22] Moreover, in the absence of the Adversary Commission Rule, [b]seller brokers would likely face additional competitive pressures[/b]. That is, instead of following long-time practice of setting total commissions at or near 6% and assigning roughly half of that amount to themselves and roughly the other half to the buyer broker commission (and selecting that amount at a level to remain in the good graces of buyer brokers), [b]seller brokers would set a commission to pay themselves alone and would likely begin to engage in more vigorous competition with one another to lower their rates[/b] and/or provide additional services to justify their newly transparent rates[/i]

- Burnett et al. v. National Association of Realtors®, et al., Third Amended Class Action Complaint

[/quote]

Not to quibble, but I think the difference is important: the relief sought (aside from damages) is an end to the anticompetitive conduct, which is the agreement to a rule that raises commission rates. Whether getting rid of that illegal agreement ultimately means the end of commission splitting between sellers and buyers and is a separate matter altogether. The complaint sets forth what they allege would happen in the "but for" world--the world that would exist but for the anticompetitive conduct--but that is different than the relief being sought. [/quote]

No that's fair.

I can see a world, an outcome, in which the buyer broker commission arrangement is among the options available to a consumer. If you want a buyer broker commission rule arrangement, it could be an option. If the consumer prefers à la carte fee-for-service alternatives, they should be available too, without industry interference.  
 [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics