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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The only thing that will happen if you untie the two fees is that buyers will lose free representation, and sellers will keep 2-3 percent more profit. [/quote]

Sellers could take a lower price because their net would be higher. A lot of deals fall apart because the buyer and seller can't agree to price. Changing the realtor fees to 2% would get them 2-3% closer than the current 4-5% commissions.[/quote]

I don't know why this is not discussed more.  What is more likely to sell a home quickly?  A top notch realtor or a price that is 5% under the market of the realtor-represented ones?

Also that for some reason realtors commission is on the gross and not the net.  That makes no sense, nothing else I can think of is comped that way.[/quote]

This. The lower price is much more likely to sell the home quickly. No seller's realtor can squeeze more money from a buyer. The most they can do is avoid hampering the deal, which unfortunately seems to happen a lot. [/quote]

It is because the seller and buyer agent make more when the price is higher, and of course, the industry as a whole (where commissions are based on percentage of sales price) benefits more with higher overall prices. [/quote]

It has been shown statistically that the opposite is true, and realtors overall make MUCH more with faster sales:

[i]When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer—$150—is too puny an incentive to encourage her to do otherwise.[/i]

https://forum.nachi.org/t/exerpt-from-freakonomics-book-regarding-real-estate-agents/56492

https://freakonomics.com/2008/02/real-estate-agents-revisited/[/quote]

Indeed.

The commission scheme incentivizes frequent sales.

In addition to  Levitt & Syverson, an example :

[quote] For example, if an agent expected that spending 30 extra hours would increase the selling price of a home by about $10,000, the 3 percent listing agent’s commission on that increase ($300), translating to $300/30 = $10/hour, or more likely $7/hour,[13] would hardly seem likely to motivate the agent to invest the time .

[13] Actually, both buyer and seller agents usually share their commissions with their brokers, with the agents typically retaining 70% of the commission. So here, the agent would receive 70% of the $300 = $210 for 30 hours

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3571088
[/quote]

There is zero real monetary incentive ($7/hour) for a seller agent to maximize returns for the seller, nor any incentive for the buyer agent to minimize price for the buyer. 
[/quote]

Here, we are talking about a buyer's agent, who gets paid nothing if the buyer doesn't buy. The OP is talking about buying with an agent. While seller's agents might also not have the seller's interests at heart, the incentive for the buyer's agent is to get the deal done, whether it is a good deal, fair price, etc. And the higher the price, the more commission the buyer's agent gets, on that sale and any other sales made using that as a comparable. The simple truth is that RE agents aren't faithfully representing the interests of buyers or sellers, despite holding themselves out as "agents."

The above is plainly true. This is why RE agents are essentially useless, especially on the buyer side, and the quicker people realize that, the better off everyone (other than RE agents) will be.[/quote]

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