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

Nothing to add to that.

The buyer should retain legal, as a purchase agreement is a legal contract. So with a commission structure providing ~ $25,000 for purchasing fees (1,000,000 x .025 commission). We assume $500-$4000 for legal. The buyer is still +20,000. One agent reported a hourly fee of $100 (is that normal?). That means ( -legal ) the buyer is left with 200 hours of billable buyer agent time ($20,000 / $100 = 200 hours).

What does the buyers agent do for [i]200[/i] hours?

Assume you find a home on Zillow, price out comparables, and assume you use legal professionals for legal contracts. What does the buyers agent do to justify 200 hours? In the normal course of things, what problems does a buyer need solved that amounts to 200 hours worth of work?[/quote]

There's no need to hire buyer's realtors at all. They become extinct. The seller's realtor can show the home to prospective buyers. I stopped using buyer agents. I just call the seller's agent and they show me the house. That's how we bought our current house.[/quote]

Well to be fair, as some have noted, some buyers prefer an agent to walk them through the process.

There’s nothing wrong with that, of course. The Seller by default being required to offer a buyer commission for a service that may or may not be necessary or requested is the problem.

If the buyer wants to hire an uber to provide transportation to closing, fine. Hire yourself a driver. 
[/quote]

I bought a house recently without a buyer's agent. The seller's agent, while making clear he could not "represent" us, helped keep the paperwork and closing moving along. [b]He had all the incentive in the world to make sure the deal closed[/b]. I honestly am not at all clear what the buyer's agent might have done, other than slow things down. I really think that no buyer should have an agent. If you have questions that cannot be answered by the internet, pay a lawyer for a few hours of work.

The advantage to us was that the seller was willing to come down a little in price. The seller's agent made more (because he didn't have to split the commission); the seller made more because the commission percentage went down; and we paid less for the house. I will never buy another house with an agent ever again, unless it is some niche market with a lot of complexities.[/quote]

That is certainly true, but he didn't have your interests in mind and, in fact, was legally obligated to do everything possible to ensure things were in the seller's favor.  So while you were able to represent yourself, the seller had someone with experience in real estate transactions on their side.  Maybe it didn't negatively affect you, but maybe it did.  As for the price, it may be that the seller was willing to "rebate" some of the cost savings achieved by not having a buyer's agent on to you, but that certainly won't be true in every case.  [b]In a tight, seller-oriented market like we've had in the DMV for many years now, sellers are generally going to keep that money for themselves.  In other words, the market price is the market price.[/b]  Sellers will benefit financially, but I doubt that buyers will, in general.[/quote]

The buyer's agent has no incentive to be a hard negotiator, and every incentive to get you to pay the price to complete the transaction. Once the offer is accepted, it is simply a matter of moving the paperwork forward on schedule, and the seller's agent is going to make sure that happens.

And for what it's worth, we did this during the pandemic in a "hot" neighborhood and the seller was open to lowering the price since we didn't have an agent. Why wouldn't he have been open to it? Your "the price is the price" is exactly the point. He knew he was capped at a certain price, so why not lower it a little for someone without an agent if it meant he takes home more money.

I swear the agent-shilling on here gets embarrassing at times.[/quote]

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