Real estate commissions likely to change forever

[MrSquished]

The buyer's agent has the same incentive, a perverse incentive to sell the most expensive house.

I could care less if it's the most expensive. I want the one they can actually win the bid AND close on AND be happy. You people think it's easy to get to closing. It's not. I keep expectations realistic, because only then will I have a decent chance to get to closing. If I try to stretch people's budgets, way more chance that deal falls apart. Also I've been with buyers and lost 10+ bidding wars. Why would I love bidding wars? Even if a home sells for 100K over asking, that's only maybe 2-2.5k I'll bring back extra before all the splits happen, by the time it hits my pocket after taxes it's hundreds of dollars. I spend a lot of time losing bidding wars for ZERO money. It's actually much better for me to avoid bidding wars and just close deals. This is what people don't get. For every buyer winning a bidding war, there are 3 to 20 not winning it. Yes I've been in many 15-20 bid bidding wars. You are all basing your assumptions on you win every bidding war, and that deal goes through. Far far from the truth.

I didn't even remember the backend stuff that you mentioned. We did all the work lining up the best bank to get the lowest rate we could because we wanted to keep our loan local. I know it's kind of weird but we have a thing when it comes to supporting local even if it's a bank.

Anyway, now you got me thinking about it even more. What the hell did I pay this lady 6.5% for? All she did was setup appointments for us.

If you paid an agent 6.5% for anything, you are easy to con. As far as the backend, the amount of handholding we do is a lot on numerous deals. One thing when we accept offers on OUR listings, we also consider the agent as a measuring point on how good that offer is. If we have to work with a moron, we lower the quality of that offer. We need an agent that we can speak to anytime as we are the main ways we can talk to our buyers and sellers and keep deals together. Shitty agents kill deals. Seen it time and time again. We are not afraid to call agents morons and idiots. Each of us has egos to handle either the buyer or seller, home inspectors to deal with, mortgage brokers, and lawyers, so I want a good agent on the other side. I could care less if the buyers made a nice offer if the agent is a schmuck. Sometimes those parts all work perfectly, but that is rare. There are always fuck ups in the process. The agent is the QB of a deal, and if they don't seem to want to do that or know how to, we try to avoid morons.

I've had some easy deals of course, and I treasure them because they are more rare than not.

 

[brianmanahan]

you aren't most buyers.

true, most people probably have a life and significant other and maybe kids, and actually want to make something nice out of where they live.

all i'm looking for is something that'll be cheaper than i currently have and has slightly more room than a tiny apartment. and also isn't in a ghetto area. and ideally is walkable in case i can't drive.

i could've easily gotten this for less than 150$k a few years but i was stupid and waited, so now it'll probably run me 250-300$k. still manageable but i kick myself mentally every time i look.

 

[MrSquished]

true, most people probably have a life and significant other and maybe kids, and actually want to make something nice out of where they live.

all i'm looking for is something that'll be cheaper than i currently have and has slightly more room than a tiny apartment. and also isn't in a ghetto area. and ideally is walkable in case i can't drive.

i could've easily gotten this for less than 150$k a few years but i was stupid and waited, so now it'll probably run me 250-300$k. still manageable but i kick myself mentally every time i look.

Sometimes your posts make me sad. Are you happy with your life even though you say you don't have a life? you seem to have some resources and a job, you can always make a change. It's hard as fuck but it can be done. If not, then just weigh the pros and cons of owning vs renting in the area you want to live. Sometimes renting just makes sense. This depends where you live, for how long you want to live there. It's often a smarter financial decision in an expensive city. And of course depends on your landlord situation. Lots of variables, you may be thinking buying but are just fine renting. Don't stress yourself out.

 

[bbhaag]

If you paid an agent 6.5% for anything, you are easy to con.

Bro that hurts......especially considering your profession is just a step or two above a used car salesman.

 

[MrSquished]

Bro that hurts......especially considering your profession is just a step or two above a used car salesman.

Well either you're misremembering or somebody ripped you off. I mean I said once that's really not possible and you said it again so maybe you did just get taken. Just giving you professional advice.

I thought the same thing of realtors before I became one. Thought it was easy peasy for lots of money. But then when you start to do it and actually really apply yourself to it and make it a full-time job, And be a rare full-time agent not just on a name you built before the internet , then you see what it's about. And sure some real estate agents are as bad as used car salesmen. I mean there are plenty of jobs where people are absolutely terrible at them, real estate is no exception especially since the barrier of entry is low. But let me tell you most of those agents barely do a deal or two a year if they're lucky And have a good sphere of influence, otherwise they have to join a team.

So it doesn't really bother me what people think. I get plenty of thanks from clients, And family who also thought the same as myself and now are like holy shit, this job is tough if you hustle.

You should look back upon your real estate deal and if you paid 6.5% just being on the buyer side that is something I would take to the state ethics board in your state.

Because by the way if you were the buyer you shouldn't pay her any commission. That's what this whole lawsuit is about, Sellers paying both sides.

 

[BoomerD]

I didn't even remember the backend stuff that you mentioned. We did all the work lining up the best bank to get the lowest rate we could because we wanted to keep our loan local. I know it's kind of weird but we have a thing when it comes to supporting local even if it's a bank.

Anyway, now you got me thinking about it even more. What the hell did I pay this lady 6.5% for? All she did was setup appointments for us.

If you were BUYING, you shouldn't have paid her anything. The commission is generally paid by the seller. (of course, that's rolled into the selling price)

 

[Torn Mind]

The Fair Housing Act exists in part because of real estate agents' misconduct.

When it's about the money, "selection" can go to dark roads.

 

[IronWing]

If you were BUYING, you shouldn't have paid her anything. The commission is generally paid by the seller. (of course, that's rolled into the selling price)

The buyer ultimately pays.for everything. The commission scheme the agents cooked up made it nearly impossible for the buyer to negotiate on the size of the commission.

 

[MrSquished]

The Fair Housing Act exists in part because of real estate agents' misconduct.

When it's about the money, "selection" can go to dark roads.

Yes there was racism in this industry, and I learned all about the fucked up techniques that were used.

But you're right this was true anywhere there's money involved and in fact where there wasn't money. So many of our laws stem from racism in any financial institution and educational institutions and basically just name an institution and there's a law to prevent racism, which most Republicans are trying to roll back but yes they exist for now.

All our sellers have to sign paperwork that we go over that basically means if the money's green you cannot discriminate based on any kind of race or sex or ethnicity or sexual orientation.

I can imagine the racism in some of the gated communities in the South, But you'll even find it up here in some of the burbs.

 

[MrSquished]

The buyer ultimately pays.for everything. The commission scheme the agents cooked up made it nearly impossible for the buyer to negotiate on the size of the commission.

You are completely incorrect. That would mean every home sold for what the seller wanted it to sell, and the buyer's just paid it. Good luck with that theory .

The market dictates the price of the homes not the seller's wishes. Both can happen, but it's not how it works fundamentally.

The buyer ultimately pays the price of the home the market will bear, regardless if the seller is netting what they want to, after they calculate the commissions they pay. If the buyers paid for everything you are assuming the sellers get exactly what they want from the start. That is poppycock. That would also make my job really easy if a seller could tell me the price and I could just list it there and they'd get it. Oh I want the net this after commission so let's list it at that. Wow if only life worked that way. My God the amount of insane sellers we deal with who have to get talked down from these insane price points. And let me tell you if it happens it's a painful fucking process.

And how do you feel now that you know that bidding war are actually not good for most Realtors, when you think they're great and a goal for the buyer's agents.

The only one who wants a bidding war are the sellers agents. You make it sound like all agents want bidding wars. Completely wrong as I pointed out before.

And In many types of markets sellers have to give concessions. Trust me the buyers aren't paying for everything. It all depends on the market you're in and the state of the market overall.

You seem to have a warped view of how the entire real estate market actually works.

 

[Torn Mind]

Yes there was racism in this industry, and I learned all about the fucked up techniques that were used.

But you're right this was true anywhere there's money involved and in fact where there wasn't money. So many of our laws stem from racism in any financial institution and educational institutions and basically just name an institution and there's a law to prevent racism, which most Republicans are trying to roll back but yes they exist for now.

All our sellers have to sign paperwork that we go over that basically means if the money's green you cannot discriminate based on any kind of race or sex or ethnicity or sexual orientation.

I can imagine the racism in some of the gated communities in the South, But you'll even find it up here in some of the burbs.

Racism isn't the only thing covered by the FHA. Nor are political leanings of the agent relevant to determine discrimination in the legal sense, but rather the results of the transaction or suggested transaction, guidance, etc.

The results of actions against a protected class is what matters. One can be Bernie voter and still legally commit discrimination. Places that slant towards monopoly of a political party does not mean that place is discrimination free or that it is merely a few political contrarians. As cities are often heavily Democratic, it is reasonable to extrapolate that the real estate agent follows similar trends yet they still engage in the "usual" acts of discrimination.

Investigations bare out the tendencies in cities. That punishment is not doled out is understandable, as governments thirst for more tax revenue from increasing property values and the usual program-supporting populace puts the onus on government to spend, spend, spend.

https://nationalfairhousing.org/wp-content/uploads/2019/12/Fair-Housing-Solutions-Overcoming-Real-Estate-Sales-Discrimination-2.pdf

 

[MrSquished]

Racism isn't the only thing covered by the FHA. Nor are political leanings of the agent relevant to determine discrimination in the legal sense, but rather the results of the transaction or suggested transaction, guidance, etc.

The results of actions against a protected class is what matters. One can be Bernie voter and still legally commit discrimination. Places that slant towards monopoly of a political party does not mean that place is discrimination free or that it is merely a few political contrarians. As cities are often heavily Democratic, it is reasonable to extrapolate that the real estate agent follows similar trends yet they still engage in the "usual" acts of discrimination.

Investigations bare out the tendencies in cities. That punishment is not doled out is understandable, as governments thirst for more tax revenue from increasing property values and the usual program-supporting populace puts the onus on government to spend, spend, spend.

https://nationalfairhousing.org/wp-content/uploads/2019/12/Fair-Housing-Solutions-Overcoming-Real-Estate-Sales-Discrimination-2.pdf

I mean considering I admitted it happens here means I don't deny it happens where there are all different political leanings.

However if you don't think the South and very red areas are more racist than I don't know what to tell you because you live in a different reality. I mean all you have to do is look at who's passing what laws. Who's voting for whom.

We just literally had some situations where appraisers appraised a home for less if there were photos of an African American family in them versus a white family. There are lots of variables I've had appraisers see two completely different numbers in the same house, But I find it easy to believe that there's racism in there too.

But yes you can find a law or an act to prevent racism in essentially every major industry we have, anything financial. Don't forget for voting too and education.

 

[Dr. Detroit]

Buyers agents, I suspect, will be the first area to get cut/removed. Most people, 99.9%, don't hire a buyers agent when purchasing a car, but they do exist.

Required disclosures, inspections, and appraisals are already in place to protect buyers and the lenders.

 

[BoomerD]

The buyer ultimately pays.for everything. The commission scheme the agents cooked up made it nearly impossible for the buyer to negotiate on the size of the commission.

Of course...but not as a separate item. the buyer should not pay the commission. That is paid by the seller. The buyer might have to pay some closing costs, home inspection costs, appraisal cost, escrow costs, title insurance, that kind of thing.

 

[Torn Mind]

I mean considering I admitted it happens here means I don't deny it happens where there are all different political leanings.

However if you don't think the South and very red areas are more racist than I don't know what to tell you because you live in a different reality. I mean all you have to do is look at who's passing what laws. Who's voting for whom.

We just literally had some situations where appraisers appraised a home for less if there were photos of an African American family in them versus a white family. There are lots of variables I've had appraisers see two completely different numbers in the same house, But I find it easy to believe that there's racism in there too.

But yes you can find a law or an act to prevent racism in essentially every major industry we have, anything financial. Don't forget for voting too and education.

Laws don't get enforced very well nor are people even aware of them. These laws inhibit the government's funding, both fed and local, and hence don't get "auto-enforced". The victim has to file a cognizable complaint; which requires a particular mindset and a combative, lawyerly attitude.

I made no comment regarding whether an area is really more "racist" or not. It's just irrelevant to determining whether an action is discriminatory or damaging. And indeed, it's with regards to disability in which most people are much more savage in enforcing than the lawyers in the courts.

 

[Lost_in_the_HTTP]

You want to ban bidding wars? That is some serious regulation there let me tell you.

I had six showings today, my clients are putting in three offers. Every home went on the market last week, open houses this weekend, and all best and final offers are due Tuesday. Until we build a shit ton more housing, this is the world we live in. As progressive as I am banning bidding wars is a little crazy government overreach. The solution to this inventory issue is radically changing zoning laws and building a lot more inventory, and I do think do it with the most incentives for affordable housing, and also mandate a 10-15% affordable housing rule for projects X size or bigger.

Disagree.

We need BETTER types of building at less cost. We need $50,000 house, not $500,000 houses. We need to stop sprawl and renovate existing city housing, or demo and rebuild city housing. Less 'Burbs and McMansions. More places people can afford to live and shop.

I'll go back to Detroit for example because it's the city I once knew. There are vast sections of blocks and blocks and blocks that are unliveable. Derelict houses falling down, burned out, long abandoned. These are where neighborhoods used to be viable, people gathered, shopped and worked for most of their lives within walking distance of where they were born. The 60s, 70s and 80s took their toll with urban decay and flight to the 'Burbs. Preople left houses on postage stamp lots with parks nearby you could walk to for postage stamp lots with parks miles away you had to drive to and MUCH larger bills for mostly everything. But the city didn't learn and they never revised the tax codes. The taxes on some of thsoe derelict houses on abandodned lots are ridiculously high.


Bulldoze those blocks. Tear everything out including water, sewer, gas and everything else below ground. That stuff is close to 100 years old in some places and prone to imminent failure. No one wants to build when the utilities could fail at any moment. Do it in those areas instead of what used to be farm fields or natural areas 50 miles or more out of town.

Lay out new housing on 100' x 200' lots instead of the 30' x 60' lots I grew up on. Where a block had 40 homes back then, place 20 now. Build houses working people can afford. Basic houses. Two or three bedrooms, one or two baths, a kitchen, living room and dining room. People don't NEED great rooms, vast entry ways, home theaters, eight bedrooms, six baths a dedicated recreation/game room, home office, indoor garden/plant room, extra rooms for hobbies and crafts, and so on. Millions and millions of us grew up without that stuff.

But to do that, we need a mass re-think and the cities need to completely rework their zoning and property tax laws.

 

[sdifox]

I didn't even remember the backend stuff that you mentioned. We did all the work lining up the best bank to get the lowest rate we could because we wanted to keep our loan local. I know it's kind of weird but we have a thing when it comes to supporting local even if it's a bank.

Anyway, now you got me thinking about it even more. What the hell did I pay this lady 6.5% for? All she did was setup appointments for us.

Usually seller pays comission no?
It's like lottery, you focus on the winners, not the vast majority that doesn't win.

 

[sdifox]

Disagree.

We need BETTER types of building at less cost. We need $50,000 house, not $500,000 houses. We need to stop sprawl and renovate existing city housing, or demo and rebuild city housing. Less 'Burbs and McMansions. More places people can afford to live and shop.

I'll go back to Detroit for example because it's the city I once knew. There are vast sections of blocks and blocks and blocks that are unliveable. Derelict houses falling down, burned out, long abandoned. These are where neighborhoods used to be viable, people gathered, shopped and worked for most of their lives within walking distance of where they were born. The 60s, 70s and 80s took their toll with urban decay and flight to the 'Burbs. Preople left houses on postage stamp lots with parks nearby you could walk to for postage stamp lots with parks miles away you had to drive to and MUCH larger bills for mostly everything. But the city didn't learn and they never revised the tax codes. The taxes on some of thsoe derelict houses on abandodned lots are ridiculously high.


Bulldoze those blocks. Tear everything out including water, sewer, gas and everything else below ground. That stuff is close to 100 years old in some places and prone to imminent failure. No one wants to build when the utilities could fail at any moment. Do it in those areas instead of what used to be farm fields or natural areas 50 miles or more out of town.

Lay out new housing on 100' x 200' lots instead of the 30' x 60' lots I grew up on. Where a block had 40 homes back then, place 20 now. Build houses working people can afford. Basic houses. Two or three bedrooms, one or two baths, a kitchen, living room and dining room. People don't NEED great rooms, vast entry ways, home theaters, eight bedrooms, six baths a dedicated recreation/game room, home office, indoor garden/plant room, extra rooms for hobbies and crafts, and so on. Millions and millions of us grew up without that stuff.

But to do that, we need a mass re-think and the cities need to completely rework their zoning and property tax laws.

LoL 100x200 lots. What century are you in? Make far more sense to build condo towers and have large public parks. Much better use of land.

I used to own a place with 50.5x211 lot. I had to mow every fucking week or the jungle takes over. That's a lot of work just to have a large yard.

 

[Lost_in_the_HTTP]

I'm on close to 4 acres now. In a good grass growing Summer, mowing takes 2-3 days to get it all done with a riding mower and tractor, and that's done about every 10 days. On those city lots, even the 60 x 150' I had before I came here, mowing would take a couple of hours at most with a walk behind.

High rise tenement buildings didn't work out so well before and are the last thing we need again. Ask Philly and some other eastern cities how the overly dense row housing is working. Kids don't even know what a lawn is.

 

[sdifox]

I'm on close to 4 acres now. In a good grass growing Summer, mowing takes 2-3 days to get it all done with a riding mower and tractor, and that's done about every 10 days. On those city lots, even the 60 x 150' I had before I came here, mowing would take a couple of hours at most with a walk behind.

High rise tenement buildings didn't work out so well before and are the last thing we need again. Ask Philly and some other eastern cities how the overly dense row housing is working. Kids don't even know what a lawn is.

Lawn is a very North American concept. It's utterly stupid. You buy fertilizer, water it so the grass can grow faster so you need to cut it more...

What makes more sense, you occupying 1,000 sq ft of lawn that you use 2 hours a day (being generous) or 10 people sharing 10,000 sq ft of park space?

 

[NutBucket]

Sure. I would agree. But how do you think that 2% commission of $20,000 gets split up to the actual agent, and vs the potential work they did.

Basically my point. Without quoting all the other discussion, I think nowadays the agent is more or less there just to make sure all the paperwork is in place (state dependent of course). Most "mainstream" buyers do a lot of legwork themselves since the internet makes it easy to search listings, see when open houses are, etc.

All this changes of course in a buyer's market but that's just hard for everyone unless you happen to be a buyer with means...timing is everything!

 

[MrSquished]

Basically my point. Without quoting all the other discussion, I think nowadays the agent is more or less there just to make sure all the paperwork is in place (state dependent of course). Most "mainstream" buyers do a lot of legwork themselves since the internet makes it easy to search listings, see when open houses are, etc.

All this changes of course in a buyer's market but that's just hard for everyone unless you happen to be a buyer with means...timing is everything!

Got you so while ignoring the discussion and not answering the one question I asked you, You have come to the final answer.

I appreciate your take.

 

[nakedfrog]

Lawn is a very North American concept. It's utterly stupid. You buy fertilizer so the grass can grow faster so you need to cut it more...

What makes more sense, you occupying 1000 sq ft of lawn that you use 2 hours a day (being generous) or 10 people sharing 10000 sq ft of park space?

Yeah, lawns were created as a method of showing off.
"Instead of making this land anything useful, it's going to be ornamental and require a lot of effort to maintain, because I can afford that."

 

[NutBucket]

Got you so while ignoring the discussion and not answering the one question I asked you, You have come to the final answer.

I appreciate your take.

I'm agreeing that (at least in my experience), they didn't do much to earn said commission. I could have done the paperwork myself if I had access to it.

 

[MrSquished]

I'm agreeing that (at least in my experience), they didn't do much to earn said commission. I could have done the paperwork myself if I had access to it.

Well you'd already said that, so why ignore a whole thread to then come back and say the same thing?

You don't have to use a buyer's agent. Just use yourself. Say you have a good attorney to help run the deal. If you want to sell, represent yourself, do a FSBO.