Honestly, I’ve owned two homes and the last one I bought in 2005 (where I type from). So I don’t really know. But not all inspections are the same and we all know that some people don’t disclose things.
But I’m guessing there’s other “legal” things related to title transfer or more.
Honestly, I don’t really know - as it’s not my industry - hence i asked.
In the car industry, for example, I’ve been on appointments with dealers - and the amount of paperwork is stifling - and people just sign without truly knowing (like at the doctors office) and I just bought only my second car ever since I get a free one or cheap lease but the college grad no longer eligible - and the amount of paper work I had to sign (which I did read) and from the lender as well - I’m guessing many can be “tricked” or at least signing off on things they’re not really thinking about.
Hopefully the industry is fully transparent and there is no risk like you say - but I honestly don’t know.
Actually a lot especially with first time home buyers. Seller has to disclose material issues so tons of stuff a good realtor can see first time home owner can not. Negotiation, reading an inspection, how to get a home in a tight market, how to even write an offer, options on getting closing costs paid, area knowledge etc. If you use the seller’s agent, their only fiduciary duty is to the seller Help you evaluate home prices (no zillow not good source) based on improvements, neighborhood etc Also from a practical view if you want to see a bunch of houses, especially in a competitive market, you can’t wait for open houses
I personally think that is risky. When our son bought his townhouse, we insisted he get an inspection. There were some things that the owners were happy to get fixed to get the sale done.
The vast majority of the time it is a split of either 6 or 5% In CT pretty much always 5. In case both use seller’s agent they usually get the whole percentage
Until now the typical arrangement has been for the seller to offer a commission (usually 6%) to the listing broker, and for the listing broker offering a portion of that to the selling broker. The commission amounts have been negotiable, but in practice are almost fixed.
Regardless of whether they’re representing the buyer or seller in a transaction, many agents represent their own interests ahead of their clients’, which should come as no surprise and is a natural human tendency. The opacity of the current system sometimes compounds this problem.
For example, a seller might agree to a 6% commission with the requirement that the listing agent offer 4% to the selling agent. The selling agents will be incentivized to show this property but the buyers won’t know they’re being steered to it.
Similarly, a buyer might go directly to the listing agent, who will then have an incentive to push that buyer’s offer over one where he’d need to share the commission.
The objective of the settlement is to “de-couple” the fees, and have buyers and sellers each negotiate and pay for the services they need.
The settlement is due to be implemented in July, and IMO will cause a fair amount of disruption in the industry.
One issue that immediately comes to mind is how a buyer with a low down payment would pay his agent. As it is now, the commission is technically paid by the seller, and the cost is rolled into the buyer’s mortgage. If the buyer needs to pay his agent, even at a lower rate, where does the cash come from? Will mortgage lenders begin allowing commissions to be added to the loan? Will this lead to kickback fraud?
So I’ve been following this case with interest because we’ll be moving again after S25 heads to school. I’ve bought 6 houses and sold 5 so I consider myself pretty experienced in real estate.
I think what’s important to note, is that this settlement doesn’t define what percentages who pays, what it does is stop the NAR from setting commissions and requiring the sellers to pay the buyer’s agent. It makes the buyer’s agent’s fee negotiable. In a hot market that means the buyer is paying their own fee, in a cold market I imagine the seller could offer to pay the fee. It also means that fewer buyers will use agents, and will just depend on the seller’s agent to write the contract and perhaps use a lawyer or title company.
What we’ve found in our years of moving is that the difficulty of buying or selling a home is extremely state specific. I would pay a buyer’s agent in Massachusetts, I would not in Washington.
In my opinion, this is all excellent news, consumers should have the power to negotiate rates.
I imagine it will be rolled into the mortgage, but you’re right, it does bring back memories from before the housing crash when everything was rolled into the mortgage. It may also result in banks allowing 17% down mortgages or sellers in the first home markets needing to negotiate paying for their buyers agent. Or seller’s agents representing both parties.
Interesting - maybe that’s why the experts are saying - home prices could go lower.
Let’s say the hypothetical $500K house now costs $485K - so you got a steal. But if you agreed to pay your buyer’s agent 3% for their time, that’s now close to $15K - so you’re back to about $500K.
I don’t know - I guess we’re going to find out.
While I abhor high commissions (my only move the company paid the realtor) - and I’d likely try a FSBO or 1% listing thing - I do feel bad for gazillion of realtors out there, many of which make a lucrative living.
My realtor only charged us the 3%, as the buyer was acting as his own agent. Still, for an extremely small amount of work (home had several offers on the first day, and closed for cash sale within 3 weeks of offer), she earned about 4 months of my final salary. I would have been upset to have paid the full 6%!
Agree. I think particularly with high priced homes, we’re going to see more flat rate options. 40k to sell your home instead of 3% kind of thing.
I’ve always felt that it’s ridiculous that an agent can sell one 3-5mil home and make enough for a year, while another agent has to sell 15 homes at 300-500K for the same result. Sure, selling an expensive home may be a little more work but not 15x more work.
So it sold quickly but was there time spent with you, staging, marketing- in other words much work done ahead of time that perhaps we take for granted? If it sold that quickly did you ever think to do FSBO rather than enlist her services?
I’m not a realtor but have close friends who are and I see/hear all they do. It’s more than some people think. The market lately has made selling easy and buying difficult.
My older s’s previous home sold quickly and for a LOT of money (think San Francisco) but the realtor organized the vendors for the inhome updates, painters, landscapers, had a beautiful video made with photographer and drone, etc. I think they did an open house over the first weekend (had many requests for the disclosure forms) but the weather was yukky so they held another the next weekend as well before taking the “best and final” offers the following Tuesday. Sold quickly and with no contingencies. Sold fast but the realtor did a lot.
So I could also foresee a future where realtors offer packages at certain rates, for the standard 3% we’ll do this, for 2% we’ll do this, etc. Discount brokers are already doing this.
I’ve had agents on both sides of the spectrum, we had one that hired a stager and organized all of our repairs etc, and one that literally drew up a standard contract and said “offers due 3/18”, looked through the offers with us and then she was gone and we dealt completely with the title company. They both made the same percentage. Seems wrong.
Menu pricing - I love it!! And it works - at least in my industry.
I do think part of the issue for many sales people is - the last few years - certainly in my industry but in real estate - it seems like the work hasn’t been as hard. People have become order takers but now with the economy maybe shifting, people have to work again - reach out, market, etc. Before a realtor put a home on the MLS and it sold - and it seemed that easy.
And while I agree that - wow, you make a lot for doing little - on the flip side, if someone achieved or exceeded your goal, why would it matter how much effort they put into it? Wouldn’t they have earned whatever the compensation is, even if egregious for accomplishing the goal?
I see it both ways.
I am curious how all this works out. Real estate is such a huge industry and many will be impacted which is never good. Then again, we’ve had industries turned upside down many times - and somehow people adapt and find other ways (whether the same industry or otherwise) to be successful.
There used to be consumer travel agencies, florists, cable companies, local phone companies, etc. etc. - and they’re mainly gone.
So I mostly agree with you. I think the issue is more that the commission structure shouldn’t be set by a national organization, it should be set by market conditions.
