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NAR settlement effect
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
Commission rates, like any other good or service are based on supply and demand.
The settlement is likely to lead to a lot of agents leaving the business. That equals a lower supply of available labor.
Here is a quote from an Axios article from an interview I gave them back in December.
Quote from @Kris B.:
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
Agents who provide the most value to the marketplace have nothing to worry about and still going to command the majority of business. Just getting rid of a lot of the agents who are one-foot out of the door any way or those who were getting by doing the minimum. As someone who's focused on building out a business for decades to come -- I'm thankful for there being a higher standard we should all be held to.
PS - Commission rates were and are always negotiable, its a misconception that ONLY 6% could be charged or that it could no longer be charged -- I wouldn't be shocked to still see 6% commission rates moving forward.
Quote from @Stephen Montez:
Quote from @Kris B.:
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
Agents who provide the most value to the marketplace have nothing to worry about and still going to command the majority of business. Just getting rid of a lot of the agents who are one-foot out of the door any way or those who were getting by doing the minimum. As someone who's focused on building out a business for decades to come -- I'm thankful for there being a higher standard we should all be held to.
PS - Commission rates were and are always negotiable, its a misconception that ONLY 6% could be charged or that it could no longer be charged -- I wouldn't be shocked to still see 6% commission rates moving forward.
I drives me mad when agents claim "comission rates were always negotiable". We just had a giant lawsuit that showed how difficult it was to negotiate the fees, and the steps realtors took to prevent buyers from easily doing so. And how the system would create negative outcomes for those who did negotiate lower fees.
Quote from @Jason Tinder:
Quote from @Stephen Montez:
Quote from @Kris B.:
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
Agents who provide the most value to the marketplace have nothing to worry about and still going to command the majority of business. Just getting rid of a lot of the agents who are one-foot out of the door any way or those who were getting by doing the minimum. As someone who's focused on building out a business for decades to come -- I'm thankful for there being a higher standard we should all be held to.
PS - Commission rates were and are always negotiable, its a misconception that ONLY 6% could be charged or that it could no longer be charged -- I wouldn't be shocked to still see 6% commission rates moving forward.
I drives me mad when agents claim "comission rates were always negotiable". We just had a giant lawsuit that showed how difficult it was to negotiate the fees, and the steps realtors took to prevent buyers from easily doing so. And how the system would create negative outcomes for those who did negotiate lower fees.
I've worked for 6%, 5%, all the way down to 2% in commissions. Hard doesn't mean not negotiable and the entirety of negotiating a deal is hard anyway, it should be. I'm not disagreeing that changes should have been made, I'm in favor of them. But the facts of the situation are the facts of the situation, that's all I'm trying to share. Best of luck!
Quote from @Stephen Montez:
Quote from @Jason Tinder:
Quote from @Stephen Montez:
Quote from @Kris B.:
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
Agents who provide the most value to the marketplace have nothing to worry about and still going to command the majority of business. Just getting rid of a lot of the agents who are one-foot out of the door any way or those who were getting by doing the minimum. As someone who's focused on building out a business for decades to come -- I'm thankful for there being a higher standard we should all be held to.
PS - Commission rates were and are always negotiable, its a misconception that ONLY 6% could be charged or that it could no longer be charged -- I wouldn't be shocked to still see 6% commission rates moving forward.
I drives me mad when agents claim "comission rates were always negotiable". We just had a giant lawsuit that showed how difficult it was to negotiate the fees, and the steps realtors took to prevent buyers from easily doing so. And how the system would create negative outcomes for those who did negotiate lower fees.
I've worked for 6%, 5%, all the way down to 2% in commissions. Hard doesn't mean not negotiable and the entirety of negotiating a deal is hard anyway, it should be. I'm not disagreeing that changes should have been made, I'm in favor of them. But the facts of the situation are the facts of the situation, that's all I'm trying to share. Best of luck!
What drives me mad is that they say "well, it was always negotiable" and try to gaslight everyone, as if it's all the people out there who just couldn't be bothered to negotiate. If only you had negotiated better, maybe you wouldn't have gotten yourself into that mess - you have nobody to blame but yourself. The comments pretend that all of the barriers that brought about the lawsuit never existed.
Former Realtor here, so no dog in this particular hunt. It really was always negotiable.
I can't count how many times I met with a seller and said my commission is X% (and I'll pay the buyer's agent out of that), and they replied that so-and-so says they only charge Y%. Can you beat that?
At that point, I recalculate. I have to decide whether I take less, offer the buyer's agent less of both or walk away from the listing. I have done all of the those, based on the circumstances.
I also can't count the number of times in mandatory training / continuing education that I was told that we were never, ever, under any circumstances to discuss setting "standard" commissions with other agents. In fact, in my pre-licensing course in Mass, the instructor said that if we were ever in a setting with other agents, like a gathering at a bar, and someone said something like "you know, we should all agree to a minimum of Z%" that we were to loudly and publicly excuse ourselves.
Business brokering is so much more fun - and we charge a lot more commission too!
@Kris B. Sure, commissions have always been “negotiable”. But try to get an agent/broker to reduce his or her commission, to actually negotiate it, and you would run into a brick wall virtually every time. When most of the agents in a market are charging 6%, with the rare 5%, it’s pretty hard to negotiate as a seller. Especially when the broker refuses to allow negotiating. My belief is that the settlement will allow negotiations to happen a little more freely since the public is aware that this can be part of the process. The difficult part is going to be for buyers who will have to either come up with the funds to pay their broker or negotiate seller paid closing costs to cover it. 
Quote from @Mark S.:
@Kris B. Sure, commissions have always been “negotiable”. But try to get an agent/broker to reduce his or her commission, to actually negotiate it, and you would run into a brick wall virtually every time. When most of the agents in a market are charging 6%, with the rare 5%, it’s pretty hard to negotiate as a seller. Especially when the broker refuses to allow negotiating. My belief is that the settlement will allow negotiations to happen a little more freely since the public is aware that this can be part of the process. The difficult part is going to be for buyers who will have to either come up with the funds to pay their broker or negotiate seller paid closing costs to cover it. 
Commissions being negotitiable doesn't mean every individual agent or brokerage needs to negotiate their fees. It means there is no standard fee. Just like target doesn't drop their fee cause you want to pay less......you can go to a cheaper place like Wal-Mart if you choose. You don't like what Compass charges, then you hire Redfin. You think Redfin is too much, then you go someplace lower.
Compass still won't negotiate their fees. And neither will Redfin, each will charge what they want as long as a consumer is willing to pay it.
If you negotiated the fee to 4%, with the selling agent getting 2% and the buying agent got 2%, you saw a whole lot less traffic from buyers. The fees being published was definitely a problem. Buying agents had less incentive to bring a client there and were acting on their own interest, rather than their clients. Same reason why an agent may push a seller into accepting $10k less on an offer, it gets the house sold and the difference is only $300 to them (based on 3% commission), whereas it's $9,700 to the seller. Now, this is not all agents/realtors, and that's why it's imperative to find someone who you trust and looks to build long-term relationships, and not someone just in it for the quick money, but it definitely was a chunk of them.
@Jeremy Brown fyi don’t forget the broker/agent split…. So it’s even less
I’ve had clients be concerned. Once I pointed how really little it affects my commission they all realized how stupid were there concerns and how little I make, especially all the time I have to put into just one transaction
Quote from @Charlie MacPherson:
Former Realtor here, so no dog in this particular hunt. It really was always negotiable.
I can't count how many times I met with a seller and said my commission is X% (and I'll pay the buyer's agent out of that), and they replied that so-and-so says they only charge Y%. Can you beat that?
At that point, I recalculate. I have to decide whether I take less, offer the buyer's agent less of both or walk away from the listing. I have done all of the those, based on the circumstances.
I also can't count the number of times in mandatory training / continuing education that I was told that we were never, ever, under any circumstances to discuss setting "standard" commissions with other agents. In fact, in my pre-licensing course in Mass, the instructor said that if we were ever in a setting with other agents, like a gathering at a bar, and someone said something like "you know, we should all agree to a minimum of Z%" that we were to loudly and publicly excuse ourselves.
Business brokering is so much more fun - and we charge a lot more commission too!
Bottom line is this: the courts found that the industry illegally conspired to keep commissions high. That means things weren’t quite as negotiable as they should have been.
I see so many agents saying nothing has changed, it’s always been negotiable so nothing will change. They vow to uphold the old system, even though it has been ruled illegal. They plan to continue what’s been ruled illegal through clever workarounds and ticking boxes on forms differently.
I’m just frankly shocked at what’s coming out of their mouths - almost as if the law is this silly little thing that the courts enforce because they can’t see the light properly as an agent does.
I say all of this as a licensed agent. I have my license to avoid exorbitant fees on my own deals (as much as I can).
Quote from @Kris B.:
Question for agents. What's your take on no more 6% commission and how this will change the way you operate?
From what I've heard some real estate buying agents are moving on to become TC, others are considering the fix & flip business model capitalizing on what they do know and that is locating discounted properties coupled with there knowledge of sales simply need financial backing. I work with private investors who will offer short-term financing to non seasoned LLCs and do not have a FICO requirement. privatemoneylender.website
Quote from @Mark S.:
@Kris B. The difficult part is going to be for buyers who will have to either come up with the funds to pay their broker or negotiate seller paid closing costs to cover it. 
Buyers always came up with funds to purchase the property, which then went to pay the commissions. The seller never brought funds to the table. The same is true here, but in the new arrangement it is only more transparent.