NAR Settlement - HOT TAKES

[Alan Asriants]

I have a few HOT TAKES on this recent NAR Settlement News

1. Buyer's agents won't wait long to get into written agreement with a Buyer. Right now, many agents don't sign any agreements until they sign an offer. With this new system, I won't wait long to sign an agreement and spell out what commissions are owed. Many Buyers will refuse to sign, but will quickly see that no one will want to work with them for free without an agreement in place. This is actually not a bad thing for Buyer's agents, as we will encounter less tire kickers. 

2. Prices of listings will adjust. The MLS market always included both sides of the commission. So if the Seller is not offering that commission, then the price of the home offered should be less, since the buyer is now assuming this responsibility

3. Many agents will leave the business. Again, this is a good thing. For many agents it can be a sigh of relief, as we no longer have to compete with incompetent family members for business 

4. The market will drive commissions. In a sellers market, anyone can sell a home. This is why I believe this issue started in the first place. Sellers got greedy and wanted more money in their pocket because they felt they could sell their home on their own just by putting it on the market. While some of this is true, this won't hold true when the market shifts. In a Buyer's market, sellers offer LARGER commissions to Buyers agents in hopes of getting an offer. To the sellers thinking they are going to make more money, maybe not. 

5. Buyers who don't have representation will get screwed. If a buyer doesnt want to pay an agent and goes directly to the seller, their interests are not protected. In the short term we might not see any issues, but overtime, cases will arise when Buyers start getting screwed in shaky deals. Its like going to court without a lawyer. The lawyer could've likely gotten you a shorter sentence.

What are your thoughts?

[Shane H.]

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

They already paid both fees. Let’s be real here. 

They will wrap them in the mortgage just like they did before. Like what you’re saying is $150,000 house - $9,000 is $141,000. Or 145,500 - $4,500 is wait… still $141,000?! Lol

[David Avery]

The NRA will work through this quickly 

Might be a good time to buy a 🏠 and save

$12,000.(3 percent ,)( 400,000 house, )

Who Knows. 

It will work itself out.

[Shane H.]

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 If that’s what you mean by going down then sure… but they’ll still ask 150k and if the buyer forgoes an agent they’ll sell for 150k and pay the sellers agent. If the buyer uses an agent they’ll offer 145500….

[Bradley Miller]

Shane- I can only speak for my state when I say that you can certainly represent yourself. There is no automatic 6% (actually that is not the norm in our area anyway). Or you can hire an attorney to represent you. It's just not as easy as most people think. The reason brokers don't like to do dual agency is not because they are trying to perpetuate a scam on the public, it's because it's difficult to have a fiduciary relationship with both parties (i.e., trying to get the most money for the seller and the best deal for the buyer). But in our area some real estate agents do represent both sides anyway and may even give a break on their commissions when doing so. Plus there are plenty of discount brokerages around who will work for a reduced commission (e.g., Redfin).

[Shane H.]

Quote from @Bradley Miller:

Shane- I can only speak for my state when I say that you can certainly represent yourself. There is no automatic 6% (actually that is not the norm in our area anyway). Or you can hire an attorney to represent you. It's just not as easy as most people think. The reason brokers don't like to do dual agency is not because they are trying to perpetuate a scam on the public, it's because it's difficult to have a fiduciary relationship with both parties (i.e., trying to get the most money for the seller and the best deal for the buyer). But in our area some real estate agents do represent both sides anyway and may even give a break on their commissions when doing so. Plus there are plenty of discount brokerages around who will work for a reduced commission (e.g., Redfin).

While it may not always be 6%, this is exactly what the lawsuit was about. So if you were not already doing it that way it should have 0 effect on you. The whole point of this was the 6% that was locked in by the seller that the buyer has to pay. 

[Mark S.]

@Zander Kempf I agree - been trying to figure out why the media keeps saying home prices will come down as a result of this.

[Rob Tennyson]

Quote from @Sasha Mohammed:

Lets keep this thread going! 

Personal opinion, ive never liked dual-agency. When a listing agent also represents the buyer, the fiduciary duty to both parties gets removed, and instead turns into a duty to oneself (as the agent) to make the most amount of money possible. One cannot simultaneously get the highest price for the seller and the lowest price for the buyer in the same transaction. 

As a mortgage broker in these types of transactions, or buyers going at it without an agent, puts a lot on our shoulders to answer questions that would typically be referred to their buyer's agent. I'm also concerned with the liability here. Yes, i'm licensed, but i don't work as an agent in any capacity; there's no experience on my end other than a piece of paper that says i'm allowed. this is a disservice to a buyer as well, may of whom are first timers and could benefit from all the support they can get. 

I also don't love that in a market where buyers are already having affordability issues, especially where i am (Orange County, CA) where most 30-somethings are already struggling to piece together a minimum down, they will likely be slapped with an additional cost in paying their own agent. even at 2%, on an entry level $1m home, that's an extra $20k most don't have.

IMO, this just made our affordability situation worse. and i don't see it reducing home prices, i see it benefitting the seller to pocket that extra 3%-ish at a time of record equity building over the last few years. 

Not sure what the aim was with this NAR settlement. only thing i could think of is slowing down demand further to meet the supply (or lack thereof)?

I just don't see any way sellers are going to make buyers pay for RE comp out of pocket. It would be devastating to their listing. Only unrepresented buyers would make offers. 

The biggest takeaway for me in this whole lawsuit is that buyers and buyer's agents are going to negotiate the agent's fee before they see ANY houses. Sellers will still pay for the buyer's agent comp and it will be built into the price of the home. 

[Rob Tennyson]

Quote from @Jay Hinrichs:

Quote from @Zander Kempf:

I don't see listing prices being adjusted. If you were about to sell your house and your listing agent told you that you only need to pay 3% now instead of 6%, would you drop your price by 3%? Nope, sellers will just pocket the difference. 

are appraisers going to value the homes different depending on commish amounts ?

 I'm curious about this as well. I've seen appraisers reduce the appraised value by the seller credit. So wouldn't they do the same for buyer's agent comp?

For instance. $500,000 listing price. Offer gets accepted at $505,000 with $5k in seller credit. Then the appraisal comes in at $500,000. Ruins the whole seller credit. 

[Mark Cotter]

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 When there is a void something always moves in to fill it. I'm willing to bet you that companies like Redfin and Zillow will be all over this. Buyers won't be using Agents within 5 years.

[Rob Tennyson]

Quote from @Alan Asriants:

Quote from @Mark Cotter:

Quote from @Alan Asriants:

Quote from @Mark Cotter:

Quote from @Alan Asriants:

Quote from @Mark Cotter:

Quote from @Alan Asriants:

I have a few HOT TAKES on this recent NAR Settlement News

1. Buyer's agents won't wait long to get into written agreement with a Buyer. Right now, many agents don't sign any agreements until they sign an offer. With this new system, I won't wait long to sign an agreement and spell out what commissions are owed. Many Buyers will refuse to sign, but will quickly see that no one will want to work with them for free without an agreement in place. This is actually not a bad thing for Buyer's agents, as we will encounter less tire kickers. 

2. Prices of listings will adjust. The MLS market always included both sides of the commission. So if the Seller is not offering that commission, then the price of the home offered should be less, since the buyer is now assuming this responsibility

3. Many agents will leave the business. Again, this is a good thing. For many agents it can be a sigh of relief, as we no longer have to compete with incompetent family members for business 

4. The market will drive commissions. In a sellers market, anyone can sell a home. This is why I believe this issue started in the first place. Sellers got greedy and wanted more money in their pocket because they felt they could sell their home on their own just by putting it on the market. While some of this is true, this won't hold true when the market shifts. In a Buyer's market, sellers offer LARGER commissions to Buyers agents in hopes of getting an offer. To the sellers thinking they are going to make more money, maybe not. 

5. Buyers who don't have representation will get screwed. If a buyer doesnt want to pay an agent and goes directly to the seller, their interests are not protected. In the short term we might not see any issues, but overtime, cases will arise when Buyers start getting screwed in shaky deals. Its like going to court without a lawyer. The lawyer could've likely gotten you a shorter sentence.

What are your thoughts?

 Here's my take on your post. Initially, I'm sure nobody will know what to do but this is how I think it settles.

1. Buyers won't use agents, Companies like Redfin and Zillow, who are more Silicon Valley than RE companies, will develop technology to cut them out.

2. In my neighborhood homes sell for 2-3 million, there are currently 2 homes pending that were on the market for a week, and no homes for sale. When I purchased here it was the opposite, I made an offer and it was low and they quickly said no and all my Realtor did was tell me to make another offer, tried to rush me, and create urgency but eventually the market came to me. Homes will always sell for the amount the market dictates.

3. I agree, and that is a good thing. Millions of incompetent agents propped up by an inflated compensation model.

4. "Sellers got greedy" no, the general opinion of Realtors out there in the world is extremely negative. This is based on experiences people have with them. Price and value are not the same thing and it isn't the price that has been the problem it is the perceived lack of value. As for the rest of point 4 I think, in a vacuum, this might be correct but as technologies improve, especially LLM/AI products I think Agents will become even less important. This is a rather large kink in the NAR's armor and there have always been those on Wall Street who have eyed the lucrative housing market.

5. Why will they get screwed? Disclosures in my neck of the woods are the responsibility of the seller and if they don't disclose well we shall see. I can order a pest, talk to the title company, and have house inspections done. Realtors use transaction coordinators, maybe it's an opportunity for them to branch out. It is nothing like going to court without a lawyer.

 4. I don't know if technology can replace someones experience of living and breathing in that area/environment. Maybe im wrong here and tech will advance far past our imagination, but I don't know if a computer can describe certain emotions feels, perceptions etc. Maybe we are being forced into a colder world, where people just buy builder grade BS, and things are just treated as roofs over peoples heads, but feel is something human that cannot be taken away, and a good agent understands this and their buyers. Again, lots of us here are investors. We are not emotionally involved. But many people buying for themselves are EXTREMELY emotional. 

5. An agent can simply take advatage of a buyer that doesn't have information. Again, you can't think from your perspective as someone who has experience. Many people dont! When I first started rehabbing houses, I got taken advantage left and right by contractors, because they fed me some BS and I ate it up. Now I know its BS. 

The tech that I refer to will replace the actions of the buyer agent, not the experience of seeing the product. Seller agents have an obligation "fiduciary" to their clients so they will have to show the home to unrepresented buyers, if agents want to try and cut the independent buyer out then they risk the buyer lodging formal complaints. In strong sellers markets it may be more difficult for unrepresented buyers and they may choose to get a Realtor but this is the market dictating the circumstance and not the NAR. This was the point of the decision. If an agent wants to "take advantage of a buyer, " this ethical issue already plagues the industry.

The comment that "sellers are greedy" Is such a red flag for me. I would never use a Realtor who told me I was greedy. Getting the best price for the asset is one of the skills Realtors claim to have and to pass off their failure as "seller's greed" is one of the reasons Realtors have such a poor standing in our society today.

 The market is the highest it has ever been. Sellers are getting FAR more than what they imagined they would get for them home. In some cases 10-20%+ more. They are trying to limit commissions and save 1-2%. Don't get me wrong, I understand the idea of getting the most for your home. You are absolutely right I do get the most for my sellers. Even in multiple offer situations I will try to get additional value and terms for my seller from the higher bidders. That's what I am paid to do. What I don't understand is why this issue of paying commissions is coming at the highest point and best market ever for sellers... 

Instead of taking my comment and turning it into a "red flag", consider the overall picture. When its easy to sell, no one wants to pay anyone anything. When its tough, people try to get/pay for all the help they can. Its simple psychology. 

 I made it clear that I consider it a Red Flag so I'm not "turning it into" anything, as its my perspective. Regarding your comment on sellers, this is about the buyer side of a transaction, not the sellers. Buyers should have the ability to negotiate the cost that they pay, it really is that simple.

 Unfortunately it is not so simple. They can negotiate, but that doesn't mean they will be able to afford it. Packing it into the loan is not so simple as it can create issues with lender and appraisal. 

What if you're a VA buyer? You are technically not allowed to pay commissions to Buyer Agent. Even if they can afford to pay it outside of their 0% down payment.

Lots of thing will need to change if buyers need representation. These kinds of things rarely affect those who have the money to pay, it is about those buyers who are getting into the market with a down payment they just scraped away. Now they might not get representation when they might need it most, even if they wanted too. 

I can almost guarantee that FHFA, HUD, and VA will see guideline changes surrounding this over the next year or so. Especially VA.

[Matthew Paul]

Quote from @Alan Asriants:

Quote from @Matthew Paul:

My thoughts , The buyers agent wont be working on a percentage basis , it will be a flat fee plus any extras .  Very similar to how contractors work .   

The 5 house package , I will show 5 houses within a 30 mile radius ( extrs $2 a mile past that ) submit up to 3 contracts . For xxxx  dollars .   Arrange home inspector  xxxx dollars  . etc etc . 

There is no more work to show a $500K house than a $900K house , for the most part . 

As far as the open houses , I can see some attorneys selling a pre made contract to buyers and the buyers without agents will fill out the contract and hand it to the selling agent . 

I think the days of a commission based structure for buyers agents is going to be over .

Sure there are agents that say they wont work for less , thats fine , others will .   

 What do you think is fair?

 It doesent matter whats   " fair "  .    Its what both buyer and the agent agree on .  

If I , the buyer wants to see a house and a buyers agent takes me in and shows me , And then I want to put in an offer , they are entitled to be paid for their time . Is that amount a percentage of the sales price ?   No , not in my opinion .   If they have 8 hours of their time involved , they should be compensated .  If the agent is asked to provide additional services , they charge accordingly .

Becoming an agent is not hard , take a free course offered by a real estate company , study , pass the test , you are a licensed agent . No college , no 5 years of experience needed . Plumbers , electricians , HVAC , need time in the field under a master before they can be a journeyman and more years before they can sit for the test for their masters license .  

Yes  buyers agents will make less , when you are hungry you will do what you need to to put food on the table . And other buyer agents will lower their prices to get the work . 

[Shane H.]

Quote from @Carlos Ptriawan:

Quote from @Shane H.:

Quote from @Carlos Ptriawan:

Quote from @Shane H.:

Quote from @Bradley Miller:

Are we just going to dump the buyer's agent? I don't think so. Despite the fact that the 2023 Profile of Home Buyers & Sellers survey comes from NAR, I think it is a fairly accurate representation of what is going on in our real estate business. It reveals that although 97% of home buyers search online for their future home, 89% still use a real estate agent to purchase a home. And of those, 87% said they would (73%) or probably would (14%) recommend their agent for future service. These don't look like the kind of numbers where people are just going to dump this valuable resource.

My thoughts are that there will be a change in how buyer's brokers commissions are agreed to. Instead of putting them in the MLS (which will no longer be allowed), they will become part of the offer... much like asking for closing costs. But even before that, a fee will be agreed to between the broker and the buyer for representation with the understanding that the broker will do their best to get the seller to pay as much of that fee as possible.

Of course if the sellers refuse to pay for the buyer's side commission, then the price of the home will need to be negotiated to reflect that, especially in those cases where people push their lending limits to the edge.

People use a buyers agent because it is built it already, not because “it’s a valuable resource.” When they look online and ask for info it sends them to a buyers agent. I specifically have to look up the listing agent and call them direct to avoid this annoyance. And then it’s already built into the listing contract that 6% of the buyers money is going to agents so they often opt for their own instead of dual agency. The end result of this is going to be no change in price for those who forgo an agent, and an increase for those that use one. 

That's the ultimate objective of NAR lawsuit.

To increase home prices? Lol

 No the other way around lol

 Why would it be the other way? Lol the buyer always paid both fees. Try well continue to pay both fees. No changes. The fees are already factored in by anyone who’s not a moron. Seller and buyer… that number won’t change. Just the way it’s written on the settlement sheet. 

[Steve K.]

Quote from @Mark Cotter:

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 When there is a void something always moves in to fill it. I'm willing to bet you that companies like Redfin and Zillow will be all over this. Buyers won't be using Agents within 5 years.

Redfin has been around for 20 years now and Zillow for 18. People have been saying they'll end real estate agents ever since they started. But the opposite happened: there are more agents now than ever before. Are they going to take over now just because buyers agent coop fees are moving from the MLS to somewhere else? All of the info on these sites originates from the MLS systems that NAR controls. They could not exist as they do without agents inputting that data, and NAR could end both of these companies overnight simply by cutting off their IDX feeds. Both of their stocks are down since the settlement announcement. Co-star stock however is up. Redfin announced they were leaving NAR last year (but didn't actually leave because they couldn't in most markets or they would lose the MLS access that their platform is built on), and Zillow is still a NAR member.

[Paul Azad]

Real Estate Agents and everyone else in a free market is paid exactly what they are worth. That's how worth is defined, a tautology. The 1.8 Billion dollar verdict and now the 418 Million dollar settlement just breakup a classic Cartel, hence the ruling that it was an anti-trust violation. The buyer side agents now have to get their buyers to sign a document either obligating the buyer to pay their fee or not-obligating them to pay their fee. Many buyers will not sign the first form, so buyer agent will have to get fee from seller or seller's agent with no promise of getting that when first adopting the buyer client. 

who knows how it will shake out over time, but other trust busting verdicts/government actions usually lead to more efficient transactions for the consumers, ie. lower prices of fees. Like UBER/LYFT dropping taxi-cab fees by >50-75%, or pharmaceuticals coming off 17yr patent protection and costs dropping >90%, or de-reg, de-monopolization of energy in Texas etc on and on.

The verdict/case has also generated enormous interest/buzz among the average public and interestingly a new found awareness that the commissions are entirely negotiable or even avoidable which when you read the 108 page summary report of the settlement, the hundreds of plaintiffs had no idea of and claimed they were lied to by their agents. The plaintiffs in the much larger 42 Billion pending lawsuit also will likely make same claim, and may be warranted. This public exposure to the commission process may be the most damaging aspect and may dwarf these verdicts longer term. 

[Robert C.]

HOT TAKE - If buyer’s commission really gets whittled down to a low flat fee, isn’t there a point where most of you (realtors) should just become leasing agents for a living instead?!

[Jay Hinrichs]

Quote from @Matthew Paul:

Quote from @Alan Asriants:

Quote from @Matthew Paul:

My thoughts , The buyers agent wont be working on a percentage basis , it will be a flat fee plus any extras .  Very similar to how contractors work .   

The 5 house package , I will show 5 houses within a 30 mile radius ( extrs $2 a mile past that ) submit up to 3 contracts . For xxxx  dollars .   Arrange home inspector  xxxx dollars  . etc etc . 

There is no more work to show a $500K house than a $900K house , for the most part . 

As far as the open houses , I can see some attorneys selling a pre made contract to buyers and the buyers without agents will fill out the contract and hand it to the selling agent . 

I think the days of a commission based structure for buyers agents is going to be over .

Sure there are agents that say they wont work for less , thats fine , others will .   

 What do you think is fair?

 It doesent matter whats   " fair "  .    Its what both buyer and the agent agree on .  

If I , the buyer wants to see a house and a buyers agent takes me in and shows me , And then I want to put in an offer , they are entitled to be paid for their time . Is that amount a percentage of the sales price ?   No , not in my opinion .   If they have 8 hours of their time involved , they should be compensated .  If the agent is asked to provide additional services , they charge accordingly .

Becoming an agent is not hard , take a free course offered by a real estate company , study , pass the test , you are a licensed agent . No college , no 5 years of experience needed . Plumbers , electricians , HVAC , need time in the field under a master before they can be a journeyman and more years before they can sit for the test for their masters license .  

Yes  buyers agents will make less , when you are hungry you will do what you need to to put food on the table . And other buyer agents will lower their prices to get the work . 

real estate is the same you have to work under a broker ( master) for 2 to 3 years before you can sit for the Brokers test and then work for yourself..  there is so much more to a transaction then a few hours.. But regardless if Agents are only making a few hundred per deal as buyers agents they will go extinct and there are only so many listings.. So Buyers will have to just call on each and every house they are interested in.. schedule with listing agent etc it will slow things down .. Buyer will miss on deal after deal.. Listing agents will have their go to clients ( in the investor world)
We got a call yesterday on one of my new builds from a RELO agent.. how are people that are relocating going to do this without buyers agents.. ??  buyers will be forced to call 20 different agents it will be a mess.

[Matthew Paul]

Quote from @Jay Hinrichs:

Quote from @Matthew Paul:

Quote from @Alan Asriants:

Quote from @Matthew Paul:

My thoughts , The buyers agent wont be working on a percentage basis , it will be a flat fee plus any extras .  Very similar to how contractors work .   

The 5 house package , I will show 5 houses within a 30 mile radius ( extrs $2 a mile past that ) submit up to 3 contracts . For xxxx  dollars .   Arrange home inspector  xxxx dollars  . etc etc . 

There is no more work to show a $500K house than a $900K house , for the most part . 

As far as the open houses , I can see some attorneys selling a pre made contract to buyers and the buyers without agents will fill out the contract and hand it to the selling agent . 

I think the days of a commission based structure for buyers agents is going to be over .

Sure there are agents that say they wont work for less , thats fine , others will .   

 What do you think is fair?

 It doesent matter whats   " fair "  .    Its what both buyer and the agent agree on .  

If I , the buyer wants to see a house and a buyers agent takes me in and shows me , And then I want to put in an offer , they are entitled to be paid for their time . Is that amount a percentage of the sales price ?   No , not in my opinion .   If they have 8 hours of their time involved , they should be compensated .  If the agent is asked to provide additional services , they charge accordingly .

Becoming an agent is not hard , take a free course offered by a real estate company , study , pass the test , you are a licensed agent . No college , no 5 years of experience needed . Plumbers , electricians , HVAC , need time in the field under a master before they can be a journeyman and more years before they can sit for the test for their masters license .  

Yes  buyers agents will make less , when you are hungry you will do what you need to to put food on the table . And other buyer agents will lower their prices to get the work . 

real estate is the same you have to work under a broker ( master) for 2 to 3 years before you can sit for the Brokers test and then work for yourself..  there is so much more to a transaction then a few hours.. But regardless if Agents are only making a few hundred per deal as buyers agents they will go extinct and there are only so many listings.. So Buyers will have to just call on each and every house they are interested in.. schedule with listing agent etc it will slow things down .. Buyer will miss on deal after deal.. Listing agents will have their go to clients ( in the investor world)
We got a call yesterday on one of my new builds from a RELO agent.. how are people that are relocating going to do this without buyers agents.. ??  buyers will be forced to call 20 different agents it will be a mess.

Jay , you had the drive to move to the next level and become a broker . Most people dont . Yes some transactions take more effort than others . In my experience when I have dealt dirrectly with sellers on a FSBO , it was quick and easy , even my first purchase at 23 years old with no experience . The one that was difficult was my personal home where agents were involved .

Do I know how this will all play out ?  Nope , I dont think anybody really does . I do think part time and not so good agents will leave , I think both buyers agents and sellers agents are going to make less per transaction . 

Just like any other industry , the law of supply and demand comes into play . 

As far as buyers calling and scheduling with listing agent , I dont see anything wrong with that . The selling agent may have to hustle . 

I can see on some deals , yes the agent will only make a couple hundred , it all depends on what they do .  Some deals they will make more , depending what services the buyer wants them to provide . 

It could be a mess in the beginning , but like anything else , things will shake out and someone will come up with a better solution . 

[Jay Hinrichs]

Quote from @Matthew Paul:

Quote from @Jay Hinrichs:

Quote from @Matthew Paul:

Quote from @Alan Asriants:

Quote from @Matthew Paul:

My thoughts , The buyers agent wont be working on a percentage basis , it will be a flat fee plus any extras .  Very similar to how contractors work .   

The 5 house package , I will show 5 houses within a 30 mile radius ( extrs $2 a mile past that ) submit up to 3 contracts . For xxxx  dollars .   Arrange home inspector  xxxx dollars  . etc etc . 

There is no more work to show a $500K house than a $900K house , for the most part . 

As far as the open houses , I can see some attorneys selling a pre made contract to buyers and the buyers without agents will fill out the contract and hand it to the selling agent . 

I think the days of a commission based structure for buyers agents is going to be over .

Sure there are agents that say they wont work for less , thats fine , others will .   

 What do you think is fair?

 It doesent matter whats   " fair "  .    Its what both buyer and the agent agree on .  

If I , the buyer wants to see a house and a buyers agent takes me in and shows me , And then I want to put in an offer , they are entitled to be paid for their time . Is that amount a percentage of the sales price ?   No , not in my opinion .   If they have 8 hours of their time involved , they should be compensated .  If the agent is asked to provide additional services , they charge accordingly .

Becoming an agent is not hard , take a free course offered by a real estate company , study , pass the test , you are a licensed agent . No college , no 5 years of experience needed . Plumbers , electricians , HVAC , need time in the field under a master before they can be a journeyman and more years before they can sit for the test for their masters license .  

Yes  buyers agents will make less , when you are hungry you will do what you need to to put food on the table . And other buyer agents will lower their prices to get the work . 

real estate is the same you have to work under a broker ( master) for 2 to 3 years before you can sit for the Brokers test and then work for yourself..  there is so much more to a transaction then a few hours.. But regardless if Agents are only making a few hundred per deal as buyers agents they will go extinct and there are only so many listings.. So Buyers will have to just call on each and every house they are interested in.. schedule with listing agent etc it will slow things down .. Buyer will miss on deal after deal.. Listing agents will have their go to clients ( in the investor world)
We got a call yesterday on one of my new builds from a RELO agent.. how are people that are relocating going to do this without buyers agents.. ??  buyers will be forced to call 20 different agents it will be a mess.

Jay , you had the drive to move to the next level and become a broker . Most people dont . Yes some transactions take more effort than others . In my experience when I have dealt dirrectly with sellers on a FSBO , it was quick and easy , even my first purchase at 23 years old with no experience . The one that was difficult was my personal home where agents were involved .

Do I know how this will all play out ?  Nope , I dont think anybody really does . I do think part time and not so good agents will leave , I think both buyers agents and sellers agents are going to make less per transaction . 

Just like any other industry , the law of supply and demand comes into play . 

As far as buyers calling and scheduling with listing agent , I dont see anything wrong with that . The selling agent may have to hustle . 

I can see on some deals , yes the agent will only make a couple hundred , it all depends on what they do .  Some deals they will make more , depending what services the buyer wants them to provide . 

It could be a mess in the beginning , but like anything else , things will shake out and someone will come up with a better solution . 

Ya I dont disagree .. it will all shake out in the wash.. and really nothing might change.. on the private remarks the listing agent will just say Courtesy to brokers.. And they will tell their client you need to pay the broker out of your proceeds just like its been done the last 100 years. Other wise your listing is going to sit and not move and you probably are going to sell for a lot less because you have far fewer people looking at it. ??  will see ..

Keep in mind RE agents already have a wash out rate of at least 70% .. either dont make it past year 2 or 3.. or really never do much at all.. 20% of agents make 80% of all revenue so thats already here and has been here for decades.. at least the 5 decades I have sold real estate Or the 3 brokerages I have owned and managed hundreds of agents.

[V.G Jason]

Quote from @Jay Hinrichs:

I think it will be a learning curve for sure with some pain in the beginning.

Out here on the West coast residential mom and pop buyers simply never sign buyer broker agreements I have never signed one as a buyer in 50 years or actually any market I work in and I have bought and sold thousands of properties in my day.

Just today one of the Agents ( KW ) who just sold one of my new builds calls my wife ( Ms. Lori is my listing agent)  and they start discussing this new ruling.. the agent ( who is very experienced ) related to Mr. Lori that he is working with a new buyer and was explaining they he needs to get a buyers brokers signed and the commish rate.. Buyer says NO WAY I am signing that.. then came around and said sure I will sign it but I am not paying you more than $500.00 .. Well in our market which is mid to low level for west coast  average transactions is around 600k.. so average fee is 12k and up..  This agent just told the buyer he cannot then work with him and show him houses or send him listings etc and told Mr. Lori well there ya go I just lost a good buyer..

So Ms. Lori and I chatted some more and she has 30 plus years of doing retail owner occ RE sales and managed a large C 21 office at one time. She thinks that open houses which have always been the bane of listing agents ( NO one likes to do them and you usually pon them off to starter agents.. ) Will now become very popular as buyers will have to go to these for not just kicking tires but to actually get to see a house they want to buy..

We also discussed the Modern agent.. who never ever picks up the and says text me and then never calls anyone back ESPECIALLY listing agents  Listing agents dont want buyers they want listings.

In addition many brokerages in our market do NOT allow dual representation.. So how is that going to work when buyers are forced to use the listing agent.. ???

Lots to think about here on the mechanics of how this all is going to work.

For us selling our own new construction if it drives more buyers directly to us its a bonanza for us and much welcomed.

In bold-- I read before these will die off. But I thought the opposite & agree with you, this will now field buyers and will eliminate the one's truly not interested. Especially even virtual open houses done by the listing agent. Now how does the buyer engage?

This will be hard. I think the technology based brokers will find a way to undercut the on the ground agents. Most agents aren't worth their pay, so it's going to be the cheapest one to get me the basics contractually as the investor but as a first time homebuyer or someone not seasoned you need their intel & savvy. However, most aren't savvy so you'll need to pay up for that but you can't cause of limited means. There's going to be something in between that'll break this. I think another tech company that comes in with simply online a la carte models of house buying; you pay a set fee for your house search, you have online legal help to navigate you through the contracts, you can contact listing agents to see houses physically, etc. 

[David M.]

@V.G Jason

tech based brokers have been trying to do that.  Didn't Redfin bring on this suit?  They think that a salaried group of agents at a call center with fixed fee agents on the ground that don't interact with the buyers will work.

However, I haven't heard much about Redfin making tons of money.  Also, those "doorpeople" aren't doing the profession any good, at least the ones I saw.  I think it will appeal to a certaingroup of people.  Those that perhaps like interacting with faceless agents at a call center and don't want to interact with an agent face to face.  Maybe those who are trying to "save some money" either because they are experienced or even new.

The ala carte model will be interesting...  Of course, by the hour will be fruitless.  Maybe fixed fee type commissions??  Lets face it, aren't most sales compensated on percentage commissions?

[Mark Cotter]

Quote from @Steve K.:

Quote from @Mark Cotter:

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 When there is a void something always moves in to fill it. I'm willing to bet you that companies like Redfin and Zillow will be all over this. Buyers won't be using Agents within 5 years.

Redfin has been around for 20 years now and Zillow for 18. People have been saying they'll end real estate agents ever since they started. But the opposite happened: there are more agents now than ever before. Are they going to take over now just because buyers agent coop fees are moving from the MLS to somewhere else? All of the info on these sites originates from the MLS systems that NAR controls. They could not exist as they do without agents inputting that data, and NAR could end both of these companies overnight simply by cutting off their IDX feeds. Both of their stocks are down since the settlement announcement. Co-star stock however is up. Redfin announced they were leaving NAR last year (but didn't actually leave because they couldn't in most markets or they would lose the MLS access that their platform is built on), and Zillow is still a NAR member.

Because of the NAR's power over the industry and that is what will change. Do you think this is a simple change in where buyer's commissions will be displayed? Did you read the lawsuit? You should.

[Steve K.]

Quote from @Mark Cotter:

Quote from @Steve K.:

Quote from @Mark Cotter:

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 When there is a void something always moves in to fill it. I'm willing to bet you that companies like Redfin and Zillow will be all over this. Buyers won't be using Agents within 5 years.

Redfin has been around for 20 years now and Zillow for 18. People have been saying they'll end real estate agents ever since they started. But the opposite happened: there are more agents now than ever before. Are they going to take over now just because buyers agent coop fees are moving from the MLS to somewhere else? All of the info on these sites originates from the MLS systems that NAR controls. They could not exist as they do without agents inputting that data, and NAR could end both of these companies overnight simply by cutting off their IDX feeds. Both of their stocks are down since the settlement announcement. Co-star stock however is up. Redfin announced they were leaving NAR last year (but didn't actually leave because they couldn't in most markets or they would lose the MLS access that their platform is built on), and Zillow is still a NAR member.

Because of the NAR's power over the industry and that is what will change. Do you think this is a simple change in where buyer's commissions will be displayed? Did you read the lawsuit? You should.

I started reading it last night, plan to finish over the weekend. Have you read it? So far the only 2 people I know who read it have the exact opposite take than all of the news media reporting on it, including the Times. It's clear that not one of the people reporting on it actually read it. The settlement is not nearly as ground-shaking or dramatic as the reporting on it wants the public to believe IMO. It's a win for NAR actually IMO (they avoided potential bankruptcy if they didn't settle and lost, and the fine isn't really that much for them. They can pay that easily with cash on hand without even increasing dues. The procedural changes are actually minor and loopholes and work-arounds are definitely possible. There's no admission of guilt, etc.).

Did you read NAR's response to the media this week "correcting the record". Google that if not. The biggest impact could be in the negative PR though, as sometimes perception becomes reality, factual or not.

Redfin was part of the suit (and several other similar suits), their business model of charging a set percent while providing limited services was clearly called out in the plaintiffs complaint. And Zillow makes almost all of their money by selling buyer leads to buyers agents, so less buyers agents just means less money for them. I don't see how either business model benefits from this.  

[Marc Rice]

Quote from @Alan Asriants:

I have a few HOT TAKES on this recent NAR Settlement News

1. Buyer's agents won't wait long to get into written agreement with a Buyer. Right now, many agents don't sign any agreements until they sign an offer. With this new system, I won't wait long to sign an agreement and spell out what commissions are owed. Many Buyers will refuse to sign, but will quickly see that no one will want to work with them for free without an agreement in place. This is actually not a bad thing for Buyer's agents, as we will encounter less tire kickers. 

2. Prices of listings will adjust. The MLS market always included both sides of the commission. So if the Seller is not offering that commission, then the price of the home offered should be less, since the buyer is now assuming this responsibility

3. Many agents will leave the business. Again, this is a good thing. For many agents it can be a sigh of relief, as we no longer have to compete with incompetent family members for business 

4. The market will drive commissions. In a sellers market, anyone can sell a home. This is why I believe this issue started in the first place. Sellers got greedy and wanted more money in their pocket because they felt they could sell their home on their own just by putting it on the market. While some of this is true, this won't hold true when the market shifts. In a Buyer's market, sellers offer LARGER commissions to Buyers agents in hopes of getting an offer. To the sellers thinking they are going to make more money, maybe not. 

5. Buyers who don't have representation will get screwed. If a buyer doesnt want to pay an agent and goes directly to the seller, their interests are not protected. In the short term we might not see any issues, but overtime, cases will arise when Buyers start getting screwed in shaky deals. Its like going to court without a lawyer. The lawyer could've likely gotten you a shorter sentence.

What are your thoughts?

 I agree! Should be way easier for good agents. Part time agents will get flushed out, good buyers agents will charge a premium, and things will be ok. I see Redfin and Zillow launching "flat fee low budget, low service" buyer-agent lead network, but those agents will not be good, especially anything investment related. If you're a buyer agent finding off market deals, you can now charge even more for your service due to the extra headaches.

This is good all around for good agents finding good off market deals.

[David M.]

@Steve K. Any chance you've got a link to the court doc?

[Carlos Ptriawan]

Quote from @Steve K.:

Quote from @Mark Cotter:

Quote from @Devin Scott:

Quote from @Shane H.:

I think the whole thing is irrelevant. Prices aren’t going to go down. Are you seriously going to list a house for 145,500 instead of 150k because of this? Lol I expect an increase in overall cost. The only way it’s going to drive prices down is if buyers agents (like all of them not just one here or there) encourage buyers to make offers accordingly. I don’t see it… the fact of the matter is that buyers have always paid both sides of the fees. That hasn’t changed. This situation is the equivalent of a store listing sales tax in the price one day and not the next. Except in real estate the price is already so murky it won’t be as noticeable. 

 Prices aren't just determined by list price.  Buyers won't be able to pay as much across the board because they need to cover their own agent fees.  Hmm, what could that do to prices...

 When there is a void something always moves in to fill it. I'm willing to bet you that companies like Redfin and Zillow will be all over this. Buyers won't be using Agents within 5 years.

Redfin has been around for 20 years now and Zillow for 18. People have been saying they'll end real estate agents ever since they started. But the opposite happened: there are more agents now than ever before. Are they going to take over now just because buyers agent coop fees are moving from the MLS to somewhere else? All of the info on these sites originates from the MLS systems that NAR controls. They could not exist as they do without agents inputting that data, and NAR could end both of these companies overnight simply by cutting off their IDX feeds. Both of their stocks are down since the settlement announcement. Co-star stock however is up. Redfin announced they were leaving NAR last year (but didn't actually leave because they couldn't in most markets or they would lose the MLS access that their platform is built on), and Zillow is still a NAR member.

Steve, that's precisely why they are in the wrong business model . Zillow too.

So far the one that has passion to eliminate NAR is Roofstock and REX.

This pivotal phase would just intensify the war between RE tech co vs NAR and also between brokerage vs brokerage.

And also between agent vs agent.