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?

[Alan Asriants]

Quote from @Carlos Ptriawan:

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.

 Mr. Alan would think differently if he's not real estate agent and perhaps a buyer/seller ;-)

the original post is very realtor-bias , I told you folks, realtor do not control the market. It's the bidding process that makes the market.

This changes would spur competition and also drive innovation.

 I have been a Buyer, a Seller, and an agent. 

[Mark Cotter]

Quote from @Jay Hinrichs:

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.

So you think Agents have a poor standing in Society today  .. like used care salesmen or how people pick on Lawyers etc etc.. I dont see that at all personally . what I see is just like any other industry you have  OK agents you have great agents and you have poor agents.. I think I saw in one response of yours that your from OZ .. Its hard to compare the RE industry there to the US.. its really apples and Oranges of how they operate. When i first started funding folks that were selling to OZ investors about 2010 ( exchange rate favored OZ) and all the conversations I had with OZ investors .. the amount of public information in OZ was minuscule compared to the US.. Many in OZ did not realize all the information that could be found for free on the internet.. And folks selling US properties of course would present their opportunities like they were some secret inventory.. Many times Charging OZ investors 5k up front just to get the list.. And grossly over charging OZ investors for the properties that ended up being in some of the worst neighborhoods in America.

I funded fix and flippers that were picking up the pieces of failed oz investors every week.. In their super funds and so on.. props I know they spent 70 to 80k on and then were selling for 10k to my clients. It was a blood bath for them.  of course NOT all but enough to make an impression on me.

 I am from Australia, and I have lived in the USA for over 20 years. Nice attempt to discredit me. The rest of your comment is laughable. There are 25 million people in Australia so I hardly think the Australian investor community is large enough for you to be picking up the failed projects of Australian investors on a weekly basis. I don't often see people contradict themselves on a single post but congrats, you did it. You don't see that Agents have a poor standing and then you go on to say that they took advantage of people's lack of local knowledge to profit. Think before you type.

[Alan Asriants]

Quote from @Lucia Rushton:

@Alan Asriants agree on everything except I do not think that prices will be affected, I think Sellers will continue to ask market or above pricing, and they will just keep the additional 3% in their pocket. Just my opinion and not written by Ai

 Good point, Price doesn't change if you offer 2.5 or 3%

[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.

[Bjorn Ahlblad]

Quote from @Alan Asriants:

Quote from @Bjorn Ahlblad:

I buy with an agent and stay away from sale by owner. I understand folks trying to shave a percent here and there; but I don't do my own root canal either! All the best y'all! 

 Respect! Would you pay your agent a 2.5% commission if the seller didnt?

 I would and I have.

[Patrick Bartlett]

In my market I believe that the short term effects wont be much. Long term I think will be interesting to see. My thought is if you tell a seller "I can list your home for X% and half of that goes to whomever brings a buyer" and they say I wont pay a buyer agent, my response will be "that's fine, I am still charging you the same, but expect your home to sit on the market longer." It comes down to how agents explain it to sellers and buyers. To the seller - Do you want one person shopping for your buyer or do you want thousands of agents looking for a buyer. If just one than I have to do more than twice the work, and have twice the liability so I wont lower my fee. To the buyer- We always attempt to have the seller pay our commission and I have yet to have a buyer have to pay me. In the event that a seller is not willing to offer a compensation to a buyers agent, we can not look at that home, we can ask for closing costs to cover my fee etc.. 

I do anticipate that there will be buyers that ghost their agents because of this, and I will be guarding my time more carefully now. My sellers that I have spoken with regarding this have opted to continue to advertise a BAC. If / when it becomes common for sellers to not pay then buyers will be bent over the barrel and I foresee more lawsuits regarding representation or implied agency ahead.  

[Devin Scott]

The degree to which realtors think their skills dictate a sale price and/or time on market is breathtaking.  The industry has changed from 30 years ago.  Information is widely available.  Selling a house isn't anywhere near reliant on broker-to-broker relationships or special marketing as it once was.  I don't care how good or bad an agent is, if a house is over-priced it won't sell.  If it's priced right, it will.  That's why this busting of price fixing is loooooong overdue.

[Steve Babiak]

Quote from @Alan Asriants:

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)?

 Good point about affordability, Makes me wonder if this is all planned to drive buyers away from market and slow demand without rate cuts... 

Maybe a conspiracy, but not a crazy one...

Also to your point, a first time buyer can benefit greatly from an experienced agent, now they might miss out

 “Slow demand without rate cuts”????

You slow demand with higher interest rates, which makes houses less affordable due to higher interest payments.

You raise demand with lower interest rates, or “rate cuts”.

That part of the quoted post makes no sense, hence there is no “conspiracy”.

[Michael K Gallagher]

Thanks for sharing @Alan Asriants I don't think anything is going to effect the price of the homes at least in my market, the demand is too high regardless of whats going on with commissions. And essentially from what I understand in the NAR statment they just won't have a published Cobroker fee, it won't mean that buy-side commissions go away or down, it will meant that we will likely end up playing the game like we do in commercial. The Selling broker negotiates a commission and then the buying broker has a coop commission agreement with the selling broker and that selling broker pays out the buyer's broker. We do it all the time in the lease world, just leaves the negotiations up to the deal as a whole.

In the investment space already its very common to have these agreements and discussions as even deals on the MLS often have reduced coop commissions, its never stopped me from simply writing the appropriate commission into my contracts, or if in a multiple offer situation the buyer will make up the difference based on our agreement. However, we all know that most of these "discount" listing brokerages, or brokerages offering discounted coop fees have houses that are overpriced, usually flipped horribly and sit forever. So I agree whole heartedly with your take that the market will work itself out.

[David M.]

I think one aspect to keep in mind, as I understand it so far, is that "business as usual" can still continue. You just can't advertise the broker comp on the MLS. Sellers can still offer a broker comp.

More significantly in my mind, not necessarily more important, is the genesis of the lawsuit. Wasn't it by Redfin? Redfin and others are trying to disrupt the industry, for better or worse, with a new business model. However, the "restrictions placed by NAR" hampered that.

I recall one company tried doing that with not offering an broker comp. The listings were not found on the MLS, and I think i had to basically call and 800 number to coordinate the showing which was slightly interesting since they didn't / couldn't have MLS lockboxes (in NJ we have electronic/satellite tracked boxes).

So, Redfin still believes that their "national call center of salary agents" with "pay the showings local agents" is better, not sure in what sense (probably for THEIR profit margins), than the current system.

This continued trend to non-person-to-person transaction system might appeal to the younger generations, but I think they will find it lacking if given the chance.  However, as most people only do a few transactions in their life, they might be fine going the "cheapest way possible" and just continue thinking poorly of the real estate profession.

Just my two cents...

[Alan Asriants]

@Steve Babiak

Meant to say slow demand without rate HIKES…

Thanks for catching that

[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.

[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. 

[Alan Asriants]

Quote from @Michael K Gallagher:

Thanks for sharing @Alan Asriants I don't think anything is going to effect the price of the homes at least in my market, the demand is too high regardless of whats going on with commissions. And essentially from what I understand in the NAR statment they just won't have a published Cobroker fee, it won't mean that buy-side commissions go away or down, it will meant that we will likely end up playing the game like we do in commercial. The Selling broker negotiates a commission and then the buying broker has a coop commission agreement with the selling broker and that selling broker pays out the buyer's broker. We do it all the time in the lease world, just leaves the negotiations up to the deal as a whole.

In the investment space already its very common to have these agreements and discussions as even deals on the MLS often have reduced coop commissions, its never stopped me from simply writing the appropriate commission into my contracts, or if in a multiple offer situation the buyer will make up the difference based on our agreement. However, we all know that most of these "discount" listing brokerages, or brokerages offering discounted coop fees have houses that are overpriced, usually flipped horribly and sit forever. So I agree whole heartedly with your take that the market will work itself out.

 100% it will all correct itself and the market will drive commissions one way or another. I think the idea of paper pushers and more simple listing and real estate services seem cool in theory, but that human factor is still very important when selling or buying one of the most expensive things in your life. This is why these discount brokerages don't make much noise. Poor service often leads to poor results. Lots of people on here are coming from experience. They can afford to pay discount services, because they have the experience dealing with buying and selling. They can pick up the slack. 

This is not so true for first time home buyers or people who haven't seen a transaction in years. Not everyone is so educated on the process. People need guidance. I hope that these changes weeds out the non professionals from the professionals. 

[Alan Asriants]

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.

 Thanks for sharing this! Can you provide the article or data that you used, I would like to read into it more. I think you are right, it won't go away overnight. People still want and need representation. 

[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. 

[Bradley Miller]

You bet. Just do a search online for 2023 Profile of Home buyers and Sellers NAR and you should be able to pull up at least the highlights of the report.

[Matthew Paul]

Quote from @Jay Hinrichs:

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 .   

we can buy pre made contracts at the stationary stores .. they have been there for decades. AS for ala carte services thats a novel idea.. Although I can see collection issues. I guess with the new ways to move money Zell and such.. an agent can just wait until the money hits their account.. I would not advise or do it on the promise of getting paid thats for sure.

 Simple get paid up front . 

[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. 

[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.

 Seller never paid the fees. That’s such a crock. 

[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.

[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

[Nathan Harden]

Personally,

I love it. I think that after a year or so we will see the number of agents dwindle DRASTICALLY. It’s going to turn into supply and demand. The demand of buyers will still be there but with less agents to compete for their business with. 
I’ve been practicing buyer agency agreements and the way I explain it is that, no I do not work for free but nothing is really changing. The buyer has always essentially paid the buyers broker compensation through the purchase price if you really think about it. The buyer pays $500k for the house, a buyers agent commission has always been built into that sales price. 
So if a seller isn’t offering a commission on that $500k house. Add your fee on top of the $500k so it’s all wrapped into the purchase price. This way, you get paid and the buyer still has representation without having to come out of pocket for the buyers agents commission. Win win. 

I think the buyers agency agreement is great for agents who produce, and the agents that do real estate as a side job will be a thing of the past. 
Now, I would like to know what they plan on doing about appraisals going foward…

[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

[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...