Real Estate in your city

[LosAngelesSportsFan]

Originally Posted by jmecklenborg

Somehow no posts here yet on yesterday's court decision against realtors. It's comical that people think that realtors are somehow out to scam buyers/sellers with their high fees, and that those fees (which were seemingly never a point of conversation for 50+ years until the recent run-up in home prices) are responsible for high home prices.

Nobody was tacking 6% onto the top of any home listing to cover the fees. That's never how it worked. The 6% was taken from the seller, who hopefully sold the house for a gain. So I don't see how anyone ever reasoned that commissions were driving up prices or that we're going to see a reduction in listing prices if realtors go away.

I mean, we're living in a country where many home prices doubled and some quadrupled over the last ten years. 6% is far short of a doubling, and inconsequential in the event of a quadrupling.

Exactly right. It's utter nonsense. The argument that home prices will come down after this is laughable

[jmecklenborg]

Originally Posted by LosAngelesSportsFan

Exactly right. It's utter nonsense. The argument that home prices will come down after this is laughable

Obviously 6% is a lot of money in the event a multi-million dollar sale, but roughly 2% of the commission goes to pay the federal tax the two realtors owe to the IRS.

If "advocates" (who, exactly, are these people?) really want to just reduce fees, they ought to lobby Congress to exempt realtor commissions from federal income tax in exchange for capping their fee at 4%.

[Kngkyle]

The 6% commission maybe made sense before Zillow, Redfin, and other online MLS directories existed... but today? Do realtors today do anything other than schedule showings at the places you tell them to and help coordinate communication?

The argument that the 6% floor enforced by the NAR is anti-competitive is a compelling one. The argument that the 6% floor was somehow causing home prices to rise / reducing it will cause them to decrease is indeed ridiculous.

[Crawford]

I don't understand the issue. When I sold my previous home, we negotiated a rate. It wasn't 6%, but it wasn't massively off.

Didn't the realtor and seller already have the right to negotiate? There was really a nationally mandated, association-enforced commission rate?

[jmecklenborg]

Originally Posted by Kngkyle

Do realtors today do anything other than schedule showings at the places you tell them to and help coordinate communication?

Yes, they do a ton. FSBO means you go face-to-face with buyers/sellers and will likely be fooled by shrewd ones.

[The North One]

Originally Posted by Kngkyle

The 6% commission maybe made sense before Zillow, Redfin, and other online MLS directories existed... but today? Do realtors today do anything other than schedule showings at the places you tell them to and help coordinate communication?

Have any of you worked a commission based job with a client before? There's a million things that happen and go wrong. It's insane how the general public thinks real estate transactions just involve scheduling a showing and bam house is sold. That would be like thinking all a lawyer does is show up and wins a case. Doesn't work like that. If it did brokerages everywhere would be extinct a long time ago.

[LosAngelesSportsFan]

Originally Posted by Crawford

I don't understand the issue. When I sold my previous home, we negotiated a rate. It wasn't 6%, but it wasn't massively off.

Didn't the realtor and seller already have the right to negotiate? There was really a nationally mandated, association-enforced commission rate?

Exactly. On the California forms, it says in large, bold letters that commission is not fixed and is negotiable

[pdxtex]

Realtors deserve those commissions. That job requires alot of hustle. Its not just walking people around. The time and effort to actually close a sale is laborious. Experienced buyers might be able to buy their own home without an agent but first time buyers definitely need to be walked thru the process. Its a stressful vocation.

[AviationGuy]

Originally Posted by The North One

Have any of you worked a commission based job with a client before? There's a million things that happen and go wrong. It's insane how the general public thinks real estate transactions just involve scheduling a showing and bam house is sold. That would be like thinking all a lawyer does is show up and wins a case. Doesn't work like that. If it did brokerages everywhere would be extinct a long time ago.

Yes. The amount of things my realtor has done is phenomenal. He has earned every bit of his commission on the current sale of my home.

[sopas ej]

Isn't this a win-win? And it's something the National Association of Realtors agreed to.

According to this CNN article:

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers...

The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.

Link: The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement

[Kngkyle]

Originally Posted by jmecklenborg

Yes, they do a ton. FSBO means you go face-to-face with buyers/sellers and will likely be fooled by shrewd ones.

I've bought and sold 15+ places. I don't need the same level of service as a first time home buyer who knows nothing about the process. Additionally where I live we always have a lawyer (fixed fee of $700 or so) that handles the majority of communication with the other party once a price is agreed on.

I'm happy to pay a commission that is representative of the level of service I need.

[lio45]

I too always avoid realtors whenever possible. When buying something listed, I always deal with the listing agent. I’d say at least half of what I buy is off-market (neighbors of my properties, or from business acquaintances who come see me before putting their properties in the hands of a realtor.)

[streetscaper]

What is the type of work the buyer would have to do if they get rid of their own agent and only deal with the seller's agent, themselves

[The North One]

Originally Posted by lio45

I too always avoid realtors whenever possible. When buying something listed, I always deal with the listing agent. I’d say at least half of what I buy is off-market (neighbors of my properties, or from business acquaintances who come see me before putting their properties in the hands of a realtor.)

lol as a buyer that's the dumbest thing you can do. The listing agent represents the seller, not you. Anybody dealing with you off market is also stupid, that's how you get screwed out of your equity.

[streetscaper]

Originally Posted by The North One

lol as a buyer that's the dumbest thing you can do. The listing agent represents the seller, not you. Anybody dealing with you off market is also stupid, that's how you get screwed out of your equity.

Why can't I represent myself? What are the kind of pitfalls that can happen that can screw me out of my equity?

I'm just curious

[The North One]

Originally Posted by streetscaper

Why can't I represent myself? What are the kind of pitfalls that can happen that can screw me out of my equity?

I'm just curious

You can, it's called for sale by owner. As long as you know what you're doing. But you're still more likely to get less money out of your sale without a professional. Buyers are more vulnerable though, I mean good luck.

Not putting your house on the market is absolute stupidity, since that's how you get your highest and best offers. Off market deals are pretty much always a scam and that's how dummies lose a lot of money, way more than a commission check. Anybody who owns a home is familiar with those letters offering to buy off market, it's just robbery.

[sopas ej]

Still seems like a good deal to me. People are using other tools to sell and buy houses anyway.

From ABC News (video lasts a minute and 48 seconds):

Realtors group scraps real estate commissions

The changes [are] opening the door for alternative brokers, like California-based Arriva, which charges buyers a flat fee of under $10,000... Thanks to online tools, some buyers may choose not to use an agent at all.

[streetscaper]

Originally Posted by The North One

You can, it's called for sale by owner. As long as you know what you're doing. But you're still more likely to get less money out of your sale without a professional. Buyers are more vulnerable though, I mean good luck.

Not putting your house on the market is absolute stupidity, since that's how you get your highest and best offers. Off market deals are pretty much always a scam and that's how dummies lose a lot of money, way more than a commission check. Anybody who owns a home is familiar with those letters offering to buy off market, it's just robbery.

Yeah I think I'd always want to sell through an agent, to reach the widest market, of course.

But I meant as a buyer, what are the potential pitfalls?

[The North One]

Originally Posted by streetscaper

Yeah I think I'd always want to sell through an agent, to reach the widest market, of course.

But I meant as a buyer, what are the potential pitfalls?

Well if you're trying to buy in the market everybody is going to have a listing agent who knows the process (which is your enemy essentially). They represent the seller and their goal is to get the highest price for their clients and on the best terms. So already at a disadvantage. They have no fiduciary duty to you, that's why you shouldn't contact listing agents directly. You could easily end up overpaying, hand out information that works against you, not know how to negotiate things like contingencies, there could end up being issues with the house you have no recourse for. I mean there's a million ways to get screwed. You basically have no protection. The process is complex and the average person has no clue.

[LosAngelesSportsFan]

Originally Posted by streetscaper

What is the type of work the buyer would have to do if they get rid of their own agent and only deal with the seller's agent, themselves

A lot of states don't allow dual agency and the fiduciary responsibility of the agent becomes murky when repping both sides in a residential transaction.

Residential RE isnt rocket science however. If someone has purchased or sold a property or two in the past, they can likely get away with not hiring a buyers agent. Its the first time buyers that will really need the help. You need to navigate escrows / attorneys, contracts with language that may be foreign or difficult to comprehend, inspections, negotiations, timelines, loans, etc.