What does this mean?
https://www.cnn.com/2024/03/15/economy/nar-realtor-commissions-settlement/index.html
Prior to this rule, house prices have included 6% commission. If sellers pay less commission, logically, house prices should drop by 3% immediately. Doubt that will happen. If that don’t happen, buyers would reduce offer prices by 3%. Have to wait and see the tugs of war.
So after the change no sellers will pay buyer agents anything. Right now the buyer agent’s cut is shown on MLS listings. Sellers don’t feel comfortable putting a 0 in there. But going forward there is no such a field anymore and sellers won’t feel the pressure to pay buyer agents.
Current fee structure in Bay Area is typically 2.5% buyer + 2% seller = 4.5%. Going forward it may be just 2% seller total.
Buyer agent won’t get paid and there will no longer be buyer agents. I don’t think buyers will pay agents out of their own pockets. Seller agents will just represent both sides.
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Conflict of interest? Having said that, large realtor companies in Bay Area often do this… same company but different agents.
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Right now buyers are free riding on sellers paying their agents. If buyers want representation they will have to pay for it themselves.
So there may be a new business model where buyer agents work for a flat fee say $2k paid by buyers. I don’t know how many buyers will opt to pay though. Most do the homework of looking for houses themselves and sign all paperwork without reading fine prints.
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In a world with no buyer agents, double dipping by seller agent actually won’t hurt sellers’ interests.
If a seller agent represent both buyer and seller, you would expect that agent will favor a worse offer just so they can make double the commissions. If there are 5 offers, 4 with their own buyer agents and 1 the seller agent also represents, you bet the seller agent will do everything in their power to get that one offer over to the finish line.
Sellers may get duped into picking the worse offer.
But in a world with no buyer agents, seller agent will make the same money on all 5 offers. There is no longer a conflict of interests.
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Selling agent would leak info to all 5 buyers to drive up prices.
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So sellers get more money. Win win over all.
Seller agents should work for seller’s interests. They are paid by sellers. Buyers are just piggybacking. Screw them.
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Redfin CEO’s take:
Most interesting is this:
- The number of homes marketed outside of the MLS will increase , making it harder for buyers to get a complete view of the housing market. Especially for brokers without a major online presence, there may be more backroom deals, benefiting well-connected buyers and sellers at the expense of people of color and immigrants who lose out on a listing without ever realizing it was for sale. A major reason agents post their listings to the MLS has been to tell the buyer’s agent how much the buyer’s agent could earn from the sale of the home. Consumer advocates who fight cooperation have never fully appreciated how important the MLS is to an open, fair housing market.
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Woke is interesting. SMH.
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I quoted a whole paragraph but you only read and triggered by the last sentence?
Anyway, I find the prediction that the data stream will be more fragmented interesting. Interesting because I haven’t thought of it.
This has already been happening. I have witnessed many listings that go pending same day, and seller agents who have majority of their listings always sold to a colleague from their brokerage. I don’t think it’ll worsen.
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Agree with these. And, in most competitive markets, buyers were already doing all the work and using dual agency for transactions.
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Saw some counter arguments saying buyer agent commissions paid by sellers won’t go all the way to zero. May settle at a much lower level but above zero. Don’t know. But anyway it will take time for fees to gradually come down. Wonder how much and how fast changes will come.
Mercury News: The 6% commission on home sales is likely ending. How much could Bay Area buyers and sellers save?
Did not know flat fee is already a thing here:
To set himself apart from other agents, DeLeon said he often helps buyers find a mortgage lender, insurer or contractor to help with a home remodel. And when acting as the seller’s agent, his firm is trying something new: offering a buyer’s agent a flat fee, starting at $10,000.
In the latter case, if the buyer’s agent wants more, the buyer can pay the difference. Otherwise, DeLeon is prepared to represent the buyer for the listing free of charge. Despite the low margins, DeLeon said he’s seeing more than a dozen offers on some properties.
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Yes! Talk about twisting everything into a victim/oppressor situation. Based on POC and national origin no less.
Geez!
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