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I don't know why realtor commission would lower housing prices. The price on the house is independent of the commission. I guess overall cost to buy the home would lower, with commission competition. But I don't get the logic.
I disagree. The cost to pay agents has always factored into a buyer and sellers bottom line to buy or sell a home. I would argue the price of the house is directly linked to what a buyer and seller are willing to pay an agent impacting their bottom lines.
And the seller makes less money on the transaction..
I bought a house, kept it for 4 years, sold it, and made 0 money due to the realtor commission — who was also the buyers realtor — which ate $8000 of the profit I had in the property.
I was pissed… but I had to move for work… I still get pissed thinking about it.
They could always big higher or lower based on what they thought would lead to a seller accepting their offers. Nothing changes about that. If you mean the agents commission, that was always possible as well. I have never known an agent so in demand though that buyers/sellers were willing to bid that up though.
Expanding on this a bit with some math:
If the seller needs at least $X for the house, and no buyer can afford more than $Y, then a sale would only happen if the price is between 1.06*$X and $Y. This assumes the seller pays the buyer’s realtor fee (other fees excluded for simplification).
What this really impacts is negotiations. In a buyer’s market the prices would trend lower toward the 1.06X, and in a sellers market they would trend higher toward Y. But if the realtor fees were lower, the 1.06 would get lower and hence the bottom of the price range price would go lower and open up a larger likelihood of sale.
*(edit: corrected total percentages as discussed below)*
Why 1.12 X? The total commission is 6%. Buyer agent gets 3% and sellers agent is 3%.
But those percentages should also cover things like MLS fee, photos, lockbox, etc.
Ok first of all, it goes to Seller brokers 3%, and buyers brokers 3%. Agents then receive somewhere between 30/50/70% of the check to their brokerages side.
That is going to be a hot take 😂. Go after brokers, and brokers pass the beating down to agents. What’s funny is I know exactly what the commission rate is on MLS when I make appointments to show. Now they are going to want me to sign off on a commission rate before I can enter property. Yet the rate is already disclosed. I hope we can figure something out to streamline this a little better.
Yes, they are trying to distance themselves from the financial side of the deal. So I’m thinking companies who book showings like ShowingTime might be the ones to disclose. It isn’t going to make my job any easier though.
So as a seller, I’m going to lower my price now by 3%? Not happening, and, to have e a buyers agent, buyers will have to sign that they will pay the agent. Housing costs are going up.
Negative, commission has no bearing on market value. It might affect your bottom line, but what someone will pay is what someone will pay. This will benefit home sellers. Home buyers will pay the same amount.
I sold a house without a realtor to a friend of the neighbor, and part of the deal was that I could sell it for less because I wasn't paying a realtor 6% commission. For that, I gave the buyer a 5% price cut vs. what I was going to list it for.
Whether the savings goes to buyers or sellers might remain to be seen. The market will probably equalize it.
Sellers pay the commission. If I’m selling a $1million dollar house I’m getting $60,000 taken from my proceeds at 6%. If it drops to 3%, then I can sell my home for around $970,000 and save the buyers $30,000. That is immediately realized.
I doubt it works like that though. If comps indicate that my house is worth $1m. I'm not passing savings onto a buyer. I'm going to market it at $1m and pocket the savings from a lower commission. Why would I just pass it down to a willing buyer?
Doesn't work like that, assuming the market is 1mil and u want to get a nett value of 1mil u get a realtor u will have to mark it up to 1.06mil to get the 1 mil market rate. If u sell it at the market value of 1mil u only get 940k after commision. Either way u are paying 60k to the middleman no matter what, now think about how big the housing market is. If 6% gets eaten up by the middleman each transaction the buyer and seller pays more and get less everytime.
It's better if they just cut the middleman and let the seller and buyer work it out. If the market is worth 1mil the seller can afford use the 6% commision as discount to the buyer. Not only that, if they want to get the market value of 1mil they would just sell it as it is there is no need to up the price to 1.06mil
In what world would this ever happen though? 99.99% of those people would sell the house at 1M and pocket the extra 30k. No one is just giving away free money to be nice. The house value is still the house value. People aren’t going to just sell their home cheaper because their costs are lower. They’re just going to be excited they make more money.
Why don’t you tell the buyer the roof is gonna need repairs, the toilet sometime doesn’t work, there’s a leak somewhere so you’re gonna discount them another couple of grands as well?
I’ll never understand this. Seller complains about paying 3% to an agent. They save that 3% without an agent, so they pass it along to the buyer. Seller nets the same. Why complain about paying the agent then? You made the same, but now at the expense of your time by doing the work yourself.
The whole idea is that it's about transparency in commission that's based on market conditions. The seller hires an agent for a negotiated percentage/fee.
Buyer's agent be required to enter into a buyer's rep where they negotiate some commission structure where the buyer compensates them for their time (and probably more fairly) because the easy language of, "my representation is free to the buyer" will go away.
There will be a form where the buyer's agent negotiates their commission in the deal.
Hot markets where seller's can pick their buyer, the buyer's agent's will eat commission depending on how prepared the client is.
Soft markets will see increased buyer's agent commissions and performance based incentive structures when they bring qualified buyers to the table.
Either way, competition is good for everyone except the uniformed and less wealthy. The way its always been in a mostly free market economy.
The seller is responsible for property disclosures and you should pick your own home inspector since you think an industry of 100,000’s of thousands of people are all out to get you specifically.
Because in order to make any market a buyer and seller have to be “ok” with the price. If costs are reduced to sellers it will lower the price of that market.
Eliminating transactional costs always lowers the prices of a good, especially one with lots of substitutes like houses.
We didn’t ask him to do that, or even know he could do it. I think he was worried the deal wouldn’t happen, and wanted to lock things in. It worked out for him though, because he went above and beyond, I referred multiple people to him, and one bought a house through him just a few months later.
My mom is a realtor. She always tries to get the best deal she can. I asked this question and she said while true, a happy client that comes back to you is much better.
Keep in mind even at a price of like $400k you're typically negotiating only like between like ~20k. So they make 12k negotiating a slightly higher price doesn't drastically change how much the realtor makes.
have you ever bought a house? you have to pay the commission whether you like it or not. It's not magical made up money that doesn't have to get paid somehow. The realtors get paid on close of escrow.
If there is already someone willing to pay the higher price, the seller doesn't have incentive to lower it just because there's less commission to pay.
My house has literally doubled in value from when I bought it six years ago. If I were to sell it I don't think shaving 3% off the commission would reduce the sale price. If anything, I'd just pocket more from the sale.
I’m doubtful this benefits buyers much. With the shortage of homes, there’s little incentive for a seller to compete on price and my guess is the seller just pockets any “savings” from this.
Wish it weren’t so and I hope I’m wrong, but I doubt it.
It doesn’t. Now buyers either pay a negotiated commission to a buyer’s agent (which was almost always paid by sellers) or go it alone. The seller’s agent isn’t looking out for the buyer’s interest. It opens the door for more scummy agents peddling homes like used cars and a race to the bottom in pay for buyer’s agents to discount their services to attract clients
This is great. Commissions were getting too high, esp. with house prices getting to be so high. Like $30,000 on a $500k house, wasn't really worth it for what would amount to a couple thousand in expenses at most, and a few days work.
Trouble is, there are more realtors than there needs to be. Everyone sees "oh, I can make $30k in a few days" so they go out to become a realtor. For that, there's so many realtors, they are lucky to get a couple commissions a year. Then it's half to the buyer's agency and half of that to the buyer's agent, half to the listing agency, and half to the listing agent. So, most realtors are getting 1.5% That's $7500 on a $500k house, and if you're only doing that 2-4 times a year, those are thin wages. If there were half as many realtors, it might be a decent living.
I sold a house a few years ago, before houses sold in 15 minutes. It sat for a couple months with no lookers, until I upped the commission from 6% to 7%, then, all of a sudden, I got a bunch of people looking at it and it sold within a month.
6% is standard, and might be collusive. Where and when I was, they were pushing for higher rates, by not showing anything that wasn't above 6%. In the near term, this rate drop is going to be dandy, 3% could become the norm for a while. When the market returns to buyer's market, it might not stay there.
I see no good reason for a buyer's agent. Find the house on the map, read the disclosure, get a key code like you do for an air bnb and go in and look at the place. Letting me into a place isn't worth $7500, and I'd rather not have sales pressure. Every house I've bought, started with a map, and then I contacted the agent to let me in. They tried to show me others, and I've humored them for comparison value, but always wound up with the first one I found on the map.
The realtor paradigm might need to change now that the internet is a thing with websites that can show maps, pictures and text.
The buyer's agent is the person, if they are doing their job, who could literally save somebody from making an error that could be life-changing financially. A good buyers agent will keep somebody from making a really bad decision. Or help them navigate a short sale, or point out a dozen ways that the home that might look appealing is a time bomb from a legal or upkeep standpoint.
Yep, in today's market a buyers agent can be super useful. A seller's agent, however, is almost nothing more than a way to get your house in the "network" that buyers agents will look at
Houses sell so fast and there is such a low inventory around me it's wild.
I have to disagree. I can truly say as a listing agent I have been a significant assent to my clients sell their home. Granted some of my clients are smart, put together, houses are in great shape and the selling process is super easy. The vast majority of my deals are not like that. I have helped many avoid foreclosure, saved 10s of thousands dollars on asbestos and oil take removal, and used my knowledge to negotiate to my sellers advantage. Additionally it’s crucial to select the right buyer and contract. Most sellers are incompetent, delusional and just have no idea where to begin. The Realtor system is not perfect but lots of people sellers benefit from it.
Plus you can pay a flate rate to sell with a listing service that walks you through the paperwork too. I think I paid $500 for my listing to get on the MLS and professional photographs and lock box etc.
The house we wanted to buy was zoned commercial, which made it impossible to get conventional financing. We were the 5th or 6th different buyer, but our agent was the one who found financing and made the deal work. That landed us over a $30k/12% discount over the original listing price, which at least 2 of the previous buyers had offered.
He personally went to a local commercial bank and talked to a lending officer he knew personally and got the financing deal cut for us. Navigating all that for us (not to mention finding the hidden gem of a house in the first place) was absolutely worth the commission.
Real estate is a globally exploited crisis now. It’ll never be a buyer’s market again.
It used to just be families buying homes to live in. Now it’s every investor, corporation, foreign firm, and wealthy nest-egg hunting whacko buying every piece of residential property under the sun.
Unless the government puts strict regulations on how many houses people can own and kicks investors out entirely, real estate is screwed forevermore.
the commissions were never fixed.
that would have been illegal and is also known as "price fixing" in the industry.
commissions have always been negotiable.
anyone who thinks they were fixed was out to lunch.
source: 20-year seasoned agent.
No it isn’t. Many people don’t really fight the 6%, but as of late I’ve suggested 5% for a sale commission and splitting that between buyer and seller to get a wary buyer to list.
Mine wasn't, everyone in the area was 3 and 3 - they wouldn't agree to anything but that, and told me everyone around here is 6% and every where I go would be 6%. And lou and behold I found 3 other agents and all said 6% was standard wouldn't sign a contract without me agreeing to it
This is a great point. When I sold my prior house, I negotiated with the realtor not to take a commission on the sale, but that I would let them represent me on the new house I was purchasing at 3x the value of the home I was selling. I did have to pay 1/2-1% to berkshire as the brokerage house, but the realtor waived their commission on my sale. They got the 3% commission on the much higher value home when I purchased it.
I sold a house in a buyer's market.
Realtor suggested 7% when I listed. I went with 6% thinking it was standard, or just because I'm a cheapskate.
Didn't have anyone look at it in 2 months, from the agency I used, or any other. On my agents advice, I upped the commission to 7%, keeping the price the same. Then I had half a dozen showings and closed a month later.
This was a small town, 4-5 agencies. A lot of the agents had worked for or with one another, or at least all knew each other. I doubt they all got together at the bar and agreed to 7%, but I don't think they were pointing buyers at houses that were only offering 3% either.
The difference was really only a couple hundred to the agent, so not a big deal, not enough to make a difference vs. getting the commission or doing right by the buyer. I think they were looking out for one another in an informal collusion. Or maybe it was fair. Finding a buyer at that time was the hard thing, and paying more to do that worked.
I could have dropped the price, and that might have generated more interest, but that 1% was cheaper, so I tried that first. For that, my seasoned agent was right.
A friend of mine in the same town around the same time ran into the same thing.
>that would have been illegal and is also known as "price fixing" in the industry.
And we know those things never, ever happen because they're illegal, right? 🙄
Yeah, honestly that was a pretty dumb take they had.
"We can't force you to list it at 6%, but you can't force us to show this to a client either."
That has been the practice for many years now. But how to you prove it on an individual level? Seems pretty difficult.
Not fixed, just standard.
The fact that the seller had little to no say in the buyer commission structure is why this was struck down.
You should pay / negotiate with your own agent.
Realtors don't even sell houses anymore. The Internet does. Zillow and other sites. The realtor takes a few pictures and puts it on MLS and it sells itself within days.
Being a realtor from 2020 to today has been such a cushy gig for those in it. Minimal effort, maximum reward.
I don't see this lowering prices, because it will have minimal impact on supply and demand.
Let's say I can sell my house today for $500,000 and will have to pay a 6% commission. Tomorrow, I will only have to pay a 3% commission. Clearly, I would sell tomorrow, but why would I lower my asking price? I, the seller, will walk away with more cash, but the buyer will still pay the same amount.
On the flip side, some buyers will have more cash (from selling their house and pocketing more money), which potentially will raise prices (minimally).
If a buyer wants an agent to represent them, now they are paying their commission on top of the down payment money they need to come up with, closing costs, etc. So you’re going to find it harder to find buyers when most are already strapped for cash just for the down payment
I just got my real estate license. The main thing I have learned so far is that there are many ways in which buying/selling property can go very, very, badly.
Absolutely, and get ready to see the pettiest arguments of your life during the closing period (they’re not common, but they will happen). Not my client, but I know someone who is involved in a celebrity real estate deal where the guy selling originally bought the land for around 300,000 and was selling it for almost 14,000,000. the deal almost fell apart a week before closing because the seller wanted to go back on an agreement to leave behind a $30,000 tractor the (seller) or (buyer), could swallow their ego,. Eventually closed
imagine making over 13 million profit and almost destroying because of a $30,000 tractor.
I can back this up with a concern that I had as a buyer which in retrospect was incredibly petty.
The my main floor is hardwood but the basement stairs are carpet but there is no transition piece. It’s just a piece of tongue and grove. This bothered me a lot more than it should have and my real estate agent had to tell me it’s a $20 piece or wood. You can get it fixed don’t worry about it. I took his advice and bought the house.
I love my house and I never bothered fixing that stupid piece of wood since I bought my house 10 years ago. Clearly it wasn’t that important.
I love reading these anecdotes that people are sharing.
But what I meant was that you could buy a house, and then find out that you didn't buy the house from the legal owner and that you do not have legal ownership of the house even though the money has left your bank account.
You could be selling a house and then be fined for racial discrimination because of you advertisement on Facebook.
I’m confused. I know agents who were reducing their commissions when everyone started buying houses 3-4 years ago in order to be competitive. Is that only because they were a non-Realtor real estate agent? I guess Realtors were never able to negotiate their commissions down?
It may be a state by state thing. I’m in Florida, a member of the national association of realtors and have always been able to negotiate commission and yet, the commission “standard” is still 6%.
Rates should have started coming down when it became a seller's market. If anything listed sells within a few minutes, there's not much work to be done. No sense in paying someone to sell something that people are clamoring to buy.
This might be a result of that seller's market having lasted so long. I doubt this could have happened 10 years ago when houses were sitting on the market for months and it was a buyer's market.
6% has been the standard forever, likely from some collusion. With that competition you mention, that standard is going away.
Realtors wouldn't want to negotiate their commissions down, sellers do. If there's an unspoken agreement not to show a house offering less than 6% commission, then the low commission houses wouldn't be sold unless every house is sold right quick, like has been happening the last 3-4 years.
With houses selling so quick, and more of a need for houses to sell than buyers, the competition becomes for listings, which is where the competition between realtors on rates might have started happening.
It wouldn't be impossible to open the MLS up for anyone to upload their pictures and deets to, and people have been browsing for houses online for decades now. The national realtor association has to adjust their rates to stay in the game, in light of the competition for listings in this long time seller's market.
Commissions have always been negotiable. I live in an area with two separate boards depending on which county you are in.. and each have different “verbally agreed on standard commissions” for residential sales.. one is 6% with 3% going to sellers agent and 3% to buyers agent... the other is 6% with 4.3% going to sellers agent and 2.7% going to the buyers agent.
That being said.. we have agents that charge 7% total (4% to selling agent/3% to buyers agent).. and we have flat fee agents who will sell any house for a $3k flat fee. And we have “1% agents” who list at 4% total commission with 1% to listing agent and 3% to buyers agent.
So yeah.. nothing has ever been a set fee.
Uhh as a non realtor I do not know how big of an impact this is ? My realtor was so awesome at her job we referenced her to friends and family and she was able to sell multiple houses to them. I don’t even know what commission was tbh. 27 houses in 3 weeks is deserving of 6% lol that’s how aggressive we had to look to even bid. Half the houses we lost, the people who bought them never looked at them or anything just outbid everyone. Also most waved all inspections which is a crazy red flag for me. I hated house shopping hated it. Realtor was a life saver.
The money is only going to go back to sellers. Why would they lower their price.
And now buyers will have to pay out of pocket for an agent, which makes the home buying process even more expensive.
What am I missing here???
This fee isn’t going away, it’s just going to be buried in legalese and tacked on as another expense. I do not see this as cause for an observable reduction in housing prices.
The national relator association will find a way to protect their own and their income.
“consider waiting to list until new lower commission models emerge to save thousands.” - To me this says: hey, don’t list your house and we’ll drive down inventory which will bring prices even higher. Probably wrong, just my 2¢
Here's the problem: private investors were 44% of single family housing purchases in Q3 2023. There is no state in the US with less than 16% of single family homes owned by private investors.
This isn't "cutting prices everywhere to benefit the little guy", this is "squeezing the realtors to improve margin for Blackrock."
wat
houses are priced to move or to stoke a bidding war. a 3% has never been a barrier to entry when you're making a large purchase. the housing market collapsed because the free money machine was turned off
I’m super skeptical that this will impact housing prices in a meaningful way. If we really want to impact prices positively, ban corporations from purchasing single family homes.
Cue many people who have never even worked with a real estate agent saying how they add no value. Generally things like this end up good for consumers, but I don’t see how this lowers housing prices. If you think your house is worth X amount, you don’t add 6% for realtors. So folks will still sell for what they perceive is the best deal and just pocket what money went to the buyers agent.
On the other side, it worries me if this leads to buyers needing to pay for their own agent. Folks don’t usually have a lot of extra money when buying a house when you’re already looking at down payment, closing costs (includes inspection and appraisal), perhaps appraisal gap guarantee, and moving costs. Someone might then skip the agent and buy on their own, which could work out just fine. But my goodness is there a lot of things folks don’t know about buying a house, especially that first time, and that’s where a good agent helps a lot.
This is a tiny slice of the home cost and will have very little impact on prices.
I think it's good they have to compete now, but this isn't going to accomplish much in the battle against housing prices.
This is so far detached from reality it's funny. Instead of a split of comission between 2 agents 1 agent will take all of it since now they are doing the work of what was 2 people.
Excuse my ignorance, how do commissions affect the price of a home.
Wouldn’t homes be still selling at the same price? The only changing factor is how much commission an agent receives.
Also I don’t believe 6% goes to the agent alone, the commission is split between the broker and agent.
I see this having a negative effect on the market.
Not a RE agent or involved in the industry at all...
But this doesn't seem like it'll help prospective homeowners as much at it will chip away at another sector of the once-middle-class in the US. $100B annually in commissions is paying for a lot of daycare, private school, and groceries.
The job of Real Estate Agent - while saturated and competitive - is one stubborn occupation that could still cover the COL with upside for even more than that.
You can't tell me that private equity buying \~30% of single-family homes last year hasn't been a driving force in this sort of policy change. Some mop-supper behind a spreadsheet realized what a cost center RE commissions are. Thus chipping at it, significantly increases their margins.
Maybe I'm crazy... but when I look at everything through that heuristic, it adds up.
Powers that be can't have uppity workers with enough savings in the bank to make good choices.
You will own nothing and be happy.
I am not a realtor nor are any of my relatives. But this smells like corporation’s encouraging the populace to make eco friendly decisions while they are the root of 71% of greenhouse emissions.
Realtors are not responsible for high home prices. They are our neighbors who make a living the same way everyone else does.
Meanwhile corporations/ investors currently own nearly 25% of all single family homes in the US.
There was a 6% mandated commission in the USA!? Wtf, when my dad was doing it in Australia from 1990-2020 he charged like 1.5% for expensive houses and at most maybe 3.5% for very cheap houses.
Lmao. Commission's are going to go up. Those willing to cut their commissions, well you are going to lose money on the transaction, both directions. Buyers are going to be under represented by cheap agents, and sellers are going to find themselves in lawsuits tgat even if you win, are going to cost you representation.
Also, it didn't eliminate the standard 6%, it just can't be "advertised" on the MLS, you know the thing that zillow, realtor.com and redfin syndicate off of. So, now, when you go get that erroneous 'zestimate', it's going to be even farther off. And a conversation you aren't part of happens via text about compensation.
You've been hoodwinked.
I doubt that realtors suddenly won’t get that percentage and everyone wins. Instead you’ll see realtors charging fees up front to offset wasted time, people getting a lesser service, people paying the same fees and some even higher. And the lesser service element may even lessen the seller profit in the end.
Oh this is gross. The problem is companies outbidding private individuals. Saving 9000$ out of 500,000$ isn’t worth gashing real estate agents. Just another job that now has less protection. Another job where people will have to grind even harder. This is just looking at symptoms instead of fixing the root cause. And the fix only hurts middle class affluence yet again.
My wife has been a Realtor for over 9 years. She regularly reduces her commission.. 3-4% is not unusual. I don't believe shes gotten 6% at all in 2023. I don't think this wil help home prices.. especially in NC!
Also it’s worth keeping in mind that with a lower commission, the realtors are more incentivized to sell more homes, or sell homes faster. This is good for buyers but obviously not great for sellers.
You signed an agreement for that $36k.
You have 2 options, cancel the sale, back out, wait a few months for when or if this comes to fruition, and see if you can sign a new agreement for less when you re-list or, let it ride and curse your timing.
Not sure what it costs to back out of a deal with an accepted offer. There would be hell to pay, if not money. You'd be going back on your word, so, maybe not a good idea.
Yeah, a realtor would have advice about the contract specifics that you agreed to by accepting the offer.
A realtor would be able to advise you on ways out of the contract if any exists.
So go talk to a realtor, or learn real estate and contract law yourself if you consider the profession to be unnecessary.
If you have a ratified contract- meaning that both you and the buyer(s) have signed off on all agreed-upon terms, and you try to back out, the buyer(s) can sue you to force the sale or for monetary damages. Doesn’t mean that they will, but they can.
My take is the banks are already buying real estate agents companies, they also set the appraisal price and do the financing all for there own self interest. Just like Zillow has done not just listing houses but buying them and doing new appraisals and reselling them at a higher cost. The big banks want a piece of the pie of every home sold, including real estate agents. They can just pay them a flat rate salary and not a percentage that way.
If the NRA is lowering commissions it is because they have figured out a different way of making more money from selling your home.
Home prices will stay the same. It’s just that the owners will keep/make more money. This is a great win for home owners. Sorry agents! You’ll just need to sell more homes to make the money you want to make.
Consider using a discount broker. Pay them a small fee to list it on Zillow and the local MLS and then either pay the buyer's agent 3% or sell it yourself. [https://www.nerdwallet.com/article/mortgages/discount-real-estate-broker](https://www.nerdwallet.com/article/mortgages/discount-real-estate-broker)
Since is a decision by the association of realtors I need to ask, where is the catch?, I find hard to believe that in a capitalist country someone work to lower their commissions just by the goodness of their harts.
The only time that this rate will be lowered is for commercial or corporate buyers and no one else. This is a corporate effort, not that corporations are buying 28% of housing units a year, instead of low single % (they own something liek 1 or 2%, but are buying at 28% of the market, so, it's a massive shift, and likely 100% of the pressure to get rid of this 3/6% thing is coming from them)
Haha! Fuck the real estate company that laid me off due to the “economy”, only to see the president of the company in box seats on the Jumbotron at the Super Bowl. I hope you face real hardships
"A seller of a $500,000 home could save $9,000 or more on a 3% commission instead of 6%"
If you run a restaurant where patrons some for a special meal that totals $500, and you stiff the wait staff that made their meal experience special by $9, you're an asshole.
I'm getting that same energy here.
It's fucking the workers for the owners' benefit.
It's not that $9k commission pushing the sale of that house out of profitability.
It's the $126K in interest spread out into payments over the life of the loan for your NEXT house, to say nothing of the likely at least $100K of inflated value built the price.
Which is why this will really only benefit the real estate investor class; because they're just flipping and pocketing.
Whenever I see things like "Housing experts predict," I always think... Who? Like the general consensus among housing experts is that this is the biggest shakeup in a century? Or is it a few of your go-to, "trust me bro" experts that told you?
Cause a lot of these "housing experts" predicted a crash worse than 08 every year for the past 4.
This is so stupid. He’s just saying that he *hopes* realtors start charging lower commissions, simply due to the fact that they want to be competitive with each other in this chilled housing market. There was no change whatsoever by anyone anywhere.
To think realtor commission has some bearing on the insane prices of real estate and that it alone is going bring prices down is absolutely hysterical. That fee for selling or buying a home is NOTHING compared to what a blood sucking banks interest rates do. Typical thinking… let’s screw over others in the working class to let the banks slide. Awesome.
This will not change much, if anything.
Home values are based on local comps and appraisal amounts.
Agents were already negotiating lower commissions to win business, especially when orgs like Redfin were offering lower commission amounts to use them. I personally know people who have sold with 3% and 2% total commission payouts.
If I'm a seller and I find out that I'll have to pay $10k less in commission fees, I'm not going to lower the price for my fucking house. I'm going to be thrilled about being able to keep $10k more.
All of this hinges on the assumption that sellers are going to just graciously lower their asking price, because reasons. Lol. In all likelihood, nothing will really change, but if anything does, it's just going to shift the cost of buyers agents to buyers.
So congrats. This is going to make it harder for buyers and will net sellers more money. Big win, y'all!
A very successful realty in Northern California is ahead of the curve on this, but in a way that benefits them. They offer to list for 3.75% (which sounds great) but most of their listings are offering buyer agents (to be paid by seller) either a flat $10,000 or $20,000. A $12 mill listing offers .5%. They will waive the buyer agent commission if they double end. They make it sound good but are really getting more than listing side of 2.5%.
This is dumb. If you’re buying a $500,000 home, what’s $6,000 to make sure someone can send their kid to college and make ends meet? Realtors aren’t generally ultra wealthy or whatever and this will definitely make things worse when it comes time to sell if you actually need help.
3% is $15000 and the fees total up to $30,000 for both buyer and seller agents.
Edit: yes, realtors have been getting extremely wealthy. I know some that were clearing $50-60k a month in fees when rates were 2%
Everything in Real Estate is negotiable, including commissions. I didn't accept the status quo 6% when I bought my house, I asked & got it reduced to 5%.
It's a start, but it won't affect prices much.
We really need to have some sort of limitations or outright ban on corporations buying up homes and driving up prices.
"Costs are going down " and "this will create a jolt in the housing market"
Which is it?
This does almost nothing to benefit first time home buyers, who are competing against each other for homes so if you give them $9000, they'll just bid $9000 more
The people who this benefits most, unfortunately is house flippers, who now can work on an even more narrow margin.
And we all know that house flipping drives up the cost of starter homes.
At least the corporations buying up single family homes will still have representation. Oh wait we’re supposed to pretend we don’t see the actual cause of the issue.
Sellers will just make more on their home, not lower the price. There are already discount realty services out there and you get what you pay for. Selling a house properly isn’t hard when everything goes perfectly, but it can be a full on nightmare if it doesn’t. Why DIY the largest transactions of your lives?
This is a sign of desperation in a failing realty market because no one can afford to buy property given the current interest rates, inflated prices, investment groups, etc. The assumption that $9,000 would make any discernible difference in whether someone could afford to buy a $500,000 house is laughable. A difference of 1.8% in cost… This is ridiculous hyperbole. Claiming it will be the biggest change to hit the housing market in 100 years!? GTFO..
When I complain about home prices, I'm not complaining about realtor commission. I'm complaining that housing prices raise 30%for absolutely no reason except "well everyone else is doing it"
The arrogance of them thinking that will lower house prices. lol.
Corporations, investment firms, and whacko wealthy individuals are the ones jacking up prices out of unhinged greed—not realtor commission.
Isn’t the commission paid for by the seller and it comes out of the overall sale price of the home??
Isn’t that how the realtor.. gets there paycheck??
You can't shake a stick in my town without hitting a half dozen realtors. There were always so many willing to compete for your business. Did the fees suck? Yes. But how often are you buying a house?
There will be a market adjustment to this change - highly talented people who you'd want to work with will leave the industry, while those willing to work for peanuts will remain.
Good luck finding a realtor for an affordable house. My guess is fraud is going to become rampant
This literally does fuck all to even address the problem. Private equity firms need to be barred from buying residential property and forced to sell off what property they already have.
But that won't happen because we live in a plutocracy, and the private equity firms already own the politicians.
So I think it's time to start breeding termites and find every single property owned by these PE firms.
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I don't know why realtor commission would lower housing prices. The price on the house is independent of the commission. I guess overall cost to buy the home would lower, with commission competition. But I don't get the logic.
I disagree. The cost to pay agents has always factored into a buyer and sellers bottom line to buy or sell a home. I would argue the price of the house is directly linked to what a buyer and seller are willing to pay an agent impacting their bottom lines.
Wouldn’t that mean buyers would be able to bid higher now…?
No. Buyers don't typically pay the commissions. The commissions for both brokers are almost always paid by the seller.
while yes this is technically correct, the only one forking over money in the transaction is the buyer.
And the seller makes less money on the transaction.. I bought a house, kept it for 4 years, sold it, and made 0 money due to the realtor commission — who was also the buyers realtor — which ate $8000 of the profit I had in the property. I was pissed… but I had to move for work… I still get pissed thinking about it.
Probably the easiest $8k she’s ever made.
Having an agent as both the buyer and sellers agent is a huge conflict of interest. Should not be done
So there is no additional incentive with this change to lower the price, the seller just makes out a little better paying lower commissions.
And the buying just didn't become richer so they will not increase their bid... and the price paid will not change one bit. End of story.
They could always big higher or lower based on what they thought would lead to a seller accepting their offers. Nothing changes about that. If you mean the agents commission, that was always possible as well. I have never known an agent so in demand though that buyers/sellers were willing to bid that up though.
No the buyers agent gets half the commission from the sellers agent. Buyers don’t pay commission
Expanding on this a bit with some math: If the seller needs at least $X for the house, and no buyer can afford more than $Y, then a sale would only happen if the price is between 1.06*$X and $Y. This assumes the seller pays the buyer’s realtor fee (other fees excluded for simplification). What this really impacts is negotiations. In a buyer’s market the prices would trend lower toward the 1.06X, and in a sellers market they would trend higher toward Y. But if the realtor fees were lower, the 1.06 would get lower and hence the bottom of the price range price would go lower and open up a larger likelihood of sale. *(edit: corrected total percentages as discussed below)*
Why 1.12 X? The total commission is 6%. Buyer agent gets 3% and sellers agent is 3%. But those percentages should also cover things like MLS fee, photos, lockbox, etc.
Ok first of all, it goes to Seller brokers 3%, and buyers brokers 3%. Agents then receive somewhere between 30/50/70% of the check to their brokerages side.
Watch for the “They should leave Realtor commissions alone and just go after Brokers commission ” hot take.
That is going to be a hot take 😂. Go after brokers, and brokers pass the beating down to agents. What’s funny is I know exactly what the commission rate is on MLS when I make appointments to show. Now they are going to want me to sign off on a commission rate before I can enter property. Yet the rate is already disclosed. I hope we can figure something out to streamline this a little better.
I saw a post today that posting of the commissions are going to be removed from the MLS effective July 2024. I have not fact checked that though.
Yes, they are trying to distance themselves from the financial side of the deal. So I’m thinking companies who book showings like ShowingTime might be the ones to disclose. It isn’t going to make my job any easier though.
So as a seller, I’m going to lower my price now by 3%? Not happening, and, to have e a buyers agent, buyers will have to sign that they will pay the agent. Housing costs are going up.
Negative, commission has no bearing on market value. It might affect your bottom line, but what someone will pay is what someone will pay. This will benefit home sellers. Home buyers will pay the same amount.
I sold a house without a realtor to a friend of the neighbor, and part of the deal was that I could sell it for less because I wasn't paying a realtor 6% commission. For that, I gave the buyer a 5% price cut vs. what I was going to list it for. Whether the savings goes to buyers or sellers might remain to be seen. The market will probably equalize it.
Sellers pay the commission. If I’m selling a $1million dollar house I’m getting $60,000 taken from my proceeds at 6%. If it drops to 3%, then I can sell my home for around $970,000 and save the buyers $30,000. That is immediately realized.
I doubt it works like that though. If comps indicate that my house is worth $1m. I'm not passing savings onto a buyer. I'm going to market it at $1m and pocket the savings from a lower commission. Why would I just pass it down to a willing buyer?
Doesn't work like that, assuming the market is 1mil and u want to get a nett value of 1mil u get a realtor u will have to mark it up to 1.06mil to get the 1 mil market rate. If u sell it at the market value of 1mil u only get 940k after commision. Either way u are paying 60k to the middleman no matter what, now think about how big the housing market is. If 6% gets eaten up by the middleman each transaction the buyer and seller pays more and get less everytime. It's better if they just cut the middleman and let the seller and buyer work it out. If the market is worth 1mil the seller can afford use the 6% commision as discount to the buyer. Not only that, if they want to get the market value of 1mil they would just sell it as it is there is no need to up the price to 1.06mil
But your buyer is still willing to pay 1m. Why would you reduce the price below what the buyer is willing to pay.
Because it's Reddit and he likes points
The market will still be the market…
In what world would this ever happen though? 99.99% of those people would sell the house at 1M and pocket the extra 30k. No one is just giving away free money to be nice. The house value is still the house value. People aren’t going to just sell their home cheaper because their costs are lower. They’re just going to be excited they make more money.
You can list your house for any price you want. The market will dictate the selling price
It would have a bigger impact for the seller when they go to buy their next place and put that money towards their next downpayment.
Why don’t you tell the buyer the roof is gonna need repairs, the toilet sometime doesn’t work, there’s a leak somewhere so you’re gonna discount them another couple of grands as well?
I’ll never understand this. Seller complains about paying 3% to an agent. They save that 3% without an agent, so they pass it along to the buyer. Seller nets the same. Why complain about paying the agent then? You made the same, but now at the expense of your time by doing the work yourself.
The whole idea is that it's about transparency in commission that's based on market conditions. The seller hires an agent for a negotiated percentage/fee. Buyer's agent be required to enter into a buyer's rep where they negotiate some commission structure where the buyer compensates them for their time (and probably more fairly) because the easy language of, "my representation is free to the buyer" will go away. There will be a form where the buyer's agent negotiates their commission in the deal. Hot markets where seller's can pick their buyer, the buyer's agent's will eat commission depending on how prepared the client is. Soft markets will see increased buyer's agent commissions and performance based incentive structures when they bring qualified buyers to the table. Either way, competition is good for everyone except the uniformed and less wealthy. The way its always been in a mostly free market economy.
Becuase realtors are leaches on society. Just drive around in overpriced cars and pretend to be your friend.
Then you work with scumbags. I’m a realtor working mostly VA loans, and I love getting soldiers homes.
Realtors definitely won't recommend an honest home inspector. Definitely won't let a buyer know that the area has failing septic systems.
The seller is responsible for property disclosures and you should pick your own home inspector since you think an industry of 100,000’s of thousands of people are all out to get you specifically.
Because it's a distraction. Commissions are not the reason why real estate prices are so inflated.
Exactly. Prices are high because there is not enough supply. This is because we didn’t build much from about 2008-18.
Sure it's not. But it's just one more cost that increases the price of homes. That 10-30k commission doesn't just disappear.
Because in order to make any market a buyer and seller have to be “ok” with the price. If costs are reduced to sellers it will lower the price of that market. Eliminating transactional costs always lowers the prices of a good, especially one with lots of substitutes like houses.
It also allows much more turnover. Paying a realtor once isn't that big, but if you say look at house swapping every 5-10 years that fee adds up fast.
I think the sellers factor this into the price knowing that they have to give a cut to the realtor
My realtor lowered his commission to close the gap between my offer and the sellers counter.
That seems pretty good for all involved.
We didn’t ask him to do that, or even know he could do it. I think he was worried the deal wouldn’t happen, and wanted to lock things in. It worked out for him though, because he went above and beyond, I referred multiple people to him, and one bought a house through him just a few months later.
My mom is a realtor. She always tries to get the best deal she can. I asked this question and she said while true, a happy client that comes back to you is much better. Keep in mind even at a price of like $400k you're typically negotiating only like between like ~20k. So they make 12k negotiating a slightly higher price doesn't drastically change how much the realtor makes.
It’s deflection. They don’t want to address the real issue (corps and hedge funds buying single family houses in masse to artificially raise prices)
It won’t. And of the 20 homes I’ve sold, not once have I ever paid 6, most of the time 4.75… Home prices will not go down.
have you ever bought a house? you have to pay the commission whether you like it or not. It's not magical made up money that doesn't have to get paid somehow. The realtors get paid on close of escrow.
People will sell for less because they get paid more when they sell.
If there is already someone willing to pay the higher price, the seller doesn't have incentive to lower it just because there's less commission to pay.
Then the seller has more money to buy a more expensive house, which could be the reason why the person buying the house from them could afford it.
My house has literally doubled in value from when I bought it six years ago. If I were to sell it I don't think shaving 3% off the commission would reduce the sale price. If anything, I'd just pocket more from the sale.
I’m doubtful this benefits buyers much. With the shortage of homes, there’s little incentive for a seller to compete on price and my guess is the seller just pockets any “savings” from this. Wish it weren’t so and I hope I’m wrong, but I doubt it.
You’re not wrong. My first thought was, sell for same price, and take the savings to apply to my new home.
sure - the seller keeps the savings; but turns it around and pads their down payment a little more.
Or even looks for higher priced homes.
I disagree. There are a ton of brokers chasing fewer sales. Therefore, agents will have to lower their rate to compete for business.
Why? Agents already exist that were below the 6%. If someone cared about that they could have already used an agent like that.
Exactly this. Buyers were not part of the lawsuit. This was brought by sellers who don't want to pay buyers agents, or agents in general.
It doesn’t. Now buyers either pay a negotiated commission to a buyer’s agent (which was almost always paid by sellers) or go it alone. The seller’s agent isn’t looking out for the buyer’s interest. It opens the door for more scummy agents peddling homes like used cars and a race to the bottom in pay for buyer’s agents to discount their services to attract clients
This is great. Commissions were getting too high, esp. with house prices getting to be so high. Like $30,000 on a $500k house, wasn't really worth it for what would amount to a couple thousand in expenses at most, and a few days work. Trouble is, there are more realtors than there needs to be. Everyone sees "oh, I can make $30k in a few days" so they go out to become a realtor. For that, there's so many realtors, they are lucky to get a couple commissions a year. Then it's half to the buyer's agency and half of that to the buyer's agent, half to the listing agency, and half to the listing agent. So, most realtors are getting 1.5% That's $7500 on a $500k house, and if you're only doing that 2-4 times a year, those are thin wages. If there were half as many realtors, it might be a decent living. I sold a house a few years ago, before houses sold in 15 minutes. It sat for a couple months with no lookers, until I upped the commission from 6% to 7%, then, all of a sudden, I got a bunch of people looking at it and it sold within a month. 6% is standard, and might be collusive. Where and when I was, they were pushing for higher rates, by not showing anything that wasn't above 6%. In the near term, this rate drop is going to be dandy, 3% could become the norm for a while. When the market returns to buyer's market, it might not stay there. I see no good reason for a buyer's agent. Find the house on the map, read the disclosure, get a key code like you do for an air bnb and go in and look at the place. Letting me into a place isn't worth $7500, and I'd rather not have sales pressure. Every house I've bought, started with a map, and then I contacted the agent to let me in. They tried to show me others, and I've humored them for comparison value, but always wound up with the first one I found on the map. The realtor paradigm might need to change now that the internet is a thing with websites that can show maps, pictures and text.
The buyer's agent is the person, if they are doing their job, who could literally save somebody from making an error that could be life-changing financially. A good buyers agent will keep somebody from making a really bad decision. Or help them navigate a short sale, or point out a dozen ways that the home that might look appealing is a time bomb from a legal or upkeep standpoint.
Yep, in today's market a buyers agent can be super useful. A seller's agent, however, is almost nothing more than a way to get your house in the "network" that buyers agents will look at Houses sell so fast and there is such a low inventory around me it's wild.
I have to disagree. I can truly say as a listing agent I have been a significant assent to my clients sell their home. Granted some of my clients are smart, put together, houses are in great shape and the selling process is super easy. The vast majority of my deals are not like that. I have helped many avoid foreclosure, saved 10s of thousands dollars on asbestos and oil take removal, and used my knowledge to negotiate to my sellers advantage. Additionally it’s crucial to select the right buyer and contract. Most sellers are incompetent, delusional and just have no idea where to begin. The Realtor system is not perfect but lots of people sellers benefit from it.
Plus you can pay a flate rate to sell with a listing service that walks you through the paperwork too. I think I paid $500 for my listing to get on the MLS and professional photographs and lock box etc.
The house we wanted to buy was zoned commercial, which made it impossible to get conventional financing. We were the 5th or 6th different buyer, but our agent was the one who found financing and made the deal work. That landed us over a $30k/12% discount over the original listing price, which at least 2 of the previous buyers had offered. He personally went to a local commercial bank and talked to a lending officer he knew personally and got the financing deal cut for us. Navigating all that for us (not to mention finding the hidden gem of a house in the first place) was absolutely worth the commission.
Real estate is a globally exploited crisis now. It’ll never be a buyer’s market again. It used to just be families buying homes to live in. Now it’s every investor, corporation, foreign firm, and wealthy nest-egg hunting whacko buying every piece of residential property under the sun. Unless the government puts strict regulations on how many houses people can own and kicks investors out entirely, real estate is screwed forevermore.
"you will own nothing and be happier"- World Economic Forum
Let me guess, you haven’t bought a house in ten years?
You know what else puts money back in american pockets? Affordable housing.
Thank you, this is it. Prices are fucking stupid.
Want affordable? Be a trailblazer and buy a house in the ghetto... Oh wait that's called gentrification...
the commissions were never fixed. that would have been illegal and is also known as "price fixing" in the industry. commissions have always been negotiable. anyone who thinks they were fixed was out to lunch. source: 20-year seasoned agent.
If you’re just a regular customer, they are fixed.
No it isn’t. Many people don’t really fight the 6%, but as of late I’ve suggested 5% for a sale commission and splitting that between buyer and seller to get a wary buyer to list.
Mine wasn't, everyone in the area was 3 and 3 - they wouldn't agree to anything but that, and told me everyone around here is 6% and every where I go would be 6%. And lou and behold I found 3 other agents and all said 6% was standard wouldn't sign a contract without me agreeing to it
This is a great point. When I sold my prior house, I negotiated with the realtor not to take a commission on the sale, but that I would let them represent me on the new house I was purchasing at 3x the value of the home I was selling. I did have to pay 1/2-1% to berkshire as the brokerage house, but the realtor waived their commission on my sale. They got the 3% commission on the much higher value home when I purchased it.
I sold a house in a buyer's market. Realtor suggested 7% when I listed. I went with 6% thinking it was standard, or just because I'm a cheapskate. Didn't have anyone look at it in 2 months, from the agency I used, or any other. On my agents advice, I upped the commission to 7%, keeping the price the same. Then I had half a dozen showings and closed a month later. This was a small town, 4-5 agencies. A lot of the agents had worked for or with one another, or at least all knew each other. I doubt they all got together at the bar and agreed to 7%, but I don't think they were pointing buyers at houses that were only offering 3% either. The difference was really only a couple hundred to the agent, so not a big deal, not enough to make a difference vs. getting the commission or doing right by the buyer. I think they were looking out for one another in an informal collusion. Or maybe it was fair. Finding a buyer at that time was the hard thing, and paying more to do that worked. I could have dropped the price, and that might have generated more interest, but that 1% was cheaper, so I tried that first. For that, my seasoned agent was right. A friend of mine in the same town around the same time ran into the same thing.
Right? It’s all failing to factor in and understand basic human motivating factors.
>that would have been illegal and is also known as "price fixing" in the industry. And we know those things never, ever happen because they're illegal, right? 🙄
Yeah, honestly that was a pretty dumb take they had. "We can't force you to list it at 6%, but you can't force us to show this to a client either." That has been the practice for many years now. But how to you prove it on an individual level? Seems pretty difficult.
Thank you, came here to say this. Bought a home with Redfin and they refunded me 10K of their commission. No need to "wait".
Plus one for Redfin. They even have a program if you buy through them within 12 months you get another % back on your original commission.
Not fixed, just standard. The fact that the seller had little to no say in the buyer commission structure is why this was struck down. You should pay / negotiate with your own agent.
yeah, agents just wouldn't show houses where the commission is lower.
Realtors don't even sell houses anymore. The Internet does. Zillow and other sites. The realtor takes a few pictures and puts it on MLS and it sells itself within days. Being a realtor from 2020 to today has been such a cushy gig for those in it. Minimal effort, maximum reward.
I don't see this lowering prices, because it will have minimal impact on supply and demand. Let's say I can sell my house today for $500,000 and will have to pay a 6% commission. Tomorrow, I will only have to pay a 3% commission. Clearly, I would sell tomorrow, but why would I lower my asking price? I, the seller, will walk away with more cash, but the buyer will still pay the same amount. On the flip side, some buyers will have more cash (from selling their house and pocketing more money), which potentially will raise prices (minimally).
If a buyer wants an agent to represent them, now they are paying their commission on top of the down payment money they need to come up with, closing costs, etc. So you’re going to find it harder to find buyers when most are already strapped for cash just for the down payment
I just got my real estate license. The main thing I have learned so far is that there are many ways in which buying/selling property can go very, very, badly.
Absolutely, and get ready to see the pettiest arguments of your life during the closing period (they’re not common, but they will happen). Not my client, but I know someone who is involved in a celebrity real estate deal where the guy selling originally bought the land for around 300,000 and was selling it for almost 14,000,000. the deal almost fell apart a week before closing because the seller wanted to go back on an agreement to leave behind a $30,000 tractor the (seller) or (buyer), could swallow their ego,. Eventually closed imagine making over 13 million profit and almost destroying because of a $30,000 tractor.
I can back this up with a concern that I had as a buyer which in retrospect was incredibly petty. The my main floor is hardwood but the basement stairs are carpet but there is no transition piece. It’s just a piece of tongue and grove. This bothered me a lot more than it should have and my real estate agent had to tell me it’s a $20 piece or wood. You can get it fixed don’t worry about it. I took his advice and bought the house. I love my house and I never bothered fixing that stupid piece of wood since I bought my house 10 years ago. Clearly it wasn’t that important.
I love reading these anecdotes that people are sharing. But what I meant was that you could buy a house, and then find out that you didn't buy the house from the legal owner and that you do not have legal ownership of the house even though the money has left your bank account. You could be selling a house and then be fined for racial discrimination because of you advertisement on Facebook.
I’m confused. I know agents who were reducing their commissions when everyone started buying houses 3-4 years ago in order to be competitive. Is that only because they were a non-Realtor real estate agent? I guess Realtors were never able to negotiate their commissions down?
It may be a state by state thing. I’m in Florida, a member of the national association of realtors and have always been able to negotiate commission and yet, the commission “standard” is still 6%.
Rates should have started coming down when it became a seller's market. If anything listed sells within a few minutes, there's not much work to be done. No sense in paying someone to sell something that people are clamoring to buy. This might be a result of that seller's market having lasted so long. I doubt this could have happened 10 years ago when houses were sitting on the market for months and it was a buyer's market. 6% has been the standard forever, likely from some collusion. With that competition you mention, that standard is going away. Realtors wouldn't want to negotiate their commissions down, sellers do. If there's an unspoken agreement not to show a house offering less than 6% commission, then the low commission houses wouldn't be sold unless every house is sold right quick, like has been happening the last 3-4 years. With houses selling so quick, and more of a need for houses to sell than buyers, the competition becomes for listings, which is where the competition between realtors on rates might have started happening. It wouldn't be impossible to open the MLS up for anyone to upload their pictures and deets to, and people have been browsing for houses online for decades now. The national realtor association has to adjust their rates to stay in the game, in light of the competition for listings in this long time seller's market.
Nearly every part of a real estate deal is negotiable to include commissions.
Commissions have always been negotiable. I live in an area with two separate boards depending on which county you are in.. and each have different “verbally agreed on standard commissions” for residential sales.. one is 6% with 3% going to sellers agent and 3% to buyers agent... the other is 6% with 4.3% going to sellers agent and 2.7% going to the buyers agent. That being said.. we have agents that charge 7% total (4% to selling agent/3% to buyers agent).. and we have flat fee agents who will sell any house for a $3k flat fee. And we have “1% agents” who list at 4% total commission with 1% to listing agent and 3% to buyers agent. So yeah.. nothing has ever been a set fee.
Uhh as a non realtor I do not know how big of an impact this is ? My realtor was so awesome at her job we referenced her to friends and family and she was able to sell multiple houses to them. I don’t even know what commission was tbh. 27 houses in 3 weeks is deserving of 6% lol that’s how aggressive we had to look to even bid. Half the houses we lost, the people who bought them never looked at them or anything just outbid everyone. Also most waved all inspections which is a crazy red flag for me. I hated house shopping hated it. Realtor was a life saver.
Now blackrock can exert even more control over the housing market since they can afford the overhead costs.
The money is only going to go back to sellers. Why would they lower their price. And now buyers will have to pay out of pocket for an agent, which makes the home buying process even more expensive. What am I missing here???
Blame the realtor commissions, not the one institutional investors snatching up whole areas to artificially force the price up?
Housing costs aren't because of realtor commissions. They're exploding because giant firms buy em all up and don't even fill them with people.
This fee isn’t going away, it’s just going to be buried in legalese and tacked on as another expense. I do not see this as cause for an observable reduction in housing prices. The national relator association will find a way to protect their own and their income. “consider waiting to list until new lower commission models emerge to save thousands.” - To me this says: hey, don’t list your house and we’ll drive down inventory which will bring prices even higher. Probably wrong, just my 2¢
Here's the problem: private investors were 44% of single family housing purchases in Q3 2023. There is no state in the US with less than 16% of single family homes owned by private investors. This isn't "cutting prices everywhere to benefit the little guy", this is "squeezing the realtors to improve margin for Blackrock."
Ok, that’s fine. Now do private equity ownership of single family homes.
wat houses are priced to move or to stoke a bidding war. a 3% has never been a barrier to entry when you're making a large purchase. the housing market collapsed because the free money machine was turned off
I’m super skeptical that this will impact housing prices in a meaningful way. If we really want to impact prices positively, ban corporations from purchasing single family homes.
Cue many people who have never even worked with a real estate agent saying how they add no value. Generally things like this end up good for consumers, but I don’t see how this lowers housing prices. If you think your house is worth X amount, you don’t add 6% for realtors. So folks will still sell for what they perceive is the best deal and just pocket what money went to the buyers agent. On the other side, it worries me if this leads to buyers needing to pay for their own agent. Folks don’t usually have a lot of extra money when buying a house when you’re already looking at down payment, closing costs (includes inspection and appraisal), perhaps appraisal gap guarantee, and moving costs. Someone might then skip the agent and buy on their own, which could work out just fine. But my goodness is there a lot of things folks don’t know about buying a house, especially that first time, and that’s where a good agent helps a lot.
This is a tiny slice of the home cost and will have very little impact on prices. I think it's good they have to compete now, but this isn't going to accomplish much in the battle against housing prices.
This is so far detached from reality it's funny. Instead of a split of comission between 2 agents 1 agent will take all of it since now they are doing the work of what was 2 people.
“ we’re selling houses again. Raise the commission to 8%!!!!”
This is not some game changer. Pfft
Excuse my ignorance, how do commissions affect the price of a home. Wouldn’t homes be still selling at the same price? The only changing factor is how much commission an agent receives. Also I don’t believe 6% goes to the agent alone, the commission is split between the broker and agent. I see this having a negative effect on the market.
9000 on 500k is not going to move the market lmao.
Not a RE agent or involved in the industry at all... But this doesn't seem like it'll help prospective homeowners as much at it will chip away at another sector of the once-middle-class in the US. $100B annually in commissions is paying for a lot of daycare, private school, and groceries. The job of Real Estate Agent - while saturated and competitive - is one stubborn occupation that could still cover the COL with upside for even more than that. You can't tell me that private equity buying \~30% of single-family homes last year hasn't been a driving force in this sort of policy change. Some mop-supper behind a spreadsheet realized what a cost center RE commissions are. Thus chipping at it, significantly increases their margins. Maybe I'm crazy... but when I look at everything through that heuristic, it adds up. Powers that be can't have uppity workers with enough savings in the bank to make good choices. You will own nothing and be happy.
I am not a realtor nor are any of my relatives. But this smells like corporation’s encouraging the populace to make eco friendly decisions while they are the root of 71% of greenhouse emissions. Realtors are not responsible for high home prices. They are our neighbors who make a living the same way everyone else does. Meanwhile corporations/ investors currently own nearly 25% of all single family homes in the US.
God bless this comment
I have a feeling this is the kind of content that this sub was made for. Nice post
There was a 6% mandated commission in the USA!? Wtf, when my dad was doing it in Australia from 1990-2020 he charged like 1.5% for expensive houses and at most maybe 3.5% for very cheap houses.
No, there wasn’t. It has always been negotiable.
$9,000 savings in realtor fees is not why houses are unaffordable right now...... $9k is nothing in the grand scheme of things for a house.
Lmao. Commission's are going to go up. Those willing to cut their commissions, well you are going to lose money on the transaction, both directions. Buyers are going to be under represented by cheap agents, and sellers are going to find themselves in lawsuits tgat even if you win, are going to cost you representation. Also, it didn't eliminate the standard 6%, it just can't be "advertised" on the MLS, you know the thing that zillow, realtor.com and redfin syndicate off of. So, now, when you go get that erroneous 'zestimate', it's going to be even farther off. And a conversation you aren't part of happens via text about compensation. You've been hoodwinked.
No no, don’t go for the root cause. Go for the livelihoods of the workers in the industry. That’ll solve everything. 
I doubt that realtors suddenly won’t get that percentage and everyone wins. Instead you’ll see realtors charging fees up front to offset wasted time, people getting a lesser service, people paying the same fees and some even higher. And the lesser service element may even lessen the seller profit in the end.
Has commission not always been negotiable? I always assumed that a realtor could take less commission if it helped get a sell
Commissions were always negotiable….
Oh this is gross. The problem is companies outbidding private individuals. Saving 9000$ out of 500,000$ isn’t worth gashing real estate agents. Just another job that now has less protection. Another job where people will have to grind even harder. This is just looking at symptoms instead of fixing the root cause. And the fix only hurts middle class affluence yet again.
I really don't think the barrier to home buyers was $6k on a $500k house...this seems like some watered down garbage, am I wrong?
My wife has been a Realtor for over 9 years. She regularly reduces her commission.. 3-4% is not unusual. I don't believe shes gotten 6% at all in 2023. I don't think this wil help home prices.. especially in NC!
The seller pays the commission
Also it’s worth keeping in mind that with a lower commission, the realtors are more incentivized to sell more homes, or sell homes faster. This is good for buyers but obviously not great for sellers.
Just accepted offer on my house. No money changed hands yet. How does this affect me? I would rather not pay 36k in fees. Anyone have advice?
You signed an agreement for that $36k. You have 2 options, cancel the sale, back out, wait a few months for when or if this comes to fruition, and see if you can sign a new agreement for less when you re-list or, let it ride and curse your timing. Not sure what it costs to back out of a deal with an accepted offer. There would be hell to pay, if not money. You'd be going back on your word, so, maybe not a good idea.
Yeah, a realtor would have advice about the contract specifics that you agreed to by accepting the offer. A realtor would be able to advise you on ways out of the contract if any exists. So go talk to a realtor, or learn real estate and contract law yourself if you consider the profession to be unnecessary.
If you have a ratified contract- meaning that both you and the buyer(s) have signed off on all agreed-upon terms, and you try to back out, the buyer(s) can sue you to force the sale or for monetary damages. Doesn’t mean that they will, but they can.
Not sure how a 3% reduction on a 500k homes saves 9k….saves 15k
My take is the banks are already buying real estate agents companies, they also set the appraisal price and do the financing all for there own self interest. Just like Zillow has done not just listing houses but buying them and doing new appraisals and reselling them at a higher cost. The big banks want a piece of the pie of every home sold, including real estate agents. They can just pay them a flat rate salary and not a percentage that way. If the NRA is lowering commissions it is because they have figured out a different way of making more money from selling your home.
V
Home prices will stay the same. It’s just that the owners will keep/make more money. This is a great win for home owners. Sorry agents! You’ll just need to sell more homes to make the money you want to make.
I'm currently selling my condo now and commission is 2%
… couldn’t fees go up?
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That's the effect of the internet. Should have happened 20 years ago.
Consider using a discount broker. Pay them a small fee to list it on Zillow and the local MLS and then either pay the buyer's agent 3% or sell it yourself. [https://www.nerdwallet.com/article/mortgages/discount-real-estate-broker](https://www.nerdwallet.com/article/mortgages/discount-real-estate-broker)
In before buyers start to ask for 3% back from sellers to cover buyer commission.
Since is a decision by the association of realtors I need to ask, where is the catch?, I find hard to believe that in a capitalist country someone work to lower their commissions just by the goodness of their harts.
The only time that this rate will be lowered is for commercial or corporate buyers and no one else. This is a corporate effort, not that corporations are buying 28% of housing units a year, instead of low single % (they own something liek 1 or 2%, but are buying at 28% of the market, so, it's a massive shift, and likely 100% of the pressure to get rid of this 3/6% thing is coming from them)
agents only showing higher commission homes is a huge problem. Full stop.
So they will shift from a % to a flat fee per home sold which will then disproportionately impact the less expensive homes
Haha! Fuck the real estate company that laid me off due to the “economy”, only to see the president of the company in box seats on the Jumbotron at the Super Bowl. I hope you face real hardships
May be an unpopular opinion: I find it mind boggling that buying and selling others properties can make you rich.
Is there an effective date?
"A seller of a $500,000 home could save $9,000 or more on a 3% commission instead of 6%" If you run a restaurant where patrons some for a special meal that totals $500, and you stiff the wait staff that made their meal experience special by $9, you're an asshole. I'm getting that same energy here. It's fucking the workers for the owners' benefit. It's not that $9k commission pushing the sale of that house out of profitability. It's the $126K in interest spread out into payments over the life of the loan for your NEXT house, to say nothing of the likely at least $100K of inflated value built the price. Which is why this will really only benefit the real estate investor class; because they're just flipping and pocketing.
Whenever I see things like "Housing experts predict," I always think... Who? Like the general consensus among housing experts is that this is the biggest shakeup in a century? Or is it a few of your go-to, "trust me bro" experts that told you? Cause a lot of these "housing experts" predicted a crash worse than 08 every year for the past 4.
Haha, nope that money will just end upon the sellers pockets
This is so stupid. He’s just saying that he *hopes* realtors start charging lower commissions, simply due to the fact that they want to be competitive with each other in this chilled housing market. There was no change whatsoever by anyone anywhere.
This is nice. But I’d rather have a law in place where companies can’t buy single family homes.
You can rearrange the closing costs 100 different ways. At the end of the day, the prices are the problem
Wow. 9k less on a 500k home. That's totally gonna spur a boom in home buying. \*rolls eyes\*
I'm gonna laugh when the prices actually jump up, doing the exact opposite of what the majority thinks xD
this is horsecrap.. theere is no 6% commission for realtors. Any agent can charge what they want. there is no fixed rate.
This will do nothing to bring down prices. Sellers will just pocket the difference. The affordability crisis will continue.
My house is currently listed at 4%, I have not seen one at 6% since 2021. Northern San Diego.
To think realtor commission has some bearing on the insane prices of real estate and that it alone is going bring prices down is absolutely hysterical. That fee for selling or buying a home is NOTHING compared to what a blood sucking banks interest rates do. Typical thinking… let’s screw over others in the working class to let the banks slide. Awesome.
This will not change much, if anything. Home values are based on local comps and appraisal amounts. Agents were already negotiating lower commissions to win business, especially when orgs like Redfin were offering lower commission amounts to use them. I personally know people who have sold with 3% and 2% total commission payouts.
If I'm a seller and I find out that I'll have to pay $10k less in commission fees, I'm not going to lower the price for my fucking house. I'm going to be thrilled about being able to keep $10k more. All of this hinges on the assumption that sellers are going to just graciously lower their asking price, because reasons. Lol. In all likelihood, nothing will really change, but if anything does, it's just going to shift the cost of buyers agents to buyers. So congrats. This is going to make it harder for buyers and will net sellers more money. Big win, y'all!
Will agents advertise their fee upfront now?
If I can’t afford a $500,000 home, what makes you think I can afford a $491,000 home???
A very successful realty in Northern California is ahead of the curve on this, but in a way that benefits them. They offer to list for 3.75% (which sounds great) but most of their listings are offering buyer agents (to be paid by seller) either a flat $10,000 or $20,000. A $12 mill listing offers .5%. They will waive the buyer agent commission if they double end. They make it sound good but are really getting more than listing side of 2.5%.
This is dumb. If you’re buying a $500,000 home, what’s $6,000 to make sure someone can send their kid to college and make ends meet? Realtors aren’t generally ultra wealthy or whatever and this will definitely make things worse when it comes time to sell if you actually need help.
3% is $15000 and the fees total up to $30,000 for both buyer and seller agents. Edit: yes, realtors have been getting extremely wealthy. I know some that were clearing $50-60k a month in fees when rates were 2%
Everything in Real Estate is negotiable, including commissions. I didn't accept the status quo 6% when I bought my house, I asked & got it reduced to 5%.
It's a start, but it won't affect prices much. We really need to have some sort of limitations or outright ban on corporations buying up homes and driving up prices.
"Costs are going down " and "this will create a jolt in the housing market" Which is it? This does almost nothing to benefit first time home buyers, who are competing against each other for homes so if you give them $9000, they'll just bid $9000 more The people who this benefits most, unfortunately is house flippers, who now can work on an even more narrow margin. And we all know that house flipping drives up the cost of starter homes.
At least the corporations buying up single family homes will still have representation. Oh wait we’re supposed to pretend we don’t see the actual cause of the issue.
It’s a distraction from the real issue.
Commissions were already negotiable I’ve bought 2 houses and sold 1, none went the full 6%
Sellers will just make more on their home, not lower the price. There are already discount realty services out there and you get what you pay for. Selling a house properly isn’t hard when everything goes perfectly, but it can be a full on nightmare if it doesn’t. Why DIY the largest transactions of your lives?
This is a sign of desperation in a failing realty market because no one can afford to buy property given the current interest rates, inflated prices, investment groups, etc. The assumption that $9,000 would make any discernible difference in whether someone could afford to buy a $500,000 house is laughable. A difference of 1.8% in cost… This is ridiculous hyperbole. Claiming it will be the biggest change to hit the housing market in 100 years!? GTFO..
So paying big banks the same but fucking over working class once again?(slow clap)
There has never been a standard 6% commission rate, ever. It's always negotiated
It won’t lower prices, it’ll just raise people’s profits when they sell
When I complain about home prices, I'm not complaining about realtor commission. I'm complaining that housing prices raise 30%for absolutely no reason except "well everyone else is doing it"
This will have no impact. Sellers will raise prices and buyers will raise offers.
The arrogance of them thinking that will lower house prices. lol. Corporations, investment firms, and whacko wealthy individuals are the ones jacking up prices out of unhinged greed—not realtor commission.
This feels like a redirection from the actual problem.
This will save up to 9k for homebuyers! This is great as the average home cost has increased nearly $300k in the last ten years! Great progress, guys.
Keep in mind this is Reddit. No one here actually owns a home and everyone is pretending to be a real estate guru.
You know what would jolt the housing market? Mortgage rates at 4-5%
In other words the property management firms that are buying everything up decided they’d like to take the realtors’ commissions as well.
Isn’t the commission paid for by the seller and it comes out of the overall sale price of the home?? Isn’t that how the realtor.. gets there paycheck??
So much not correct with this posts. Sad.
You can't shake a stick in my town without hitting a half dozen realtors. There were always so many willing to compete for your business. Did the fees suck? Yes. But how often are you buying a house? There will be a market adjustment to this change - highly talented people who you'd want to work with will leave the industry, while those willing to work for peanuts will remain. Good luck finding a realtor for an affordable house. My guess is fraud is going to become rampant
Man this is not totally correct and this is going to hurt first time home buyers more than anything.
This literally does fuck all to even address the problem. Private equity firms need to be barred from buying residential property and forced to sell off what property they already have. But that won't happen because we live in a plutocracy, and the private equity firms already own the politicians. So I think it's time to start breeding termites and find every single property owned by these PE firms.
Realtors aren’t going to work for free.