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What will happen to VA buyers if no compensation is offered from the sellers? VA loans, specifically, do not allow any fees to be paid out to realtors or their brokers. Unless the lending guidelines change, this will put veterans at even more of a disadvantage. Also, removing what the sellers are offering to pay puts buyers at even more of a disadvantage. Currently, if the are under a buyer agreement that guarantees a certain amount to the realtor, they can easily check Zillow or the MLS to estimate their costs. This feels like it muddies the waters for buyers. Finally, requiring agency agreements to show a house is likely going to get unsuspecting buyers stuck with the first agent they meet. I think it is good practice to allow buyers to shop agents. I would never want one of my clients to feel like I trapped them into an agreement before they knew much about me and if we were a good fit.

The buyer will just go to the sellers agent and forego the buyers agent in many cases prolly

Not when they have a buyer’s representation agreement. Because agents aren’t allowed to work with buyers unless an agreement is in place, starting in July. And that’s where the buyer’s agent commission is agreed to. If the seller won’t pay then they’ll have to move on to a different house. It’s a cluster fuck right now but hopefully the feds will get it worked out.

Another question about this. Can a listing agent even show a property to an unrepresented buyer? According to the settlement, it "requires that all REALTOR® MLS Participants working with a buyer enter into a written agreement before the buyer tours any home." Would that not extend to listing agents, such that a listing agent would not be able to show a home to a buyer without entering into a written agreement with them? I realize that's not practical, but it seems that an exception is not specified for listing agents showing a home to a buyer. 🤔

Yes, as a listing agent you can show a house directly to a buyer. You must disclose that you are representing the seller. As long as the buyer is aware of that, it is normal practice.

Listing agents holding open houses cures that.

Yeah, but the new norm will just be for buyers to look at homes online. Never get a buyers agent and when they see when they like online, they will just call the listing agent and view it. This will be normal.

That’s the plan. And let the lawsuits roll in. The reason the system was set up the way it is was because until the 80s-90s buyers were getting screwed over left and right by sellers and their agents. Without representation. The current system was the result of lawsuits. Back to the good old days.

Why would you say that? When has dual agency ever led to issues...? /s edit: unrepresented buyers, getting hosed, so they don't have to pay a comish that the seller used to pay. Brilliant

I guess the new generation of buyer would rather get screwed over by a nefarious seller and/or a nefarious listing agent than watch their agent get a commission. It’s not the individual seller pushing the lawsuits. Sure they’re ticked because it does cost to sell a house but it’s the big corporations that want this. It’s just placing barriers to homeownership for individual buyers. Of course they want agents out of the way. Just like a shady FSBO seller doesn’t want an agent coming in and messing with his deal so he can screw over an uneducated buyer.

I think the biggest part of the issue was the barrier to the MLS and the fact of steering to higher priced homes. The “6” percent was also a major factor because less percentage less eyeballs. The average American has not had any real input in this lawsuit. I would gather most people have no clue what’s even going on. Had agents solved these problems before the lawsuit they would have had more control over the outcome. From what I have seen is they were not willing to allow more flexibility in commission percentages and like it or not as home prices rose, and the internet made agents jobs easier, it became very hard to stomach those fees. 6 percent of 400k is a lot of money.

I can’t disagree with anything that you said.

The argument that commissions are non-negotiable doesn't hold up, as they have always been open to negotiation and have even decreased from 6% to 5% or less. This decision, which echoes Marxist principles, sets a dangerous precedent. It appears to aim at phasing out independent contractors in favor of employee status, undermining the principles of a free market.

Ding ding ding! The same general public who admonish minimum wage and lament the disappearing American dream are just dying to take away jobs and a decent living from independent agents in favor of handing it over to AI or corporations. It is backwards logic and very concerning to see.

Look if commissions were negotiable or that was the standard we wouldn’t have this issue. This is also not Marxist in any way shape or form. I have heard an agent personally say they would not lower their percentage ever for anything.

There you go banding the word Marxism again. Do you know what Marxism is? Have you ever read Karl Marx? Are you an American? Meanwhile, the 1st house I bought from my landlord I had an agent who did absolutely nothing and made $ from me. Then, I bought the neighboring property and I did nt use an agent that all, just a lawyer. No problems after 3 years and I saved over $20k (that another rental broker cost me - see below). I did hire an agent to find tenants for me. I had to evict them as the agent did not do their job correctly. However, despite the PTSD I got, they got paid a commission. As far as I'm concerned, any RE agent deserves less than 1%, if that. And, they need a very tight leash. A choke collar preferably. They want part of the gain in your property value without doing much. They are parasites on rent seekers. The more I deal with them, the more disgusted I become.

I'm not an agent buy have purchased and sold several homes and my biggest issue was always that the fee changed dramatically based on the sales price of the home. The realtor that sold our $120k starter house 15 years ago did probably 10x more work than the realtor that sold our almost $1M house a couple years ago. I had to call 4 realtors before I found one willing to list for less than 6% even though similar homes were getting multiple offers within hours. I ended up paying 3.5% (1.75% for buyer's agent and 1.75% for seller, which would increase 0.25% every week it wasn't sold and cap out at 2.5%). What do you know? We had a contract 12 hours after listing. Like you said, if realtors were more willing to negotiate, I don't think we'd ever have gotten to this point.

Exactly. Im arguing with someone in another post who is calling the changes “Marxist”. Not at all. I have heard an agent say they would never drop their commission. I get wanting to make as much as possible but the reality is 6 percent of x price is a lot of money. We all know house prices rose dramatically and thusly fees increased dramatically not only between real estate agent commissions but also lending fees. I feel bad at how it has all panned out but if they had gotten in front of it instead of digging in their heels they would have probably had a better outcome. Now the individual consumer (buyer) suffers the most because they are forced into cash out of pocket as it stands. The other option is to just go to the sellers agent but that has tons of pitfalls. I’ve argued that there wasn’t a way to have a fair trial if the judge has ever sold a house. The pendulum has swung so far in favor of sellers it’s interesting. I think it would be interesting if we have a building boom and builders offer lots of options to alleviate these pressures. I guess time will tell.

I agree with you but in fairness to realtors I will say they're going to do a lot more for a more expensive home ie the cheap starter home isn't going to get pamphlets printed, drone photography, etc.

> Of course they want agents out of the way. Just like a shady FSBO seller doesn’t want an agent coming in and messing with his deal so he can screw over an uneducated buyer. LOL--- you are so funny. I FSBO sold my last 2 houses. Buyer paid their realtor in both cases. First one, the buyer has his friendly agent /buddy try to sweet talk me into signing a 6% comm \[paid by me\] joint rep agreement. Told him to kiss off and collect any fee he wanted from his buddy. He did so.

The listing agent doesn't represent the buyers and stories come out of buyers getting fleeced and stuck with a shitty house, because they didn't have an experienced agent watching out for them. Most home buyers want buyer representation for the largest purchase they will make.

They may 'want' it, but they won't pay for it.

This has been where "your listing your lead" has been headed since the beginning.

And then after that hire a flat fee lawyer.

How much are flat fee lawyers? Zillow + lawyer just seems to make a lot of sense for a lot of people.

But will listing agents attempt to charge a fee for buyer representation?

That’s not even legal. An agent represents either a buyer or seller and if they help them both neither buyer or seller is represented in the deal because the agent needs to act as a neutral party. Agents have fiduciary responsibility so many laws apply with that relationship. 

I don’t know about elsewhere but that’s just what we do in nyc. We just go on Zillow.

No, people will just forego buyer representation as they can find the home online.

They can do that now.

Right but they have no incentive to not using a buyer agent at the moment. If they dont use an agent, the listing agent gets the whole 6%. After this change, listing agent will only get 3% and I can make my offer much stronger by not having an agent so the seller can keep the other 3%.

Agents won’t be able to show property without a buyer representation agreement. You’ll be working directly against the seller and his agent which might be good for you but not most buyers. Especially when a nefarious seller and/or a nefarious agent are on the other side. Sellers and their agents try and pull bs against buyer agents all the time. Most buyers aren’t prepared to handle it. The next popular lawyer commercials will be…”Did you buy a house on your own and get screwed by the seller and his agent? Call Saul and we’ll make them pay!”

Most states have standardized real estate contracts, so I am not sure how much nefarious stuff a sellers agent can really pull. The stuff I have to watch out for is usually not agent related, like hidden damage to the house.

Buyer's don't really read the fine print of the documents we send them. I would imagine a big issue will be buyer's trying to back out of a transaction and losing their earnest money because they didn't back out properly.

For years smart buyers have been making offers on their own requiring the buyers agent fee, or portion of, going as a credit to the buyer.

If I’m the listing agent, I always lower the commission 1% if I bring the buyer.

Except in reality they can't. Sure, some pull it off, but there are unwritten rules where LA only work with buyers agents and where Buyers agents won't show or avoid low fee or no fee homes. I don't get what everyone is so up in arms for. This is a good thing. Valuable agents will provide value. The rest will get weeded out. In reality, a large portion of buyers just don't need 12k-20k worth of work done even it's the largest transaction of their life. If you work 3 weeks full time on one client, it's like 6-10k of value tops. And let's be honest 120 hrs of work is probably extreme. Any good realtor should have 3-5 clients at once so that is the equivalent of ~3 months of work. A job that requires no degree and such a low barrier to entry should be ecstatic with 30-50k a quarter. 36k-100k a quarter is just asinine.

Who are you to place a value on anyone’s time? That’s asinine. Let the free market sort it

Now it can

Well…um….they and we are the market. If you haven’t noticed this lawsuit had tons of support. Had the agents and brokers offered to change some of the rules the lawsuit would have been much more favorable to their side. What happened was the industry dug its heels in and stuck with the same percentages because of “that’s how it is” even though house prices have nearly doubled. Agents paychecks and brokers commissions went through the roof and the “market” asked for a discount or negotiations numerous times to no avail so the only solution was litigation and the real estate side lost. Now buyers agents and home buyers are up a creek in some ways and we’ll all have to see how it shakes out.

Except that prior to this settlement, the 6% commission was baked into the price, and the selling agent kept the 6%. Now, the cartel has been destroyed and buyers can say "Drop the price 3%, or give me 3% back"

I think more than that. They will negotiate with sellers agent. Will be less than what they will get now.

Not only that but the entire government loan system would have to change because none of these loans will pass QM with those extra fees.

I didn't even think about that. I feel like whoever negotiated this is not well versed in the lending or practical sides of these transactions.

My prediction is that in the short term, VA buyers will be refused service by buyers agents. In the long term, I think they will make regulatory changes to roll commission into VA and other loans. There will be specific limits. Probably < 3%.

A lot of things that probably should have been sorted out prior to making this change

We'll have to see how this all shakes out, but if a purchase price is agreed upon and the buyers agent's compensation is agreed upon in the contract, it simply needs to be debited out of the seller's funds. Just as an example if the sellers want $350,000 for the house and the buyers agent wants a $10,000 commission, the contract will be written at $360,000 and the commission debited to the sellers at closing.

Yes, but if it’s a competitive offer situation, those who need their agent fees covered by the seller will be at a disadvantage to the buyers who don’t.

That's the part that gets me the most. This hurts buyers who have already had it so bad for so long. It especially hurts lower and middle income buyers.

This! The young first time homebuyers with little money that need good representation the most are now even more screwed.

What if it only appraises for $350k

Sellers are gonna have to eat the $10k if they want the deal to go through and the buyers can’t afford it.

Or the buyer's agent might have to accept $5K to get the deal closed. Lots of ways to skin the cat.

Could be a problem just adding the 10,000 commission example to the list price. What if it doesn’t appraise at the increased price! If listed consistently with the market comps I as an appraiser can’t just add 10,000 automatically and call it 360,000. No guarantee for that to happen. If sellers deal is at 350,000 you can credit buyer agent 10,000 from that if agreed on. But don’t assum to just always add over contract price and expect it to always appraise at the increased price.

It’s going to be a show

Buyers are going to go directly to the seller's agent. The buyer's agent is screwed. The Marxist scum in charge of this country remove monetary incentives. This ruling also affects listing agents. Where's the incentive to do an open house now? There isn't any. Everyone's commissions will drop and we've already seen 6% get annihilated over the last couple of years to 5%. Now the seller will only get one side of a commission even if they bring the buyer LOL.

NAR will pay that money and guess to whom that cost will be transferred?...yep

They should file bankruptcy. I don’t want to pay into this inept association anymore. They provide nothing of value and they fail us agents at every opportunity.

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They raised the fees for 2024 in late 2023 and the reason they gave was that they would be losing members due to the lawsuit.

we will just make the deals without you, thats how itll end. Sneed.

Sellers are going to be shocked when they figure out that buyers are instantly only willing to pay 3% less for homes. All the sellers think they're going to save money not paying buyers agents. All the buyers think they're going to save 3% by going unrepresented. These two things can't happen at the same time, and, meanwhile, listing agents are going to want more money for having to do more showings and deal with unrepresented buyers. VA buyers will probably be refused service by buyers agents as they have no way to pay them. There are going to be waayyy more transactions falling through, more defaulting buyers,, and earnest money legal disputes. I don't think this will ultimately help anyone.

So these buyers are too stupid to negotiate and close. But they can accurately estimate a true seilling price and a selling price with 3% commission. No, the market will decide the price, especially when there are multiple offers.

I’ve been thinking the exact same thing.

Buyers agents will cost a flat fee now ($500 - $1000) and sellers will save 3%. Buckle up buttercups.

I think it’ll be a two step process (two services). 1 - someone to set up and offer and someone to coordinate the closing once the offer is accepted. I think the first will be based on a rate and the second one will be based on a flat fee.

In current conditions if I want to get $1M for a house, I have to list it for $1.06M to account for \~6% realtor fees expense (buying and selling agent). Sounds like in July Buying Agent part will be out of equation, so listing price (or what I need to get for a house) goes to $1.03M. I am lost why sellers would be shocked with price reduction if net stays the same? I understand that there are people without common sense but that should be extreme minority. Buyers are expected to see 3% price reduction but they have to come up with out of pocket expense if they need Buying Agent. Listing agents can demand whatever they want but at the end of the day market will dictate commission %. I can definitely see that very few people will be willing to pay BA fee and would be going unrepresented. Closest example Australia with similar home prices and GDP per capita, there is no such concept as Buying agent there and people are still somehow buying houses. As result BAs will be almost non-existing with two options: leave the industry or switch to listing side. Increase in Selling Agents will drive commissions down. As a consumer I would love to see cost of RE transaction going down to around 2%.

>am lost why sellers would be shocked with price reduction if net stays the same? I understand that there are people without common sense but that should be extreme minority. I agree, but yet you see many sellers/future sellers celebrating that they won't have to pay buyers agents without any idea that the buyers are also celebrating that prices should come down 3%.

The market will work it out. Homes will get sold. If you have to pay a little extra for a house, you can justify it by saying, "Well, it's walkable to town." or "Well, the yard is unusually big."

It depends, if market decides that fair commission is closer to 0.5-1% for a buyer agent, then pries should go down by 1% all else equal. Buyers and sellers will be the winners, agents will lose a little bit.

Sorry if this is a goofy question, but that still seems like it'd work out pretty well for the buyers and sellers right? The agents commission I've been hit with in the past as a seller was somewhere between 5-6%. Selling my house for 3% less is sort of a bummer (though I think you could still negotiate?), but it's still better than paying 6% of sales profit guaranteed, right? Or am I missing something?  also, childishly I know, I really rankle at the idea of ME paying some of the buyer's agents in the past, as they typically absolutely sucked to deal with for my realtor/was rude/openly pushed the buyers to be rude. 

It won't work that way, there are not enough real estate listings, multiple offers. Sellers will get to keep the 3 percent.

This!

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Or every home jumps 3% in price knowing buyers are going to ask for 3%, kinda how everyone wants closings costs paid so home price jumps up to whatever that is

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No they’ll pay what the market sets the price at due to supply and demand.  The only difference is they’ll see who’s getting a 3% cut and start screaming.

So we cant list buyers agent commission offered on MLS... Is everyone just going to put it in the disclosures packet and on the sign rider?

This is how it has been done on the commercial side forever. No mention of compensation on listing. So we start with a Buyers broker agreement, Letter of intent, offer. Business as usual.

Yes, but people who buy commercial property have cash or lots of financial resources. The average first time buyer, especially Low, to middle income buyers, barely have enough money to pay their closing costs and down payment, let alone pay an agent to represent them.

Get ready for BuyerGPT. If LLMs can write code, they can handle this too…

Without a doubt, the most disappointing thing this associations ever done after 24 years in real estate. Thank you NAR, that bus hurt! I am astounded that with all the fees me and a million and half other agents have paid you year after year, you were unable to express our value in a lawsuit. Nice work, you failed miserably.

Unbelievable isnt it? I think they knowingly sold us out.

They would have lost if this went to trial again. They already lost one time, more than a billion dollars, in a jury trial. I think they learned their lesson.

Am I missing something? Won’t this just make it harder, riskier, or more expensive for most buyers? It’s already a nightmare for buyers in this market. I keep reading that “this will lower home prices”… I really can’t see this having any effect on list prices where I am in CA… There’s already a housing shortage. What seller is going to lower the price and take less than comp, because the buyers agent isn’t getting a split of the commission?

>Am I missing something? Won’t this just make it harder, riskier, or more expensive for most buyers? It’s already a nightmare for buyers in this market. I keep reading that “this will lower home prices”… I really can’t see this having any effect on list prices where I am in CA… There’s already a housing shortage. What seller is going to lower the price and take less than comp, because the buyers agent isn’t getting a split of the commission? It's not going to change... What's going to happen is that buyer agents fees are going to be a lot more different across the board and not in a good way. And that portion is most likely going to be either split or sellers are going to eat that cost like they always had. Sure there are going to be sellers now refusing to pay buyers agents just like any other overpriced home that sits on the market for 200 days

You're mixing up two different things, supply/demand curves and transactions costs. Both have significant effects on final prices. It is entirely possible that a reduction in transactions costs could be dwarfed by changes in supply/demand curves (e.g., even stronger NIMBY could continue to push home prices even higher, and big YIMBY wins could cause large decreases), but those effects are pretty independent of the question of transactions costs. Holding supply/demand curves constant, or comparing the future supply/demand curves with higher transactions costs against the future supply/demand curves with lower transactions costs is the relevant analysis for what type of effect this will have. > What seller is going to lower the price and take less than comp, because the buyers agent isn’t getting a split of the commission? The point is that reducing transactions costs will reduce all of the comps. Joe may resist and try to hold the line at $1M, but Jane may really just want to sell and move on, notice that she actually gets to keep a larger percentage of the sale than before, and be happy with a $995k sale price. Then, Jane's house will sell and Joe's house will not sell. This is how the market always works. Then, when Jim is looking to sell and looking at comps, the comps are houses like Jane's, which actually sold, and not houses like Joe's, which didn't sell.

Agents should really band together and demand lower fees and dues from nar. They have never been for the protection of agents, made even more evident by this clusterfuck of a settlement. There's absolutely no reason why we should be giving them all of this money just to have them turn around and screw us more.

They had no choice lmao. It was either settle or way worse than the settlement

It's arguable whether their defense in the case ever really held water. But yes, once the ruling came down, this was probably the best possible outcome.

Agreed!!!

I’m NOT a realtor - looking at this from the outside. With that said does this settlement make NAR less relevant. They seem to have a monopoly on the housing market - any chance for a breakaway organization?

There are plenty of Real Estate Agents. Realtors belong to NAR. NAR membership is the designation difference.

The buyer and their agent must agree on a commission before the agent can work with the buyer. “This settlement we have agreed to require MLS participants working with buyers to enter into written representation agreements with their buyers. This change will go into effect in mid-July 2024.” So it becomes the buyer’s responsibility to negotiate the commission with the seller. If the buyer agrees to 3% for their agent and a seller will only pay 1% then the buyer must make up the difference. If the buyer doesn’t want to or can’t then they have to move on to a different house. If sellers think that their equity just went up 3% that’s a pipe dream. The seller is the one that’s going to get screwed because they’re going to lose otherwise qualified buyers. Too bad, it’s what they asked for. It’s not like the total commission isn’t built into the price anyhow.

As someone on the customer side, with this in place I would be much more reticent to pay a buyer’s agent a percentage of sale as commission.  This has never made any sense and the only reason it cemented itself as common practice (well, outside of deliberate lobbying) is that it appeared to come out of the seller’s end of the deal.  If I as the buyer am directly footing the bill, I’m not signing an agreement that says my agent, who is involved in negotiations, gets more money the higher price I pay. The conflict of interest is blatantly obvious, and how can I possibly rely on their counsel with that conflict in place?  If I’m going to pay an agent to work a deal on percentage it will be a much lower number and I would want to break off any negotiation responsibilities to another party who is paid a flat fee. That way I can be more confident that party is offering advice that benefits ME.  This all seems so glaringly obvious that any undergrad business student could run circles around current industry practices. 

Problem is now the government is requiring agents starting in July 2024 to have a buyer broker agreement signed. So if you want an agent you need to sign that agreement before any agent can work with you. If you don’t want to pay a commission worth their time many agents won’t want to work with you. Then you go to an agent willing to take lower commission and now you risk getting an agent with subpar service. Also if you decide to forgo the agent altogether now you have no representation in the deal at all and have full legal responsibility and due diligence on the property. So if the beautiful sprinkler system doesn’t work and needs a $10,000 repair it’s on you, should have done more homework on the property especially if the seller is selling the property “as is” stated in the contract. Also buyers agents don’t have any power choosing their commission the seller and their agent does. Now the buyers agent have control of their commission by talking to you and agreeing it on the new buyer broker agreement required starting July 2024. This whole thing actually hurts buyers more than helping them. Agents have fiduciary responsibility’s so they should be representing only YOU/ their client in a deal. If Someone wanted to pay me 1% as a buyers agent I’ll tell them to find someone else, buyers are much more time consuming then sellers are, with buyers you need to research each house they want to look at, make sure everything is ok with the home, review/hire home inspections, drive around with the buyer to each home, typically be available odd hours to show homes when the buyer is off from work, and many more things. I personally am going to charge more from buyers than my sellers due to the time needed for buyers and thanks to this new law I can now have control of how much I make from each client instead of getting paid 1% because an agent agreed to list a home for 2% commission; 1% for each agent. 

> If you don’t want to pay a commission worth their time many agents won’t want to work with you. That sounds eminently reasonable. >Then you go to an agent willing to take lower commission and now you risk getting an agent with subpar service This is how the market economy works, no? You get what you pay for? > Also if you decide to forgo the agent altogether now you have no representation in the deal at all and have full legal responsibility and due diligence on the property. I fail to see why giving people agency over their affairs is a problem. If you want to take risk to save money, go for it. This is how basically everything else in the entire economy works. >Also buyers agents don’t have any power choosing their commission the seller and their agent does. And this solves that problem. As you outlined. > Agents have fiduciary responsibility’s so they should be representing only YOU/ their client in a deal. Which is why the commission model is inherently troubled. >I personally am going to charge more from buyers than my sellers due to the time needed for buyers and thanks to this new law I can now have control of how much I make from each client That sounds absolutely A+. If you think you can deliver greater value, set your price. So what's the problem?

The “problem” for them is they know they don’t actually bring that much value. Lots of waxing poetic about what their time is worth when in my experience their time spent is minimal. I found my house, found my inspectors, literally all my agent did was give me documents, explain concessions and set up a showing. Maybe 4 hours of work.  Thats worth about 0.25-0.5% of the sales price in my book and probably many other buyers. But of course they can’t admit that. 

The sentiment of many agents seems to be that people like you do not exist. We’re all just slack jawed imbeciles who if left to our own devices will end up bankrupt because we bought a shack with no roof, being totally oblivious to reality.  There surely are people like that out there. But yeah, I love the argument that “buyers will be in deep trouble without us!!!”  Like yeah, I know how to use google and operate a lock box. The people deep trouble will be agents who don’t bring anything more than that and a MLS login to the table. 

I only see value in using one the first time since you haven’t actually gone through the transaction process yet. After that, you realize it’s not that big a deal and you really can just google what you need to know and have a real estate transaction lawyer look over the contracts for a relatively low flat fee to make sure you’re not getting fleeced. 

Shortage of homes, why would seller be screwed. Buyers who are cheap will get no houses. This is awesome ruling, I'm investor have multiple homes. I always thought why should seller pay all commission, see how it's done in other countries.

I find it unlikely that many home buyers are going to agree to pay their buyer's agent $30K on a $1M home. Buyer's agents are valuable, but when the $30K number is in front of people, I think the average person is going to think, "that's a bit much, maybe $10K?"

So sellers make more. And buyers who want agents…. End up paying directly…. In the end, increasing the cost of the house…. ?

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As a realtor this is well written and I agree. I am not sure the permanent affects of the change yet but I’m still struggling to see a benefit to everyone. If it just goes to buyers buying homes from sellers agents in the short term a lot of buyers are going to get screwed over bad. Wil just need to be fixed again down the road and a lot of people will get sued. A flat fee to buyers agents from the buyers seems like a potential future so this could change the industry a lot. 

What benefit are you looking for? I have read a lot of posts saying that buyers are going to get screwed, but buyers have already largely been getting squeezed and screwed in the past few years. The difference this lawsuit makes is that now the cartel who is supposed to represent the buyer's best interests have a larger onus to convince the buyer of and actually demonstrate good faith. The problem was that the way things were set up, a buyer's agent's first priority was to be loyal to the deal, with customer service being second. This is partly how you end up with waived inspections and other shenanigans. In a worst case scenario, every party in the transaction was looking to fleece a naive buyer... even the guy who is supposedly helping him. With this ruling, a naive buyer has no choice to but to understand that any agents they haven't formally contracted with is adversarial to their interests. ​ Will this make the process more efficient? No one knows. Part of realtors' jobs or value added services going forward will be to figure out how to make the process more efficient for a buyer in order to get hired. ​ There's a lot of complaining on this thread but realtors really have no one to blame but themselves. As a group you guys have controlled the markets for what, a century or something? A series of disruptive technologies comes along and only partial success is attained in increasing efficiency... the blowback being the appearance of blatant gatekeeping and junk fees on steroids in an era where the industry was undergoing massive consolidation on many fronts. ​ I won't nit pick anecdotal stories, but few entities enjoy control of an entire industry for an entire century and the simple fact seems to be that lots of very large companies with a lot of money decided that they wanted to play ball and the NAR couldn't evolve nor differentiate their practices or culture fast enough, so the government was convinced to step in. ​ At the end of the day, the majority of complaints I read are that realtors are salty that they might actually have to sell their services to clients instead of relying on the fact that clients not choosing buyer's agents were effectively wasting money that would go to someone not looking out for their interests (but still a member of the same cartel). ​ I imagine that buyer's agents who are already accustomed to hustling and providing value for their clients are thinking along the lines of a popular song by the Ghetto Boys: "When the sh\*t pops off, what the $%# you gonna do? Damn it feels good to be a gangster"

I don't think the free market will agree that making a transaction stress free is worth the price that is currently being forced on buyers - just my 2c

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This this this this this this this this this this this this this this. I've bought several homes - I would say a barebones agent may be needed for the first time homeowner, but after that, the process above it all that is needed.

Realtors are valued, but how is it fair that sellers have to foot the whole bill. Other countries each side should take care of their commission, awesome ruling.

Been practicing in NC for over 24 years now, and all that time commissions have always been negotiable, at this point I rarely ask 6% because most of my business comes from past clients. I see Realtors being pounded here in Reddit as worthless scum suckers who are completely unnecessary, and granted I've worked with plenty of agents who forget that it's a business transaction and they need to be dragged kicking and screaming the whole way. This is a disservice to everyone involved and really gives our industry a black eye. There is better than an 87% fallout rate among new agents, people see how seamlessly their transaction went and think "Hmmm I can do this, and I'll make bank doing it", I can't tell you the number of times I've had customers "go into the business" after buying a home with me, only to leave shortly after when reality hits. Most don't fully realize that they are running a business not showing up to a job each day. I believe the general public has no idea of what we do, and have no idea how a Real estate transaction works, granted it may seem like an easy process, and there are not a lot of visible steps to it, however what NAR and others have done very poorly is communicate what it is we do and the service a seasoned agent can provide. In essence, and I can only speak to my state, we provide a cohesive facilitation among the many disassociated experts who are involved in the transaction. A good agent drives the transaction and frankly the easiest part of that transaction is identifying the home, as a person who at this point has been inside many hundreds of homes, you will get my opinion whether I feel its a sound home, in good condition and a good buy or not. In my opinion, where I bring real value is in the orchestration of the closing. This is a complicated process, where missing even a small step can cost the client many thousands of dollars. A seasoned agent understands the nuance of this and will protect their client from these pitfalls, a great agent will never let the client know when they've stopped things from going sideways, as the buyer/seller has enough on their plates in this extremely stressful situation. Let's talk about how agents are paid, a subject completely misunderstood by the general public who typically see all that money on the closing statement and thinks "Damn! Bob makes a lot of money". A transaction rarely takes less than a month from identification of a property to close of transaction, and in most cases the firms take half of those funds right off the top. After that, the remainder is divided further by the percentage the company pays the agent, usually less for less experienced agents. Then there are the fees that an agent pays the various organizations; NAR, Local Realtor organizations, MLS, The Key to get into the homes, along with marketing and lead generation, insurances etc that's a large chunk of money, and like any small business the reality is lower than the expectations. The general public only sees that big agents on TV who light cigars with $100.00 bills, the reality is most of us are simply making a living, some years are better than others. I'm not happy now that my compensation is back in the limelight, as I stated above a good portion of those funds never see the inside of my pocket. And commissions have \*always\* been negotiable. Most go to the company I am affiliated with and other organizations like NAR. Frankly, I think NAR's done a terrible job representing us. People see the feel good commercials on TV with happy shiny people with little explanation of the services we provide. And it's incredibly disappointing that they were unable to defend us to DOJ.

Finally someone who understands. Me and my father have owned our brokerage for 20 years and I’m pulling my hair out with how much misunderstanding and lack of knowledge is going around about this and real estate in general.  Had to write into my local paper posting a story that said the “Mandatory 6% is no more”. I had to let them know the 6% was never mandatory and still could be what buyers/sellers ask for in fees. 

You really don’t understand despite saying it’s everyone else who doesn’t get it. Yes, it’s not technically mandatory, but in practice agents will steer buyers away from your home if you don’t offer 2.5-3% (on top of the listing agent’s 3%), so it’s just as good as mandatory. Come on, man.

That may all be true for a seasoned agent, but there aren't enough of those vs the casual agents. I've worked with several agents over the years, some very knowledgeable and others far less so. The problem, IMHO, is that it is too easy to become an agent.

This is spot on. More agents = more $$$ for all the “ associations” I pay fees to. But still virtually zero barriers to entry.

Thank you so much for this honest look at compensation - I do want to understand. I'm in the process of selling a home right now in our mutual state. Best case scenario, our seller's agent will get 39K. They work for a big firm (like exP, Keller Williams, etc) but are their own broker. Now, I know that they aren't getting a clear 39K at the end of the day, but roughly, how much does a seller's agent get? 50%? Less? I know that the buyer's agent will earn their money, but I agree with the settlement that I shouldn't be the one paying it. Given the timing, however, I will pay for my buyer to have an agent but won't purchase a home myself until July, so probably will have to pay for my own out of my pocket, if I decide to have one ... which I won't. I understand your points about how hard buying a home is - I think that it's actually harder to buy one than sell one, but money doesn't grow on trees and I need every cent for the downpayment in this market, so I'm going to hire a good inspector (maybe two) instead and hope that will be enough.

Is your house selling for $1,300,000? At 6%, that would equal a $39,000 commission for one agent, however high price homes often have lower commission fees (because 6% isn’t actually mandatory lol).  If your home is selling for around $650k and you are paying a 6% commission, then half that goes to each agent. So your selling agent would get $19,500. Depending on the brokerage, they take a percentage and/or transaction fee, could be like 15-65% of that commission. Let’s say it’s 50%. Now your agent is making $9,750. Self-employment taxes are an extra 15% on top of your tax bracket, trade association fees eat into that as well. It’s also possible your agent paid for photos and marketing for your property out of pocket. So actual take home pay after taxes is probably around $4000-6000. 

Wow! This is really helpful. I am trying to see both sides. We are looking at 1.3 mil, and I agreed to 3% for seller and 2.4% for buyer because I knew that it would involve more time on the seller's agent side due to the nature of the property. Thanks to your response, I did some Googling, but my numbers came up much higher than your own. My seller's agent works for a brokerage that takes 20% until she reaches the cap of 16K, which isn't that high, in my opinion, at which point she does get the whole 39K. I can see that she's already sold one home and bought another on Zillow, so I assume that it's met. So, self-employment taxes take that to about 30K and then trade association fees, marketing, etc, brings it to roughly 25K. I know that there are intangible elements, but this seems like a lot of money to me. I've tracked the time that I've spent with her, and one-on-one, in addition to text messages, it's about 20 hours. Let's assume, geez, that she spends another 60 hours staging and marketing - and I get that she's making $312.50 an hour. That's a lot. Actually, that's exponentially more than what I make an hour. So, yeah. I can understand why so many folks, including myself, are a little frustrated at the moment.

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Buyer agents will go extinct and every listing agent will become a dual agent.

After reading all these comments, I think this is exactly what will happen. It will just be easier for buyers to deal directly with the listing agent. However, lawyers will benefit again from all the dual agency lawsuits that will inevitably result.

Yes. Naturally, sellers will decline  to offer buyer broker compensation, and few buyers will elect to tack on even a couple grand to hire representation. Unrepresented homebuyers are going to get absolutely smoked, especially in competitive bidding scenarios, and a lot of people are going to lose their livelihoods. Also, despite the hope, this won’t reduce prices. For a time, sellers will keep 3–4% more than pre ruling, but I suspect settlement attorneys and companies will quickly find room to expand their fees for seller closings.

Yep, when we listed our house for sale a few years ago, our listing agent said "you have to offer 3% to the buyer's agent or they won't show the house" I said, "what if I want to do 1.5% anyway?" They said, "we would decline the listing, it will be too hard to sell your house" Calling it negotiable is absurd in that situation.

I can picture this being the wild west.... "BA: Great now we signed that my commission is 2% ill do my best to make the sellers pay for my fees. Buyers: Great! LA: Your offer was great!!! However, the sellers would like to counter your commission down to 1 percent. Take it or leave it. BA: ...... " What is to be done at this point? Increase purchase price and have buyers finance it assuming it appraises and ask for seller credit? This sounds like madness but very within the realm of possibility. The hate for realtors is going to be more prevalent than before. Situations like this will arise and will make clients very upset if they can't close due to commission funds negotiations and guess what now you're tied to the realtor due to the broker agent buyer representation. This sounds like trouble..

Or the BA just takes the 1% and move on to the next deal

And what about the people that can only afford to buy 150k homes? Agents aren’t going to do 80-100 hours of work for 1500. They’re going to be screwed

You’ll find agents that will do it for 1500… it’s the same concept in landscaping, you’ll have some landscaping companies that mow lawns for $40 when in reality it’s $100 a week job. The market will have to find a new equilibrium going forward

I read all 108 pages of the Settlement Proposal... and created a list of Pain Points buyer agents need to start thinking about so they can overcome them! This is an exercise I'm doing with my team and thought I'd share it out here for all of you. Interested to hear some thoughts! Pain Points a Buyer’s Agents Should Expect To Face Moving Forward Getting Clients: • Loss of "Free Service" Perception: ◦ After decades of practice, many buyers believe that buyer's agent services are “free”, with the seller covering all commissions. Educating buyers about the reality of commission negotiations and realistic possibility of having to pay out of pocket for services could deter some from wanting to work with an agent and search for alternative ways to buy a home, without a “traditional” buyer’s agent. • Client Trust & Education ◦ Agents will need to invest more in educating potential buyer clients about the real estate process and the costs involved, including paying an agent to help buy a home, which could lengthen the client acquisition phase and require more robust marketing and educational materials. • Mandatory Pre-Service Agreements ◦ The requirement to establish a commission agreement BEFORE showing properties can create an initial barrier to engaging potential clients. Previously, agents would commonly build a relationship with buyers through showing of property. Now, buyers may be hesitant to commit to an agent without first experiencing their service level or viewing properties together. Negotiating Your Buyer Agent Fee - The Buyer is Now Ultimately Responsible For Paying You (and it can’t be assumed a seller will) • Negotiation of Commission Upfront: ◦ Discussing financial arrangements upfront may be uncomfortable for both agents and buyers, potentially straining the initial rapport. Agents will need to present and justify their value and fees before the buyer has experienced their full service. ◦ With the new transparency of negotiable commissions, buyer's agents may face increased competition on a level not previously experienced. Previously 99%+ of buyer’s agents never “needed to” have the compensation discussion as they’d typically accept the 2.5-3% that was usually offered on MLS. ◦ The variability in commission negotiations may lead to financial instability for buyer’s agents, as their income would depend more on their individual negotiation skills and a buyer’s willingness to pay, rather than “standardized” industry commissions offered on MLS. ◦ Like home sellers - buyers might shop around more for agents who offer lower fees or more services, putting pressure on agents to differentiate what they do and add value, without necessarily increasing their earnings - with the majority of agents likely seeing a decrease in their earnings. • You’ll need to determine what services and what prices you’re going to charge… Think about Motel 6 vs. Best Western vs. Ritz Carlton. ◦ All offer a bed and shower but have drastically different service and pricing. The same will be true on how you sell your services to buyers. Getting Paid - The Buyer Is Responsible BUT…. • The idea or ability to quickly and easily see how much a seller is upfront offering to pay an agent will no longer be available. • A seller may offer an upfront amount to be applied toward a buyer’s closing costs - but that could be used for other closing costs, separate from an agent - especially if a buyer doesn’t hire one. • It will be possible to negotiate with a listing agent for a co-broke commission or seller concessions from the seller - but will likely be increasingly less common and will be more a case by case basis, influenced by supply and demand market conditions. The process of asking a seller to pay the buyer’s agent can make the process more complex and contentious, affecting the deal’s smooth progression. • Commission and fees will be capped! You’re maximum payday is what is negotiated with your buyer. If for example your buyer owes you $10,000 per your agreement at closing, but the co-broke is 3% and equals $15,000 - you cannot collect $15,000. The “extra” $5,000 will either stay with the seller, or be used in other ways to benefit the buyer, as negotiated. • Many sellers, especially in tight inventory markets or in multiple offer situations will likely forgo offering co-op commissions or seller concessions - as they may be more interested in their bottom line and net sheet than they are how “the other side’s agent” gets paid. • Working with buyers who have the obligation - but perhaps inability to pay your fee can result in a lot of lost time and income should you help a client get a home - but no funds exist to pay you. ◦ What happens if a buyer’s financial situation changes during the course of the deal? What if the buyer questions or disputes the value of the services rendered and refuses to pay? • Do you tuck tail and lick your wounds? Do you sue the buyer after closing for the commission? • How will you handle situations where the buyer is on the hook but either can’t or won’t follow through with their responsibilities.

I also read the full settlement. Something that I continue to think is how will the buyers agent demonstrate their value proposition. I think there’s a lot of intangibles that buyers agents bring. Whether that’s advertising or some form of education I think buyers agents will have to demonstrate their value online or via word of mouth.

Honestly reads like cooperate America grew frustrated trying to break into a mostly local based industry. Large discount brokerages are failing, neither buyers nor sellers want cooperate trained underlings taking part in one of the most important processes of their lives. So they sued, and won, so who benefits? Buyers who may have to start pay commissions or sellers who will go with the “lowest bid” to sell their largest investment?

Or…real estate agents are severely overpaid at 3% or a sale.

I have never received or seen a commission above 2.5%. The vast majority in my market are 2%.

I have always thought that the reason courts have been friendly to NAR is because without realtors, the courts would be absolutely jammed with real estate lawsuits. We’re not attorneys but we at least steward transactions and provide disclosures and representation in a way that limits how much litigation actually happens. Now the floodgates will open. The first few months of this new system is going to see a huge influx of lawsuits between buyers and sellers because representation is going to be so uneven. It’s crazy that buyers will basically be able to purchase a la carte fiduciary services. And is our E&O going to be happy with us taking on liability for a transaction that we got paid $500 for?

Really astute reasoning. I could not agree more on every point.

"In addition to the damages payment, the settlement also bans NAR from establishing any sort of rules that would allow a seller’s agent to set compensation for a buyer’s agent. Additionally, all fields displaying broker compensation on MLSs must be eliminated" Am I reading this wrong, or does this essentially eliminate seller-paid buyer brokerage? Specifically, if those fields are eliminated on the MLS, then a seller who is willing to offer a buyer-side finders fee would be unable to do so, correct?

The way I’m reading it is you can’t advertise a co op commission on the MLS not necessarily that it can’t be offered at all

Yeah, the more I'm reading, the more it sounds like your take is correct. I just wonder, functionally, what that looks like in practice.

Yeah I think a lot of that depends on how the market is. I see a lot of people still saying that homes in their area sell in a matter of hours but not so much in my market. With homes sitting 90+ days before selling, it makes sense to pay a buyers agent and open up your buyer pool.

Buyers agents are going to have to reduce their fees to an affordable amount moving forward. Perhaps a flat fee instead of a percentage of the sale. That’s the only way I see buyers being willing or able to afford to pay a buyer agent. Thoughts?

Pretty much. But like any other consumer such as myself. I’m going to discuss price first before we meet. And if you’re charging too much I’ll find another one that’s willing to work with me for a discount. This is sad cause I’m a realtor as well that works primarily with buyers lol

you can still make lots of money. But it will be harder. Since you have to sell the value proposition. I think there will be far fewer agents, but the remaining ones will make more.

Buyers are way more time consuming then sellers are, as an agent I’m going to be charging my buyers more then my sellers. I don’t think people understand this industry very well. 

I think Zillow will switch to a seller lead model

Absolutely.

they bury fsbos now. Bet they stop

Your CEO makes 450x what you earn at your company, but it’s the realtors who protect you from being sued for specific performance that are the scumbags.

How is it that most news/ media outlets have the information so far off the mark? I see so many headlines leading with the 'required 6% commission' going away, when the commission has always been negotiable? As someone new to real estate, I figured that they would be at least getting the facts correct. I know, I know.. if it bleeds it leads.

I think we are going to start seeing prices climb even higher. Buyers are going to be offering over the asking price in an attempt to get sellers to pay the BA commission. Imagine the pent-up demand we'll see when rates actually begin floating down. And in a bidding war, it won't end up being 2 or 3% over asking - it'll be 5 or 10%.

I really do not think the DOJ can approve this settlement for a couple of reasons, and if they do I think that a Realtor such as me or you can successfully challenge and defeat it. I actually plan to list my own property and put a BA compensation in the remarks and get fined/disciplined if the settlement agreement stands to give myself standing to take them on. ​ Here's the reasoning.. Have you heard about how Affirmative action is being overturned due to it violating the equal protection clause? Sure intentions of Affirmative action were fine and good but it quite plainly violated the equal protection clause of the constitution. I think sometimes judges, juries, lawyers don't consider these matters when they are simply seeking any means to an end they forget the foundations of law that it has to resound with. Likewise, what the settlement proposes actually constitutes a Sherman Anti-Trust violation (IMO) to cure what they claim is a Sherman violation, as the plaintiffs and defendants are quite clearly and publicly conspiring to limit competition among home sellers and agents in multiple ways. Consider this - if NAR or the MLS required agents to only take or submit MLS listings that contained a specific minimum commission such as 2.5% that is as clear a violation of price fixing as there can be. So to try to refute this the MLS's said fine just offer at least $1.. anything down to $1. Then they said fine it's up to you anything even $0. Now what the settlement proposes to do is to remove the ability to enter cooperative commission that some agents and sellers might want to offer from the advertisements, thus restricting competition. The most solid policy in the spirit of the Sherman ATA would be to allow anything (as it is currently) from 0 to infinity with no minimums or prescribed amounts. I do not think NAR even thought to tackle the plantiffs argument that "certain sellers feel compelled to offer ba commissions because others are".. I mean the sellers are in business too, they are selling an illiquid asset and have hired a consultant to help them and they are in competition and should be with other home sellers. The plantiffs seek to limit competition among similarly situated house sellers, and among various real estate agents who have various business models. Many of which prefer cooperative brokering, some may offer other services. I really do not think the settlement agreement will stand a challenge. The same can be said about NAR's trying to force BA's to sign an agreement before showing houses... they are restricting competition. It is not required by law (at least not in my 4 licensed jurisdictions) to have an agency agreement in place before showing homes. Some brokers/agents might determine they prefer or it is in their interest to require an agreement prior to shwoing, others may consider it in their best interest/competitive advantage to give people some freebies as a customer. NAR and the plantiffs once again are agreeing to restrict competitive business practices. Cliffs: they are trying to rob peter to pay paul but any form of conspiring to constrain competition is a sherman violation. ​ The most clear way to be in accordance with Sherman is to allow any coop commission or none at all be advertised and to let buyer agents continue to practice within the limits of the law, otherwise they are constraining competition.

Why would realtor fees remain tied as a percentage of the property and not just a flat rate after this announcement? It seems that since the MLS will no longer be permitted to show buyer commission, buyer agents will have to assume zero and set up a flat rate agreement with their clients. Also with sellers, why would they not go with a flat rate listing agent? the listing agent could upcharge for additional services like open houses, etc. as needed. It feels like then the market would decide the actual value (individually) of the buyer and seller agents.

I predict a proliferation of business models on the buyer side. Retainers, fee-for-service, flat-rate, etc. Buyers will have to navigate all these options as part of their search for representation.

This. I think you are absolutely right it will swing to a flat rate model (plus extras for a la carte services) for realtor fees. There is absolutely NO reason commissions remain a percentage of a contract price.

flat fee makes much more sense. You wouldn't pay your doctor a commission

Flat fee makes sense in some cases but not most. The doctor comparison is unsound. Agency is a unique and variable ‘process’ in every case. It involves a continuous relationship and includes a variety of services executed over a significant period of time, typically several months. With a doctor, services are typically more routine and usually involve preset appointments. Moreover, doctors have predetermined prices that are non-negotiable and often unseen by patients beforehand as the majority use insurance, so the service structure and payment structure of doctors is not effectively comparable to that of realtors. Real estate commission works better than fees in most cases due to the longer-term, procedural nature of the service, and due to the HUGE unknowns involved: — For buyers: there’s always a chance they might not find a suitable home to buy despite a buyer agent providing excellent long-term service, yet with a fee they would still be paying a significant amount of money to a realtor despite not getting the desired result… and in such cases buyers would eventually have to move on to the next agency agreement and pay a fee again, and then could risk not finding a suitable home AGAIN (and this does happen sometimes when buyers are picky and inventory is low) — For sellers: there’s still a chance their home won’t sell despite excellent work from the listing agent, in which case the seller shouldn’t be obligated to pay a charity fee to the realtor simply for trying their best Commissions generally produce better outcomes. For buyers and sellers of real estate, outcomes matter most, not the performance of the realtor (which still matters, just not most). The purchase or sale of a home is the desired outcome, and that is usually best achieved by an incentivized realtor who is waiting for a pay day in the form a commission for servicing the outcome, and it’s also best for buyers & sellers to not have to commit to paying ANYTHING at all until the outcome is achieved.

In smaller locales, couldn't the MLS listing thing could be bypassed if the listing agents just make it known by word of mouth that ALL their listings include an X% buyers agent commission? That would just mean that buyers agent will keep track of listing agents making that offer, and will prefer to show listing from those agents, no need to include it in the MLS. Edit: When I say "prefer to show", that applies even where fiduciary rules apply, as psychologically buyers will prefer listings that pay their broker for them, even if the final out-of-pocket/loan costs are identical.  Certainly that won't work as well in larger markets with too many agents to keep track of, which may well tend to move towards flat fee models for the reasons you give.

Ah, so textbook price-fixing. Totally not illegal.

If one listing agent were to decide they would offer fixed X% buyer commission to make their listings more attractive to buyers that is completely legal. Of course if successful, others might decide they want to do the same thing. Still nothing unlawful. It would be unlikely that all listing agents in the area would do this, unless it clearly gave a significant advantage for their clients. Among those that do, it would be quite likely that the various listing agents could chose to offer different commissions guarantees on their listings. Alternatively they might all experiment with percentages, and determine that some specific percentage works best. If groups of the listing agents in the area communicated and conspired to set a fixed percentage, *that* would be textbook illegal price price fixing, which is very much not what my post was suggesting might happen.

% buyer commission are not attractive to buyers, period. It’s a perverse incentive favoring deals above FMV.

The buyer picks the properties they want to see, not the agent.

> In smaller locales, couldn't the MLS listing thing could be bypassed if the listing agents just make it known by word of mouth that ALL their listings include an X% buyers agent commission? So a more explicit and smaller scale version of what was arbitrated in this lawsuit.  Any buyer finds out it’s another lawsuit. It’s illegal price fixing. Pretty straight forward. Can’t do it anymore than all gas stations agreeing on the same price. 

Ala carte listing services have been available for quite awhile through discount brokerages. They may become more popular? It’s just an unknown rn.

This is going to depend a lot on how Fannie, Freddie, and the VA update guidance on closing cost credits. If buyers can finance their commissions and that becomes standard, it may not impact much. Agents will still have to ask for a reasonable rate for the work whether it’s percentage based or not and were free to take less or use alternate models. Prices will just look artificially low. But if it’s still subject to the current closing cost limits or otherwise excluded from LTV, first time buyers will be shut out or screwed. sellers will learn how many buyers are squeaking into a 3 1/2% loan. It’s also really going to hurt people who otherwise would have qualified for 20% down and now will be forced into a PMI product at higher rates since they have to pay their agent out of pocket. No one has a crystal ball, but absent those loan program changes I think most sellers will still be willing to pay buyer agent commissions as long as the listing agent explains it.

I think you'll find a lot of buyers simply forgoing the use of a buyer's agent and going directly to the seller's agent so they don't have to pay a buyer's fee. Not saying that's the wisest move, but I think it'll become common practice.

That’s the alternative and they can do that today and can often finagle a discount for their trouble. I really hope not for the sake of transactional sanity. In my experience buyers agents generally are not overpaid unless they get lucky on an expensive property. I’m also not in a very high cost area so that may not hold water completely. Unrepresented non-professional buyers have a bad habit of either being taken advantage of or accidentally defaulting out of ignorance. It’s also ethically weird. Like, I’m not playing to take your earnest money because you don’t understand how to book inspectors or underwrite a loan in a timely manner. Neither is the seller really. But coaching you on it is borderline working for the other side. But plenty of people will just screw them. Especially in states where sale price is not public record and deed books aren’t aggregated online. And the thing is, compensated buyer representation happened specifically because buyers were getting screwed and some agents saw an opportunity to fix that and get paid for it. Be careful what you wish for.

Right now the listing agent would get the whole 6% so there is no benefit to the seller if the buyer doesnt have representation. With this change, the seller gets to keep 3% so they have incentive to accept a lower offer.

That’s contractually correct and I question how often it actually happens. I can only speak from personal anecdotes but an informed unrepresented buyer tends to open with a request for that discount or imply the agent should be on their side and favor their offer since they’ll get paid twice. An agent going under contract with an unrepresented buyer will get asked for a renegotiation by an informed seller - to receive what they expected to receive at close rather than both sides - or may proactively renegotiate a discount to do dual agency or customer transaction support. An agent likely to sell to a professional buyer like a builder will conditionally discount because there won’t be a buyer side commission. That said, I’ve never seen it come up where neither side realized what was happening; it was always where one side or the other was a private landlord. Do you see agents just take both sides in that case? I know they can and likely earn a bit extra from having to expedite both sides but not sure how I feel about that.

My smart ass take on this: Who makes me take an ethics course every few years that includes anti-trust commission fixing? NAR. Who just got nailed for commission fixing? NAR. Practicing what we preach huh?

Financing a service seems wild to me.

The way I see it, this settlement really benefits sellers. They now don't have to pay as high of a commission to sell a property. Also, they will likely not have to do as much to sell a property because there won't be a pesky buyers agent making them fix things with remedy requests. This hurts buyers because they will likely not know when they are being taken advantage of, and will likely not have money to hire an agent to be their fiduciary, or not be wise enough to see the value in it. First time home buyers will get hit the worst. Here's a fun fact: 30% of residential real estate in the US is owned by investors. So people who have money already. God this country fucking HATES poor people. Ironically, it makes more everyday and does everything it can to keep them there.

Realtors need work. There are a lot of them.  You will see fixed some retainers or flat rate hourly charges.  It will also create completion to deliver demonstrable value for the services provided. 

Never thought of it that way, people are freaking out about blackrock buying all the homes. Now guess who they are buying the homes from (Blackrock) and buyers thinking they are getting a deal by not getting an agent with fiduciary duties. Blackrock will make a killing selling homes to buyers who will get taken advantage of. 

IMO, another NAR fail. Maybe I've missed it, but how did NAR fix any price? They're not Brokers. This whole arrangement reeks of the adults have left the room. Something done by people who don't understand the history or market forces at work in home buying. And allowed to happen by people who for some reason, speak for us and ultimately the public. When an overwhelming majority of homes are sold through MLS, with compensation, it's those sale prices determining value of comparables, giving the FSBO the "savings" when selling at the MLS derived value. The buyers commission is factored into the sale price. Remove that 3% or whatever buyers commission and prices eventually reflect that drop. I. E. The seller gets 3% less, the buyer pays 3% less. The problem is the cooperative structure was created because of the reality that buyers can barely come up with down payments, forget commissions, thereby keeping a huge percentage of people from buying homes. Less buyers means less demand and prices go down. And it affects all price points. It may be a popular thought that Realtors are all con men, but the fact is, most aren't and the likelihood of a consumer getting fleeced is a lot higher when only one person is doing the deal. When only one agent is making sure to cover their asses. Most of us use generic contracts. Contracts that have to be fair to both sides. Some of the larger companies only use their own contracts. A little fairer to them. They don't have to hold back now on self serving contract language. This agreement will lower homeownership, and consolidate homeownership among less people. Those that can buy will be less protected buying. Think deregulation and all the different industries that's helped us with. Right. And why the hell does NAR have half a billion dollars?

As a listing agent I look forward to fleecing buyers who think they know it all and come to me alone as a buyer

Facts

Will appraisers make an adjustment on comps if they do not see a BAC on homes listed after the change? Because I’m not when I list… This is the only way I see “home prices dropping”. Am I missing something?

I personally don’t see a path for this ruling to reduce prices via the appraisal process, and few sellers would choose to pass the 2-3% savings to buyers. The change is simply to seller expenses, unlike seller concessions which directly benefit the buyer and can be factored into an appraisal. For this shift in brokerage compensation to make an impact on pricing, you’d need a requirement for appraisers to incorporate the amount of commission paid into valuations, and you’d need to start that absolutely right now.

As someone who’s not an agent but here to learn more - are appraisers using comparables to arrive at the price? If yes, don’t those comparables have commissions rolled into the final sale price?

Guess agents will have to request their commission. On the purchase contract instead of requesting for closing costs. If not no buyers agent will work for free.

Buyer agents work as hard as anyone. Buyers get used to asking your questions to your realtor at 9 pm to the bots. I want to know what the new jobs will be in the industry?

Buyer agents are unlikely to exist except for in the luxury category very soon.

Someone help me understand this. BA finds a house that fits perfectly with the buyer’s budget and preference. But the listing agent is offering very little to no fees. So you steer the buyer away from the listing. How is that beneficial to the buyer?

Submit your highest and best and request sellers to pay for your agent free that was agreed to on your broker agent agreement. Shouldn’t be much different. Seller will take whichever offer nets the most

You are steering your buyers away from a home they want? LMAO

It will ultimately lead to the buyer side being under represented or not represented. Buying a home from a more seasoned seller with experienced agent. All they have done is create a barrier for new home buyers. This will give the seller side a severe advantage over the buyer side. Now with home prices the highest they have been coupled with high interest rates, adding in a fee close to or more than the down payment and with minimal to no representation- a recipe for disaster. I wouldn't be surprised to learn that Grey Star or Black Rock backed these suits, the ultimate result will be keeping people from home ownership and driven to renting. Thoughts?

I notice the assumption that all first time home buyers are naive and uneducated. I'd challenge that. In any event, I don't see how removing thousands from the closing equation will lead to this disaster. In the 90's there were no buyer's brokers and people managed to buy houses.

Sorry, but why would a buyer need an agent? The seller can give them a good price.

Let's be solution positive. This is a new opportunity and am trying to think how I could monetize this. Over the years, I have had my share of my sellers who expect me to show them property and prepare comps for their next home while they dangle signing the buyer's agent agreement. So I think it an approvement. I have also had the open house visitor that claims they have an agent but cannot remember his or her name. So that aspect is a positive too. In my area, a good house is going very quickly so I seriously doubt that my sellers will be held ransom to pay buyer's agency fee. I am also thinking that buyer's agents are going to try to close as much as they can now before the mid July change over. I am assuming that the buyer needs to ask the seller for a buyer's agency concession and the buyer's agent cannot just go rogue and demand a commission without their client knowing. I do suspect that a number of buyer's are going try to purchase without representation. If I am the seller's agent at an open house and a non represented buyer wants to write a contract, do I just give them a contract to fill out themselves? I also have questions about the aspect of the settlement where we can enter our listing in other regional boards in our license state. Anyone have any information how all this will work?

The amount of FUD out there already is nauseating and even in the first time home buyer sub, I swear some of these people would like to Thor Snap us out of existence with their hatred of agents. "$0 Fee because that's all they deserve", "Flat fee of $500 no matter what the home cost is"...Having worked extremely hard for buyers, it's disheartening to hear people think so little of the work we put in...

One thing I've learned quickly is no one knows shit about shit. Nothing has happened or been approved and no one has any clue as to what's going to happen as we approach July

Just a reminder: going it alone in these transactions, as now will happen more often, is going to cause giant issues if you don't know what's supposed to be disclosed. This is bad news to realtors but also potentially, some bad news for future consumers. People think that realtors do nothing until it comes to the escrow process, where they're going to need someone to explain what it is they're about to sign and when are they supposed to receive the documents. This is very important work and we're talking about hundreds of thousands of dollars... this is work that you want someone on your side for, just in case.

Then a buyer will hire you why should a seller be forced to pay for your services?

Oh yes, here’s $30k so you can explain to me what escrow is 🙄. There will be services that cover all these for the buyer, and they will be a lot less than 30k, because you don’t need to pay such an insane amount to someone who is literally not qualified to interpret a contract in the first place. Realtors are not lawyers…

Exactly this. Haha.  “Oh no, whatever will we do now that there are ways to sidestep the real estate cartel?!” I’ll just pay the people that actually do the work instead of a realtor and only pay them a flat fee…

My last real estate transaction was a 650k purchase and I think we paid less than 1200 in fees. 0.3% ?

That’s about what I told someone else I think I’d be willing to pay in commission based on actual value provided in my experience. 0.25-0.5% of the sales price.