From CNN:
The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement
The 6% commission, a standard in home purchase transactions, is no more.
In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.
The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.
The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.
By some estimates, real estate commissions are expected to fall 25% to 50%, according to TD Cowen Insights. This will open up opportunities for alternative models of selling real estate that already exist but don’t have much market share, including flat-fee and discount brokerages.
Shares of real estate firms Zillow and Compass both fell by more than 13% Friday as investors feared that lower commission rates for agents could lead to less business for real estate platforms.
In a 10-K filing last month, Zillow warned that, “if agent commissions are meaningfully impacted, it could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry, which could adversely affect our financial condition and results of operations.”
Shares of real estate brokerage Redfin also fell nearly 5%.
Meanwhile, homebuilder stocks rose on the news: Lennar shares gained 2.4%, PulteGroup shares added 1.1% and Toll Brothers shares added 1.8%.
…
Homesellers who brought lawsuits against the NAR have argued that in a competitive market, the cost of the buyer’s agent’s commission should be paid by the buyer who received the service, not by the seller. The sellers who brought the lawsuit against the NAR and the brokerages said that buyers should be able to negotiate the fee with their agent, and that the sellers should not be on the hook for paying it.
This settlement, which is subject to a judge’s approval, opens the door to a more competitive housing market. Realtors could now compete on commissions, allowing for prospective buyers to shop around on rates before they commit to buying a home. Brokers could begin to advertise their fees, allowing customers to choose lower-cost agents. The NAR, in its announcement, did not set a suggested fee.
This marks the biggest change to the housing market in a century, said Norm Miller, professor emeritus of real estate at the University of San Diego.
“I’ve been waiting 50 years for this,” Miller said.
This still makes zero sense to me. Commissions are not locked in at 6%. They have always been negotiable and it is always advised up front how much a listing agent is getting and how much would be paid out to a buyers agent. This is definitely going to cause problems and not in a good way.
Sure Zillow is afraid of agents having smaller marketing budgets. Agent marketing budgets do not help market homes, they market the agent. Between MLS and the Internet, there is no need for an agent to spend a dime marketing a house.
Zillow since it inception has been focused on changing the way real estate is marketed. Like they say, be careful what you wish for.
Sure, list a house at 1% – it’s obviously visible on the MLS and gets avoided as the buyers agent isn’t interested.
Isn’t that the crux of this?
Grim, Are you saying 1% total or 1% to selling side?
Used to be sellers would question if I advised offering less than 2.5% to selling side. They were concerned their home wouldn’t be shown as agents would show the 2.5 and 3% and not their property. Nobody seems to be worried about that now.
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I haven’t entirely delved into the changes this will do to the real estate industry but this outcome is one of the reasons this forum existed from the beginning. G0d only knows why the pay structure existed in the first place when, from my experience, all the leg work was done by me and the agents just collected a check. Some agents were outright clowns and dumbbells, others were considerate and very nice but this 5% or 6% structure was infuriating.
I want to hear you guys weigh in further and digest the comments.
REDFIN CEO on this change for Buyer’s agents.
Seller will keep more of the sales price.
https://www.cnbc.com/video/2024/03/15/redfin-ceo-reacts-to-nars-418-million-commission-lawsuits-settlement.html
Does not fit narrative. Must suppress.
https://m.youtube.com/watch?v=cCCw-uFBfnA&embeds_referring_euri=https%3A%2F%2Fmobilesms.apple.com&embeds_referring_origin=https%3A%2F%2Fwww.youtube.com&source_ve_path=MzY5MjUsMjM4NTE&feature=emb_title
“Used to be sellers would question if I advised offering less than 2.5% to selling side. They were concerned their home wouldn’t be shown…”
Was flat out told by a very good friend selected as our realtor when we were redeveloping SFHs that not giving 2.25-2.5 to the buyer broker was the kiss of death.
Too many other options the buyers’ broker could/would steer their buyer to, no one house is that unique or ‘must have’.
I believe them, as they were chosen because they were a very good and trusted friend…we were selling new construction where the sale occurred off the TBB, ie no work for them so we were effectively handing out free money, and they took seller commission in the 1s….
My off the cuff assessment of the NAR settlement:
Good for qualified buyers (financial and knowledgeable) as the need for a buyer’s broker in these instances was always near zero yet they were paying for this unneeded (and in some cases counterproductive) service anyway.
Bad for those who really need advice – first time buyers, lower income, lower financial and legal acuity – as those ‘services’ that used to be bundled into the sale price will need to be purchased and negotiated a la carte now. By those least capable of doing so.
These people, often the lower end demographic, will likely face an impediment to buying they don’t now. Be prepared after this settlement gets implemented over this year for there to be claims of various ‘-isms’ as a result and for some type of legislative or fiscal ‘relief’ for these ‘disadvantaged’ parties.
For sell side brokers there is the potential for additional work as they will now presumably be dealing with more under-represented buyers even the most informed of whom may bring some ‘friction’ into the process that didn’t previously exist. Can’t imagine the shitshow a sell side agent may now need to go through selling a starter home with a high number of unrepresented first time buyers.
Lastly, would expect a shakeout of the number of brokers as the weakest no longer have a place to hide.
***Buy side representation, regardless of product or market, has always been the province of beginners and the less qualified for a reason. It sucks, and the probability of payout especially relative to effort is poor at best.***
NAR brought this on themselves. Probably one of the most tone deaf organizations around. Amazing it lasted this long.
https://wapo.st/3wTRiwh
The one thing that will happen is that real estate brokers and agents will have to work harder and make less overall money.
Think of being a stock broker in 1964 vs 2024 regarding ease of making reasonably money if you were not a dufus working for mother Merrill or other big house and the opportunities available and ease of making money for those big house in 1964 vs 2024 with Schwab, Fidelity, etc/. That is the equivalent of now for real estate brokers.
Going back fast to the secession of the union question. Someone mention that TX polled at 30%. TX being the morons and spending their time having those mental jerk 0ff moments are likely pull the plug first and will prove positive how fast they will be a failed state, with all other nutty red states realizing the facts and getting real God Bless the American Union overnight, with TX whining about coming back to the fold.
The Cartels are now using land mines against the Mexican Army and civilians. Is Billy Bob Joe in his F150 and AR15 going to stop Cartel armies? Who are they going to draft to man the newly created TX army – Mexican Americans? How are they going to pay for their new military and other security infrastructure? You mean taxes? Income Taxes? Do you thin Musk, oil billionaires and other assorted rich brats that don’t feel they got to pay are going to stay there?
Airport Karen. Goes after the agents and the PoPo. This one is cray cray. funny as hell.
Welcome to the no flight list. American women are a special breed today.
https://youtu.be/LFEPbySj09c
Meltdown time stamp. Imagine being married to this one.
https://youtu.be/LFEPbySj09c?t=512
Tells the cop “Making your sixty grand and f’n your wife with your five inch Dicc. Hehe.
This one is funny.
https://youtu.be/LFEPbySj09c?t=1059
That Texas succession comment doesn’t make sense. If they left, they would have to raise an army. I imagine that Texas has 100,000’s of active duty military personnel. As would a California or a NY.
They wouldn’t be a failed state they have natural resources, open ports etc. Now I think succession would be an idiotic idea, but to say Texas wouldn’t be able to put together a civil defense force and have a powerful economy is foolish.
It’s a stupid conversation…… Not worthy here folks.
Yes you Left…..this is nonsense….There will be nothing but war if any state tries to leave. If the 1850s civil war wasn’t a good enough example too.
Use Ukraine as the latest example… Sure they were technically their own country but as soon as any move to join the EU or NATO there was war.
It will be no different here. Sure the oil oligarchs in the Permian west Texas will love it until they have to send everyone to the front lines to defend it.
The six million barrels a day is worth a war folks? Your kids will be there on the front lines.
Frankly I feel insulted we are having this conversation at all.
More and more I think of Peak Civilization…
We are perhaps close…
There will be no enjoying your thoughts online stroking you ego folks…Peak is still directly tied to peak oil.
There is no question, it all ends quickly if there is no fuel..
Stan,
A lot of people are in Texas because is part of USA. The GOP runs the state because it was it was gerrymander to their benefit by Tom Delay and others. Even with that Sen Cruz barely made it in last election. The business world if they have a problem the file lawsuit in US Federal Court Southern District of NY in downtown Manhattan because its reputation for competence and integrity.
In short when you add it up, a lot of everything will bail out asap. More importantly the Cartel will move in big time. Is easy to buy people once they don’t have fealty to a cause. All residents of Texas are “Americans”, few of those residents are only Texans.
Juice,
Just to rabble you up a bit read up on the Great Filter Theory on your thoughts on Peak Civilization.
Also the ideas of many cosmologist, one being Stephen Hawkins wrote about before his death that go along like this. If you look at humans, we are basically emotional assess. No sane benevolent civilization would want anything to do with us. They might observe but will stay away. Our attempt with SETI and others to make contact is likely to attract the malevolent ones. Our future is pets.
https://youtu.be/mFkRvF8MeYM?si=VWylYhy0yx-dSQUt
rabble you up?
Great Filter Theory?
You live on a rock flying 67,000 miles per hour around the sun. What else do you need to know?
You live on a rock flying 67,000 miles per hour around the sun. What else do you need to know?
Hehe..
That was great. Juice for the win.
Left: The rent has been paid.
Jersey. Wealthy Jersey. Man what do they eat in that town?
https://youtu.be/cYgmhnDW6tI
Two new potential Presidential candidates. Who would you choose?
Female Driver, 94, Drags Female Pedestrian, 75, Outside Paramus Public Library.
Just the day before, a 94-year-old widower from Bergenfield was charged with the hit-and-run death of a popular teacher from Dumont.