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TUESDAY, OCTOBER 31 DAY TWELVE

12:07 p.m. CDT: PLAINTIFFS WIN: A jury in Kansas City, Missouri, sided with a group of homeseller-plaintiffs Tuesday, ruling that real estate's biggest names participated in a conspiracy that helped keep agent commissions inflated.

The jury found that all of the defendants, which include the National Association of Realtors as well as franchisors such as Keller Williams, participated in the conspiracy. And the jury ultimately awarded $1.785 billion in damages. Andrea V. Brambila

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wonder what this means for the future of the ole buyers agent?

https://www.housingwire.com/articles/missouri-jury-finds-nar-brokerages-guilty-of-conspiring-to-inflate-commissions/

If seller agents are to be prohibited from splitting commissions with buyer agents, then life just got a lot harder for 2/3 of buyer agents who are mostly unproductive and have benefitted from being able to easily secure buyers. They will now to have prove their worth and negotiate a commission rate. So the first step for them now, instead of just pitching an MLS populated comp list (usually not even very accurate and doesn't account for differences between homes), will be to pitch their worth to the client and why they should be paid thousands of dollars. Most of them will not be able to do that.

The quality agents will be mostly unaffected, though in markets like this one where buyers cost of funds are through the roof, I suspect the difference will more or less come out of the sale price in some form or fashion.

Buyers on the other hand are not used to paying commissions. In fact, most don't even think about it. Their agent getting a cut of the seller's agent's commission, whether they knew that or not, was an afterthought and didn't affect the deal in any way, shape, or form since it had been such a widely, long-practiced institution. Most, especially first timers with stiff budgets, aren't going to willingly fork over multiple thousands of dollars. While the data might not show at first, or even after multiple months or years, I would suspect that sales prices and quantity of Realtors would be the factors most affected by this change ultimately.

What isn't going to happen in widespread data is seller's all the sudden netting that 3% in their pocket. A house is worth what a house is worth to a buyer. And with them having to now pay out of pocket for commissions, the house just became worth less.

The net end result is going to be negative for the buyers.

Going to end up with lots of buyers getting screwed on negotiations. Which can happen now but it will be far more widespread.

It will probably lead to more lawsuits, which the lawyers are the only big winner in this case anyways.

People aren't going to pay 3% to a BA who toured a home with them that they themselves found on zillow.

It's been a racket for decades now. Freeloading is over.

TxAG#2011 said:

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People aren't going to pay 3% to a BA who toured a home with them that they themselves found on zillow.

It's been a racket for decades now. Freeloading is over.

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Yeah, that isn't how the buyer's agent works - at all.

There is so much more to it that just pulling a Zillow listing out of their ass and meeting them there to unlock the door.

Shooter McGavin said:

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TxAG#2011 said:

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People aren't going to pay 3% to a BA who toured a home with them that they themselves found on zillow.

It's been a racket for decades now. Freeloading is over.

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Yeah, that isn't how the buyer's agent works - at all.

There is so much more to it that just pulling a Zillow listing out of their ass and meeting them there to unlock the door.

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That's how it worked for me.

I guess we can do it a la carte style then, the buyer can pay for the expertise required.

Opening a door and writing up a promulgated contract doesn't take much expertise.

Correct. The only winner in any of this are the attorneys.

TxAG#2011 said:

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Shooter McGavin said:

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TxAG#2011 said:

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People aren't going to pay 3% to a BA who toured a home with them that they themselves found on zillow.

It's been a racket for decades now. Freeloading is over.

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Yeah, that isn't how the buyer's agent works - at all.

There is so much more to it that just pulling a Zillow listing out of their ass and meeting them there to unlock the door.

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That's how it worked for me.

I guess we can do it a la carte style then, the buyer can pay for the expertise required.

Opening a door and writing up a promulgated contract doesn't take much expertise.

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Well then your agent sucked. I am a Zillow Premier Agent(top 1%), if all your guy/gal did was fill in the blanks and collect a check then wow.

Why didn't you contact the listing agent and handle it all yourself?

Sorry couldn't help myself.

This will drag out for years with appeals, damages will probably be adjusted, and an eventual settlement could be reached. I wouldn't expect to see any changes any time soon.

The problem is you don't know what you don't know. It's like trying to buy a life boat on the titanic. In 20 years of real estate both as a lender and realtor, I have never done the same deal twice. I guess if you're mad about 3% for your agent, or a point and half for your lender, you're using the wrong people.

A giant ship's engine failed. The ship's owners tried one 'professional' after another but none of them could figure out how to fix the broken engine.
Then they brought in a man who had been fixing ships since he was young.
He carried a large bag of tools with him and when he arrived immediately went to work. He inspected the engine very carefully, top to bottom.
Two of the ship's owners were there watching this man, hoping he would know what to do. After looking things over, the old man reached into his bag and pulled out a small hammer. He gently tapped something. Instantly, the engine lurched into life. He carefully put his hammer away and the engine was fixed!!!
A week later, the owners received an invoice from the old man for $10,000.
What?! the owners exclaimed. "He hardly did anything..!!!".
So they wrote to the man; "Please send us an itemised invoice."
The man sent an invoice that read:
Tapping with a hammer………………….. $2.00
Knowing where to tap…………………….. $9,998.00
Effort is important but experience and knowing where to direct that effort makes all the difference.

Long time coming.

Wow. That sure was a long step away from texags you took. Your self control and dedication are second to none.

Deats99 said:

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The problem is you don't know what you don't know. It's like trying to buy a life boat on the titanic. In 20 years of real estate both as a lender and realtor, I have never done the same deal twice. I guess if you're mad about 3% for your agent, or a point and half for your lender, you're using the wrong people.

A giant ship's engine failed. The ship's owners tried one 'professional' after another but none of them could figure out how to fix the broken engine.
Then they brought in a man who had been fixing ships since he was young.
He carried a large bag of tools with him and when he arrived immediately went to work. He inspected the engine very carefully, top to bottom.
Two of the ship's owners were there watching this man, hoping he would know what to do. After looking things over, the old man reached into his bag and pulled out a small hammer. He gently tapped something. Instantly, the engine lurched into life. He carefully put his hammer away and the engine was fixed!!!
A week later, the owners received an invoice from the old man for $10,000.
What?! the owners exclaimed. "He hardly did anything..!!!".
So they wrote to the man; "Please send us an itemised invoice."
The man sent an invoice that read:
Tapping with a hammer………………….. $2.00
Knowing where to tap…………………….. $9,998.00
Effort is important but experience and knowing where to direct that effort makes all the difference.

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Very nice example of what you are trying to explain. However, your example exposes another not so nice issue for realtors getting "standardize commission". As your example shows, MOST REALTORS don't know where to hit the hammer. Your industry is so water down with part time idiots that your example only points out that the very few high quality realtors will now have more pressure on them to show why they should be paid top dollar. As this ruling will eventually lead to the lowering of commissions as the band of low end realtors compete bring the commissions down. And before you tell me there is no "standardize commissions now"; we all know that everything is negotiable but in most cases not!
This ruling will take years to have a noticeable affect. Fortunately for me, I already have my real estate portfolio intact. I used the current situation to my advantage intentionally creating a conflict of interest by only negotiating with the listing agent letting them keep all 6% in most cases so that I would secure the deal. Money talks especially when business is being conducted.

I'd think their refusal would be a breach of their duties and promptly get them into lawsuits.

one MEEN Ag said:

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A seller cannot, in the real world, negotiate a reduction for both sellers and buyers commissions because agents are greedy human and will pass up a listing that has a reduced buyer commissions. Buyers agents will also push homes to the top of the stack that have over 3% commission.

And that in my mind is the biggest case of anti-trust violation. The commission to the buyer's agent is very much unable to be negotiated under the current set up. Because they aren't there at the time the seller picks an agent.

Sellers agents will still work off of commission. Buyers agents will probably move to a per hour rate for viewing and a small commission for closing. The cost will just get added to the line item of things new homeowners foot the bill for at close.

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Wrong on so many levels.
-My commission is literally the last thing I look at.
-Seller totally has the ability to adjust the buyer's agent compensation on the listing agreement.
-You have obviously has ****ty representation if you think buyer's reps are an hourly gig.

From a lending perspective this screws buyers as it is one more closing cost that has to be paid out of pocket.

hunterjr81 said:

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I bought 'my first house without an agent involved on both sides. I worked with the person so we agreed on the number and I just downloaded the standard contract we filled out. I then hired a home inspector and the bank made sure it appraised. To me, a good inspector is worth their weight in gold. A good real estates agent just doesn't bring much to the table. The second house I bought was through a highly rated, experienced realtor. Just was not impressed and he was way overcompensated for the work he put in.

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On a clean deal, you are probably right. Those are the exception not the rule.

TxAG#2011 said:

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Very good way to put it. There's a reason half the realtors in Dallas are part time instagram models.

No issue with them getting paid obviously, but 6% is completely mental when you think about it for more than 2 minutes.

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This. The business has devolved into who is the best at marketing, not who is the best/most experienced/knowledgeable person that can make sure your deal is the best for you.

So many folks end up with agents with very little experience, but great at social media.

Shooter McGavin said:

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TxAG#2011 said:

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Very good way to put it. There's a reason half the realtors in Dallas are part time instagram models.

No issue with them getting paid obviously, but 6% is completely mental when you think about it for more than 2 minutes.

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This. The business has devolved into who is the best at marketing, not who is the best/most experienced/knowledgeable person that can make sure your deal is the best for you.

So many folks end up with agents with very little experience, but great at social media.

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That god I'm instagram hot

Deats99 said:

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one MEEN Ag said:

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A seller cannot, in the real world, negotiate a reduction for both sellers and buyers commissions because agents are greedy human and will pass up a listing that has a reduced buyer commissions. Buyers agents will also push homes to the top of the stack that have over 3% commission.

And that in my mind is the biggest case of anti-trust violation. The commission to the buyer's agent is very much unable to be negotiated under the current set up. Because they aren't there at the time the seller picks an agent.

Sellers agents will still work off of commission. Buyers agents will probably move to a per hour rate for viewing and a small commission for closing. The cost will just get added to the line item of things new homeowners foot the bill for at close.

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Wrong on so many levels.
-My commission is literally the last thing I look at.
-Seller totally has the ability to adjust the buyer's agent compensation on the listing agreement.
-You have obviously has ****ty representation if you think buyer's reps are an hourly gig.

From a lending perspective this screws buyers as it is one more closing cost that has to be paid out of pocket.

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Look, if you can't separate market forces from your own approach then this conversation isn't for you.

Buyer reps time is spent doing two things: going to an unending viewing of houses (and not getting paid) and closing a deal (getting paid). I had excellent representation in Red Pear Realty as they understood this dynamic years ago. I found my house, I paid a flat rate to view the home, and they got their smaller commission for closing.

Jamie is an extremely sharp guy, I appreciated his commercial background and his own DIY investing in real estate. He brought a lot to the table and understood the market.

Stick your fingers in your ears if you'd like, the real estate industry was on the clock the second the internet was made. It's overdue.

Now I believe you have some houses to go show.

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Wrong on so many levels.
-My commission is literally the last thing I look at.
-Seller totally has the ability to adjust the buyer's agent compensation on the listing agreement.
-You have obviously has ****ty representation if you think buyer's reps are an hourly gig.

From a lending perspective this screws buyers as it is one more closing cost that has to be paid out of pocket.

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Look, if you can't separate market forces from your own approach then this conversation isn't for you.

Buyer reps time is spent doing two things: going to an unending viewing of houses (and not getting paid) and closing a deal (getting paid). I had excellent representation in Red Pear Realty as they understood this dynamic years ago. I found my house, I paid a flat rate to view the home, and they got their smaller commission for closing.

Jamie is an extremely sharp guy, I appreciated his commercial background and his own DIY investing in real estate. He brought a lot to the table and understood the market.

Stick your fingers in your ears if you'd like, the real estate industry was on the clock the second the internet was made. It's overdue.

Now I believe you have some houses to go show.

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Way to oversimplify…..
I imagine all you do is draw pictures with crayons and play with models.

Same level of oversimplification

Good buyer reps don't go on unending cycles of showings.

Sorry you think what I do is bull****, but I will respect you as an Ag enough to not assume you are a self serving idiot like 75% of the engineers I have to hire to do analysis for my clients.

Do you even realize you have to have an agent to look at a listed property in Texas? Technically, if a listing agent shows a perspective buyer a home they listed it creates a dual-agency situation which is a big No No. The laws are very clear. I can represent the buyer or the seller, but not both. (Clarification: I could manage the transaction, but not represent either party's interests)

If the market dictates a change, then so be it. All this is going to is hurt buyers and screw up the market for a few years.