Who stands to gain the most from the settlement reached with the National Association of Realtors regarding commission price collusion? The clear beneficiaries are residential real estate investors and owners. Why? Because they were the ones burdened with paying the so-called “standard” real estate commission ranging from 5% to 6%.
Following the judgment against the NAR and other real estate brokerages, such as Keller Williams, it's expected that average real estate commission rates will decrease by 1% to 3% this year. Consequently, residential real estate owners will retain an additional 1% to 3% of their home equity when they sell.
Even for those who opt not to sell, there's a boost in the value of their residential real estate holdings in their net worth calculations by 1% to 3%, if they choose to include it. Therefore, whatever your residential real estate holdings are estimated to be worth, multiply them by 1% – 3% to find out how much more they are worth today.
Looking forward, it's conceivable that residential real estate owners could eventually see an increase in the value of their holdings by 5% to 6%. After all, across every industry, competition pressures commission rates down to 0%.
My background: I've been investing in residential real estate in San Francisco and Lake Tahoe since 2003. Physical real estate and private real estate investments in the likes of Fundrise, a sponsor, account for about 60% of my ~$270,000 passive income so my wife and I can be free. I started Financial Samurai in 2009 to chronicle my journey to financial independence. Today, this site is read by over one million readers a month.
Chart Showing How Residential Real Estate Investors Gain
Here is a chart I created illustrating multiple real estate valuation price points, demonstrating how real estate valuations increase as commission rates decline. The greater the reduction in commission rates and the larger your portfolio of residential real estate, the greater your gains will be.
Roughly 65% of Americans own homes, therefore, the majority of Americans benefit from a decline in real estate commission rates.
The Only Residential Real Estate Investors Who Don't Benefit
Only one type of residential real estate investor may not benefit from the NAR settlement on price fixing. These are investors who are unwilling to advocate for their wealth and negotiate down a listing agent's commission.
They might fall into categories such as being too affluent to be bothered, too apprehensive about confrontation, unaware of the ruling, or simply complacent with being taken advantage of.
However, for the vast majority of rational investors who are informed and eager to maximize their wealth, negotiating down proposed real estate commission rates will be a priority.
The worst-case scenario is the real estate agent saying “no.” In such case you can continue interviewing until finding one who agrees as there are more real estate agents in America than there are homes for sale.
Ultimately, the lawsuit is aimed to reinvigorate the free market's functionality for consumers. The lawsuit isn't an indictment of the integrity of hard-working and honest real estate agents.
The argument suggesting that homebuyers will now be “screwed” due to listing agents is unfounded. This notion presupposes that the majority of listing agents are unscrupulous, dishonest, and deceitful. Unless real estate agents, who are the primary opponents of this ruling, consider themselves to fall into this category, homebuyers need not worry so much.
Believe You Have The Ability To Negotiate A Better Deal
Those who are inclined to take action harbor a belief in the possibility of change. If you lack faith in your capabilities, you've already set yourself up for defeat. Here's an example of how a defeatist mentality could cost you.
In 2014, when my wife was experiencing burnout after a decade in her job, I suggested she negotiate a severance package, similar to what I had accomplished in 2012.
Her immediate response was, “I can't do that! My manager would never agree! I'm too valuable to the team. Why would they let me go with a severance package?”
This response echoes sentiments I've encountered countless times since publishing my bestseller, “How To Engineer Your Layoff.” Ironically, this retort often stems from a self-centered perspective. Once you consider the viewpoint of your manager and the company, negotiating a severance becomes more feasible.
Another reason for skepticism in negotiating a severance package is a lack of confidence in negotiation skills. This lack of confidence often arises from limited experience and knowledge. My book solves this problem and so do numerous articles on Financial Samurai.
Believe in your power and ability to negotiate lower real estate commission rates. In 2017, I successfully negotiated my real estate commission down to 4.5%. Then, in January 2024, before the NAR settlement but after the verdict, I managed to further negotiate my selling commission rate down to 3.5% with an experienced husband-and-wife team.
Advocate for what you deserve. If you're struggling to believe in yourself, seek out someone who does. Happily, my wife was able to negotiate a unique severance package that gave her a 60% raise.
Residential Real Estate Buyers May Benefit Too
Even though homebuyers never paid a real estate commission, they could also potentially benefit from the real estate commission price fixing settlement too.
With residential real estate owners now 1% – 3% richer, when they choose to sell, some owners may decide to share in some of their real estate commission savings gains with the buyer in the form of a credit at closing. Why would sellers do this? To help get the sale across the finish line. The credit can be used to pay for the cost the buyer has to now pay their buyer's agent if they choose representation.
The sharing of real estate commission savings likely won't by split 50/50 with the homebuyer. However, even if just 20% of the savings of the 1% – 3% (0.2% – 0.8%) in commission savings was offered to the buyer, this could be a win too.
Why? Because the price buyers will pay for a buying agent's services will be affordable given it will be determined by the free markets.
If a buyer's agent charges more than what a buyer thinks they are worth, then a contract will not materialize. And if a contract does materialize, then a buyer, by definition, can afford to pay the buyer's agent. The buyer believes an agent's value is equal to or worth more than the cost.
Hooray free markets! Nobody is forcing anybody to do anything.
Example Of A Buyer's Agent Fee Schedule
Below is a proposed new home purchase fee structure introduced by a real estate agent I saw on Twitter. It shows what a buyer's agent will do for a prospective homebuyer in a clear and concise manner.
In my opinion, this buyer's agent fee structure looks fair.
A prospective homebuyer can add an incentive, such as offering to pay X more if the buyer's agent can get a lower price. A prospective homebuyer can also offer to pay for helping write a real estate love letter, spending time negotiating a tricky problem found during the inspection contingency period, and more.
In other words, everything is negotiable. So longer as the contract is clear and agreed upon by both parties, all is good.
Example Of How Both Seller, Buyer, And Both Agents Win
Let's examine a scenario where a listing agent charges a 2% commission to list and successfully sell a $500,000 house, highlighting the benefits for all parties involved.
Firstly, the listing agent earns $10,000 gross, a significant win. Despite the 2% commission being slightly lower than the 2.5% to 3% they might have earned with a 5% to 6% commission and splitting it with the buyer's agent, it remains a substantial sum.
Secondly, by opting for a 2% commission instead of the traditional 5% – 6%, the homeseller saves $15,000 ( ($500,000 x 3%) -$20,000 ($500,000 X 4%). This is a clear benefit.
Thirdly, the buyer's agent earns $2,000 gross under the sample fee structure above, adding to the overall success.
Lastly, the homebuyer receives a $3,000 credit from the homeseller, representing 20% of the 3% commission savings (0.6% x $500,000 = $3,000). Consequently, the homebuyer effectively “makes” $1,000 from the purchase, as they only pay the buyer's agent $2,000.
The Seller Wins The Most But Also Shares In Their Winnings
The homeseller's overall commission rate stands at 2.6%, which is 2.4% – 3.4% lower than the “standard” 5% – 6% rate. To illustrate, at a 5% rate, the homeseller would have paid $25,000 in commissions. With a 2% commission, the homeseller pays $10,000 in commissions and provides a $3,000 credit, totaling $13,000, equivalent to 2.6%.
This arrangement showcases the beauty of cooperation and mutual benefit. Although in this scenario, buyers' agents earn less than they would with a 2.5% to 3% commission rate, it's a reflection of the dynamics of free markets.
Homebuyers Already Have the Tools to Empower Themselves
The majority of homebuyers are now taking charge of their home search online. They're browsing listings and attending open houses independently.
Thanks to platforms like Zillow and Redfin, homebuyers can access all the necessary data to determine fair market prices for comparable homes, all free of charge.
Making an offer has also been simplified with services like Docusign, enabling buyers to submit offers online within minutes, eliminating the need for in-person signings. This streamlined process resembles submitting applications through platforms like the common app for college admissions.
Furthermore, homebuyers can educate themselves online at no cost, learning about the home escrow process, financing options, and home inspection contingencies. Resources like my website offer strategies for managing the escrow period effectively, including how to request additional time if needed.
Homebuyers can also conduct their own inspections, inviting friends and family to help identify any issues and hiring professionals if necessary. The goal is to thoroughly assess the property for repairs needed to make a fair offer.
While dishonest listing agents exist, a longer escrow period and thorough inspections provide safeguards. Real estate agents are obligated to be honest and transparent, supported by disclosure statements. If issues arise, homebuyers have legal recourse.
If You Own Residential Real Estate You Are Suddenly Wealthier
One of the most promising arbitrage opportunities today lies in residential real estate ownership. We just got through the bottom of the latest real estate down cycle, which was in 2H 2023. Mortgage rates are gradually coming down and pent-up demand is set to be unleashed onto the housing market.
Over time, the prevailing 5% to 6% commission rate is poised to diminish. It will mirror the trajectory of online brokerage trading commissions, which have transitioned from $200+ per trade decades ago to being virtually free today.
Consider the landscape 30 years from now, with automation, AI, and ongoing technological advancements. Can we reasonably expect real estate commission rates, especially following the NAR settlement exposing price fixing, to remain static by the year 2054? Unlikely. Just as the S&P 500 and single-family home prices are anticipated to rise in 30 years, so too are commission rates likely to decline.
To amass wealth, one can capitalize on trends, such as investing in real estate within the Sunbelt/Heartland regions due to demographic shifts toward more affordable areas. Additionally, recognizing trends that favor one's interests, such as the reduction in real estate commission rates, is important.
If you own a home, condo, vacation property, or multi-family unit, congratulations – your wealth has suddenly increased. Armed with the knowledge that real estate commission rates are on a downward trend, it's logical to prolong ownership of your properties.
At the end of the day, the ideal length of time to hold your properties is forever. Feel good knowing that over time, you've got a positive tailwind due to lower selling costs.
Reader Questions And Suggestions
As a residential real estate owner, does my declaration that owners are suddenly richer by 1% – 3% make sense? Does the declining in real estate commission rates encourage homeowners to hold onto their homes for longer? Besides real estate agents, is anybody else agains the real estate commission price fixing lawsuit?
For those interested investing in residential real estate in lower-cost areas, explore Fundrise. Managing over $3.3 billion, Fundrise focuses primarily on residential and industrial real estate investments in the Sunbelt region. With lower valuations and higher yields, the Sunbelt presents an appealing prospect due to demographic shifts catalyzed by technology and remote work trends. Financial Samurai is an investor in Fundrise and Fundrise is a long-time sponsor of Financial Samurai.
About the author: Sam Dogen is the founder of Financial Samurai, the web's #1 personal finance site, boasting over 1 million organic pageviews monthly. Every piece on Financial Samurai stems from firsthand experience because Sam believes money matters are too crucial to rely solely on speculation. In 2009, he catalyzed the modern-day FIRE movement, which has since become a global sensation. Since 2003, Sam has been investing in physical and private real estate, now constituting approximately 60% of his annual passive income totaling $270,000.
Join his free newsletter today if you'd like to achieve financial independence too. There is no rewind button in life. Might as well make the most of it.
This is the Most Ridiculous article. Fact is, you ALWAYS had the opportunity to negotiate your fees
Fact is sellers would always find a way to “pad” the fees in the cost, and pass the burden to the buyet
Fact is sellers ALWAYS had the opportunity to go FSBO
Fact is Buyers always paid in the end for all fees
Now yje seller will still end up offering to pay for all fees, as they always will, because in not doing so, they reduced the percentage of the buyer pool who can get approved to buy the home, and pay the fees
Because of this, the buyers will want an impeccable home, in ideal conditions
Because of this the seller also forget they now pay for buyers fees.. ouch
And trying to use the same agent to do both? Is equivalent to them being your lawyer to sue you too
This will cost sellers in more ways than not.
Buyer agents legally don’t have to work for free, slavery is not legal in the US
And any sellers agent doing the work of two for much less? How well will you trust their negotiation skills? And, ask yourself, if your boss fires everyone for you to do their work fir a minimal raise, how loyal will you be? How dedicated?
Sorry, this was a lawsuit based on lawyers wanting $$.. as you stop and ask yourself, how often did you hear of real estate agents NOT NEGOTIATING their fees?
Your fee schedule for buyers agents in interesting but I think you are missing a few items and I think some of you tasks are priced to low for an agents time.
#1) Showings. In this hyper competitive market rarely do buyers get the first house they see. In addition, I know in my experience houses don’t look the same in pictures and / space not as nice as they look. Having house available online have made it easier in respect it has also made it tougher due to quality photos, wide angle lenses, etc. I have toured over 30+ homes with my agent and I would guess an agent would chharge $100 for the first home and $50 there after. The majority are one off showings due to the lack of inventory and worthwhile houses to see.
#2) I think if a fee structure is the way the busines goes agents will start charging by the hour like an attorney, advisor, etc. $50 hr / min 15 min charge of $25
#3) When I sold my home the numerous inspection lasted roughly 5 hours total. I think agents will charge by the hour when attending the inspection and it will $500.
#4) I doubt agents will charge less to write offers 2-9. I imagine the time is the same. IM), it will be $250 per offer.
#5) Negotiations $ 250 / hr.
#6) Buyer consultation $250
#7) review Disclosures $150
**** Why would an agent give a $500 credit for a deal the failed to close. Makes no sense if the agent is being paid per task.
Buyers and sellers would be well served to focus on the bigger picture – which agent will net me the most most money on my sale & which will get me the most house for my money when I buy. While commission is a factor in this equation, most will find it is not the most important one and focusing on it is likely to be shortsighted. Like with any other service business (investment advisor, CPA, attorney, etc.) a good real estate agent’s services should more than pay for themselves. If they don’t you are working with the wrong professional.
I would argue that Sam should take a pay cut. He makes too much money .
If you paid anything to read this site, I’m happy to refund you your money since this site is free. Otherwise, think how much better the world would be if we all did work for free.
I know it’s hard to adjust to the court, ruling and declining commissions. But you must find a way to adapt because there’s no turning back.
This article is so off base and unfactual it’s ridiculous! Homeowners ALWAYS had the opportunity to shop around with different agents and brokerages. There are many brokerages that are and have been discount brokerages with low rates. Also, NO homeowner is now by some magical imagination is suddenly going to want to sell their home for less than its worth since this ruling. This is why people who sell by owner sell on their own and don’t want to pay a commission and many times overprice their home because they want to keep all the money. Even the DOJ doesn’t understand that. Agents will still charge what they feel fit to stay in business.
The buyers and sellers will be hurt by this watch and see. This will not improve anything. To think listing agents are going to work a buyer’s side for free is laughable. It’s way more work and the legal liability will be off the charts, not only for the listing agent but for the seller as well. You think after this lawsuit and brokers getting sued right and left a listing agent is going to be stepping in so easily dealing with an unrepresented buyer for free???? Guess again!
This is going to create an absolute mess. Nothing like they are trying to make it out to be. The media has all the facts wrong on how the industry even works and what the outcome of this suit will bring. It will hinder many first time homebuyers from habing representation or even able to buy a home. VA loans prohibit veterans to pay a buyers agent and so does FHA. This is atrocious to keep someone from having an advocate to buy a home. The government is making a mess like they typically do. Good luck with all of this.
He conveniently left out the BROKERS in this. You know, those that split the 6% and then trickle down a split to the agents. Agents typically get a percentage of the percentage. And cover their own expenses, fees, insurance, etc
All headed down in commission rates.
Never knew a homeowner was obligated to use a real estate agent. I thought you could simply put a For Sale sign in your yard and sell your home all on your own.
Love this. Look with this judgement and settlement it is time to rethink the entire structure. Flat fee structure should be the starting point. I love the itemized breakdown for realtor services that you posted. Look if you want to buy a house the buyer should start with paying a small initiation fee to a realtor, maybe $100-200 just as a client initiation fee. All the rest of the services and costs can still be rolled up at closing and still possibly covered by seller…
What are these percentages?? 1%, 2%, 3%, 4%, 5%, 6%. Which do you chose any why? It was all made up!! Realtor services are a work order. You are hiring a person for a temporary service, show me a breakdown for hourly work and labor!
If the buyer’s agent compensation moves to being paid by task and by the house they will make bank. What’s the fee for every showing? Every phone call? Every email and text message. Ring the cash register up. BTW: NO one has asked where or how a buyer will get the funds to their agent.
Interesting article with many valid points. The only issue I have is the idea of real estate agents and brokers colluding on commission rates is a false narrative. Commissions are negotiable. Always have been. Per your article you proved that with agents you have hired. The real issue in the realtor industry is lack of agent talent of a large percentage of realtors. You can blame the industry for that.
Commissions are negotiable, but most fail to be negotiate below 5% as other realtors say they simply aren’t allowed by their brokerages to lower commissions.
I tried many times and failed before. Also, I sold a much more expensive house than the median in my city, so there was more wiggle room as a result.
Sam, I concur based on my recent experience selling a home in the Seattle area. All five agents I interviewed independently told me their respective brokerage could not go below 2.5% buyer’s agent commission. The listing agent’s commission was negotiable, down to as low as 1%, though I hired an agent, who did a good job, at 1.5%. I would have supported the listing agent receiving 2% in return for a concession on buyer agent commission, but the listing brokerage prevented this outcome. That being said, the 4% total commission paid was still too high.
Bingo. The 2.5% to the buyer’s agent was impossible to overcome. They require it to get the buyer’s agent to advocate for the property to their clients (steering), which felt weird. A buyer’s agent should have the duty of showing the best property possible that suits their clients needs, regardless of the incentive.
But as we all know, incentives affect outcomes.
False. You stated buyers have the power now with listings online. You can’t have it both ways. I’m a buyer and I tell my agent what houses I want to see
Exactly. Buyers dictate what they want to buy and what they want to see. Don’t need a buyer’s agent to find a property nowadays.
It is collusion. The listing agent protects the buyers agent by telling the seller that their house will not be shown unless they offer up a big percentage to the buyers realtor. The buyers agent also tells the buyer that their services are free. This is and was collusion and misrepresentation. Both of those are gone now. Greed comes back to bite you. Realtors should have been reducing and capping commissions a long time ago..
False. Buyers dictate the houses they want to see. The writer stated it’s easier now with technology. Which is it – Buyers have the power or agents? I’m a buyer and I tell my agent what houses I want to see not the other way around.
Thanks for keeping us updated on all of the important happenings with the NAR case, settlement, and how it will impact us as consumers. I don’t have plans to sell a property in the near term but I expect I will have to sell my parents place in a decade or two so this is really helpful to know. And I agree that there should definitely be meaningful savings by then and likely way sooner with so many positive changes happening now in the industry.
I truly hope this ruling will change ancient practices, but I am not hopeful. The lie is that commissions were always negotiable. Not the complete truth. Sure in theory, but finding a Realtor to take a lower percentage was rare, discouraged, and looked down upon as they would complain about people wanting to discount their income. Not to blame most realtors, because real estate classes drill in you to “know your value” and take every opportunity to discredit discount brokers.
So after getting my license I joined a discount brokerage offering sellers a low flat rate and giving them the choice of how much to pay a buyers agent. We often ended up recommending at least 2% because we experienced steering so often. Yes, we have literally had agents tell us they try to avoid our clients homes or make comments to discourage buyers from them. Once in a while calling us to complain we are not offering an high enough commission.
Will this change? Amongst the chatter in our local realtor pages I don’t believe so. Many are saying that they will simply sell their buyer on the benefits of still paying a higher percentage and that they will make sure the seller will pay it. How will this happen? Even though buyers commission won’t be listed on the MLS they will simply call the seller’s agent and see what commission the seller is offering before they show the house. Yes, there might be times they have to settle because the buyers want to buy the house regardless and they’ll receive whatever the seller is offering, but it certainly appears at the moment that Realtors will attempt to find a way to hold to old practices.
The over supply of real estate agents should self correct. The over supply was because of artificially high incentives due to collusion. So one can argue that real estate, price-fixing luredmore agents to be agents than needed, enriching the NAR, but hurting all other agents in the process given increased competition. This is the law of unintended consequences when you metal with the market.
I sold a house in 2021. Paid 5% commission. Completely ridiculous that I paid a brokerage firm $42,000 for listing out house on MSL, one 3-hour open house, 1 hour to show us how to arrange our furniture, ordering a termite check and setting up closing meeting with bankers. Maybe 16 total hours (2 days) including the office work.
While we are in a hot housing area so houses sell themselves and agent doesn’t need to do much, there is no reason I have to overpay to make up for agents that have to do alot more work in other markets.
The point of the ruling was to introduce more “site-specific” fees and it should work if consumers demand it.
I think the real estate industry’s pushback is that nobody forced you or me to sell a home and pay those fees.
But tried as we did to get a better commission rate, nobody or very few would budge because their brokerage houses wouldn’t allow.
This should thaw/change now. And I’ve already negotiated down to 3.5% for an experienced team. I just decided to rent out instead.
To me the issue isn’t percentage but transparency. I may be OK paying 5% if I could see the effort and cost and felt it was legit. There is too much secrecy in what is being paid for. They are a service industry and should perform like all service industries. I am in a service industry as an engineer. When I bid on work I have to lay all my proposed costs out in detail for each item. I know I will be compared to other engineer bids and some may be lower. Clients are free to choose low bid or stick with my relationship and higher level of service.
So I like your idea of soon seeing a schedule of services by item when seeking to hire a real estate agent. Then we have knowledge of the work required and can shop around. Again I may pay 5% instead of 3% (low bidder) based on comfort – but give me a choice. To this point it just is basically a flat tax of 6% on a sale and disassociated from service or work.
If you look on Facebook, all the real estate agents are posting their to do list. I try not to judge since they’re my friends lol.
As a former real estate agent, when trying to close a contract to represent with a home seller, we would talk about pricing. I often advertised, and subsequently offered 1-2% listing fees. I was competing on price. My boss, who had been in the business for over 30 years would offer his rate at between 2 and 3% depending on the price of the property and the services offered. He had “full-service” which included staging, light landscaping, professional photos, etc. And he had a basic service, etc.
We also then counseled our sellers what rate to offer the buyers agent, and that conversation went by the market dynamics in DC. Which is, if you want buyer’s agents motivated, would be 3%, and if you wanted normal, 2.5%, and if you really don’t care, then 2%. As a buyers’ agent, I would time to time see 4% offered, or closing bonuses offered by sellers who really wanted to sell fast. Why? The wanted to incentivize buyers agents to show those units.
To be honest, no one told us what to do regarding pricing, but we can see the prices, and know what was normal practice in the metro DC area. Now, I became an agent as I am a real estate investor, and after buying 2-3 properties, I didn’t need advice anymore. I wanted to make a 2-3% bonus every time I purchased a property. I also could list my properties on the MLS for free as a seller. I also wanted to help my friends get into real estate. I learned, you can take a horse to water, but cannot make a horse drink water. Most of my friends are to risk averse to invest in anything. The only 3 people I did end up helping buy properties all worked with me in the industry, one at a bank as my boss, another as my closing agent, another as a lender. Hahaha. Others just look at me and think “property mogul”. (I only own 10 rental units, small 1BR or studio condos in DC, but on a non-profit salary for my whole life, it’s not common.)
As a buyer’s agent, you accepted what rate the seller was offering. I’m not located in the US anymore, and no longer am an agent, so I am not sure what the latest talk on the town from the Realtors is about this decision. I wonder if it will make a difference at all. Has anyone here tried to sell a place recently and can comment on how the pricing conversation went with the agent?
Here in Florida, it’s always been a free market. We have flat fee companies posting listings on the MLS for a nominal fee and the seller has full autonomy to offer any amount to buyer’s agents. The idea that sellers will get more out of their house by removing buyer’s agent commission is false. If the buyer with the burden of loan down payment and 3% loan closing costs has to additionally pony up for their agent’s commission, buyers will be offering less for their purchases. In the past, the buyer agent commission cost was essentially rolled into their 30 year mortgage. Now it will be an up-front cost that will immediately impact their purchase power. Rather than increase property value, it will cause properties to stay on the market longer until the seller who “saved money” on a reduced commission ultimately has to lower their price to accommodate the buyer’s cash commission burden. In summary, the market will flex and it will be a wash. I expect motivated sellers to continue to offer buyer agent incentives in a competitive market.
“Now it will be an up-front cost that will immediately impact their purchase power.”
The seller will share part of the commission savings and offer it as a credit at closing that goes to the buyer o the buyer’s agent.
Maybe.
One of the best articles I have read in a long time. As a real estate investor and landlord with 15 rentals this was very informative and refreshing. Thank you for caring.
Makes total sense. Thank you! With 65% of Americans owning their primary residence, the commission settlement is a HUGE win for Americans. The only people against this settlement are real estate agents, and that’s because they are thinking selfishly.
Great example in the post about how all four parties can win with lower real estate commissions. Also, the amount of real estate transactions may go up with commission declines, offsetting the decline in real estate commission dollars by a certain extent.
Think about all the homeowners who’ve felt trapped in their place because they don’t want to or can’t pay 5% – 6% commission. Now more homeowners can move and right size and live more free!
I posted a reply and would agree that as a real estate agent that has worked incredibly hard at representing my clients and defending my livelihood as well.
In Washington state commissions have always been negotiable. This is ultimately going to hurt buyers more than the agents and this is very unfortunate and possibly the plan.
I’m in my WA state experience, listing agent commission is negotiable but buyer agent commission is not. This hurts both the listing agent and the seller.
Transactions will not be going up until interest rates shrink significantly.
The only winners will be sellers. Everyone else looses including the buyer.
I generally agree with everything in this article and think that overall this is good for real estate owners/investors but there is at least one scenario as residential real estate owners and investors that is negative for our family.
In our case, my wife got her real estate license for the purpose of us buying residential real estate. Aside from being able to see properties when and how we want this also gave us a leg up in offers and negotiations. We found a brokerage with a minimal brokerage transaction fee for my wife to join.
When we make offers we waive nearly all of the buying agent closing costs and ask the seller to cover a lesser amount of closing costs in exchange. This created a win-win for us as buyers and then as sellers as it reduces the overall transaction costs for the seller, reduced our cash outlay for making purchases, and reduced our taxable income (as opposed to receiving the same value paid in closing costs by the seller as commission).
Not sure fully yet if this change will impact our approach but I think it will.
Interesting perspective and important to remember. There may be an abundance of Real Estate Brokers, but consistently 10% do 90 percent of the transactions and have been shown to net more proceeds for the seller. I would say that you are would be wiser to pay a good agent for their skills than to spend your time haggling over that percentage and you could up losing in the long run. The media is showing its bias and would serve the readers better to do more research and look at tbe story from both sides.
The interesting thing is, if real estate commission rates weren’t so high due to the collusion involved, there would be a better match in number of real estate agents (fewer) and number of homes sold.
Unhealthy pricing dynamics not promoted by the free markets causes these type of imbalances.
Dude, there never has been collusion. As an investor, I have sold homes with 1%-2% on each side.
Sounds good. Guess the jury decided otherwise. How did you negotiate selling for only 1% and what did the buyer’s agent earn? What price point was the house? Thanks
In the UK, buyers rarely use a broker. I am not sure why it is different in the U.S.
Also, why is the brokerage fee 100-200% higher than say UK and Australia? Are the U.S. brokers just 100-200% talented, better skilled and/or being that much value?
The ruling will weed out many part-timers and under performers. Those who are top performing will be fine, and may even make more money but with more work.