I took a negotiations class in college and we did real estate one day and the current system has a really blatant flaw, at least in terms of agent incentives. I feel like in the grand scheme of things the buyer agent's pay is not a top 5 issue for housing pricesFreakonomics talk about how on a surface level, its in the best interest for both agents to make the price of the house as high as possible; however, when looking beyond the surface level, that 3% commission, which agents have to give up half or more to their brokers (so each agent only ends up with ~1.5% in their pocket), is so small and it doesnt incentivize any of the agent to negotiate harder on your behalf (e.g., why spent a week or more negotiating and working harder to earn just $150 more by raising the sale price by $10k, or reduce your own pay by lowering the sale price).
I took a negotiations class in college and we did real estate one day and the current system has a really blatant flaw, at least in terms of agent incentives. I feel like in the grand scheme of things the buyer agent's pay is not a top 5 issue for housing pricesFreakonomics talk about how on a surface level, its in the best interest for both agents to make the price of the house as high as possible; however, when looking beyond the surface level, that 3% commission, which agents have to give up half or more to their brokers (so each agent only ends up with ~1.5% in their pocket), is so small and it does not incentivize any of the agent to negotiate harder on your behalf (e.g., why spent a week or more negotiating and working harder to earn just $150 more by raising the sale price by $10k, or reduce your own pay by lowering the sale price).
Thats a huge change, and for first time homeowners, the barrier to owning your own home is raised even higher because you need even more cash upfront.Isnt it more likely that costs go down, as people wont be willing to pay 6%? I feel like this would open the door to budget realtors, online services, etc
Isnt it more likely that costs go down, as people wont be willing to pay 6%? I feel like this would open the door to budget realtors, online services, etcI dont see a reason why the seller would reduce the housing price by 3%.
Agreed. Seeing the discourse surrounding this has actually made me lean against it because the people are celebrating as if real-estate agents are all lazy rich people and as if this will somehow have a drastic reduction in housing prices. If anything, it just benefits the seller/selling agent more.Thats exactly what happened. A coalition of sellers sold the realtor group to make this change.
I dont see a reason why the seller would reduce the housing price by 3%.As far as I understand, sellers were already paying the full 6%: their share and the buyers share.
As far as I understand, sellers were already paying the full 6%: their share and the buyers share.As a seller in todays market, I wouldnt budge at all and laugh at the buyer asking me for sellers assist in paying for the buyers agent fees. Besides, sellers assist applies to the mortgage that the buyer is going to get and doesnt equate to direct cash to them. This wouldnt work, unless its an under the table deal.
Now that the realtor fee is on the buyers shoulders, and the commission rate isnt hard set on 3% for each party, the buyer can either negotiate with the seller for them to pay the fee, or the buyer can go through an inevitable budget option at a much lower percentage.
It seems more likely that the seller would still pick up the fee for both parties as a negotiation tool, but now they wont be paying 6%. Itll be likely to be much less.
This new rule benefits literally everyone but realtors lol
Why are real estate agents still a thing?Property would be one of those things where I'd personally rather involve someone who knows what they're doing.
Property would be one of those things where I'd personally rather involve someone who knows what they're doing.Then you wouldn't want to involve a real estate agent.
Why are real estate agents still a thing?
Makes sense. I'm worried how this will impact new (and low income) home buyers that won't have someone to advocate for them and walk through the process. They may have to pay out of pocket up front, before they can even get an offer in. This will require a revamp of the system altogether.Exactly. I feel like this will hurt new homebuyers significantly by adding yet another thing you need to have in full cash before being able to buy a house.
I think you have a misinformed view of what real estate agents do.
I think you have an misinformed view of what real estate agents do.Having worked with them, no, I have a very informed view of what real estate agents do. Perhaps it is you who is misinformed.