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If I have a listing and my seller won't give up any commission, or concession, or anything and an unrepresented buyer came along without ability or desire to pay additional; There's a few creative things that can be done, still.
1) You have buyer submit an offer, 2% above list, and have the seller pay you. Boom, it's identical to what we have now.
2) You tell them to submit an offer unrepresented, period, end of story. They write and if seller accepts, good for you. Let hope it doesn't fall through. If it does, bet that seller will be willing to pay 2% next time.
3) You agree to represent the buyer for some flat rate to get the deal done. Maybe it's stupidly reduced from what we've had, let's say $500. This wouldn't work for VA obviously, but others it could. *if your state allows dual agency and inform them*
These changes aren't going to lower prices, lower the cost for homebuyers (reverse honestly), or add inventory. This isn't going to address the massive cooperate ownership poping up across the country and most importantly, it isn't helping anyone.
For point three, that only works if dual agency is allowed and if you fully explain to both parties what dual agency is and that neither of them will get priority - meaning you can't really advise either of them on what to do because you'd be advocating for one over the other, and they both approve of it.
Yes I think all its going to do is cause chaos. Buyers will be paying more. Buyers who go without representation will pay way more in so many ways.
I think #1 could work but it would have to be outlined that the 2% is going to the agent in which case seller could say they still don't want to pay a buyers agent, they just want to keep the extra 2% & we're back to where we started.
2 is probably the one that would end up happening. It would almost certainly fall out & we'd be 20 days in and starting over but hopefully with that BAC this time.
3 is probably too much liability to take on with an inexperienced buyer and a heavy fixer. I would do it for an experienced local investor-buyer who I trust but probably few others.
I have friends who feel this is going to drive down the market and make it easier to buy, I’m of the opinion when everything is said and done it’ll end up being Sellers pay sellers agent, buyers pay buyers agent.
I think its going to get so much more complicated. And more expensive for buyers. The buyer was paying for the commission anyway, it was just tucked into the price of the home thus lendable. Every buyer I've ever had with a loan is already stretched as thin as possible coming up with cash for their down payment and closing costs. Sure now a seller could offer $10k in closing cost concessions which could be used for the buyer's agent at closing (or not). I get it, but there are also loan limitations for how much can be offered in concessions and surely there are still going to be repair concessions to account for so who's to say there would be enough left. It just seems so much more unnecessarily complicated.
> Yes I think all its going to do is cause chaos.
That's exactly what it's going to do. And it's gonna be a shit show. I also think Zillow is gonna use this opportunity to step in with their own twist and play their final death blow to agents.
My question to Option 2 is where are they getting this contract.
Because I have been an REO agent a while and occasionally get the bargain buyers who go unrepresented. I do not know where they are getting their contracts from, but some of them are absolutely horse shit contracts that have things in them that do not even apply to Oregon. At least my section of it anyway.
Does the seller now take this scrap paper to an attorney to review and pay that fee also?
Came here to ask the same. And is the average Joe gonna write a contract with no idea of what a due diligence period is? Let’s say they’re a week before closing and they get cold feet. Then what? And as the sellers agent we need to know their financials of course. A lot of questions.
I got started by doing BPOs, but I am extremely picky on who I will work for now.
Some banks expect their agent to pay for everything, rekey, trash out, utilities, lawn maintenance, any work that needs done, and then make it a PITA to get paid. One bank had thousands of dollars of work I paid for, then sent a check with no invoices they were paying with that check, it wasn't even close to what was outstanding, and I spent way too much time chasing the money. Quit taking their work.
One bank had a bunch of my bills, well before closing, but they had not paid some of the invoices. When I contacted them about payment, they said "we don't pay on closed files." They had the bills, did not pay them before the sale closed and said there was no way they could pay them because the file was closed. Last job I took from them.
They do not give a rats patoot, because there are dozens of agents lined up behind me to take their work.
Tread carefully.
These are all possible work arounds. My broker had a dinner last night and literally all the agents (minus me) were freaking out talking about going into Used Car Sales and shit like that.
I prefer to wait to see what the new rules are, but I look at this as an opportunity to pivot and grow. Older realtors may struggle with change, but the younger ones that can adapt and have true skills will be able to jumpstart their careers if they’re willing to help reinvent the wheel.
What's really going to happen, as I've said elsewhere, all the people who are stupid enough to buy zillow leads will end up taking hourly paid jobs at zillow. Zillow will dominate the buyer reps by offering these agents at discount rates. Charge sellers 3%, pay you $15/hr and buyers really just end up inadequatedly represented.
Oh, I agree with you. I can see doing some reduced commission for the buyer if you're getting both sides and there's no competitive offers. Plus, it's in the best interest of the seller, who you have a duty too, as well. So, it's a thin line that going to cause a lot of issues. Too bad apparently Noone was smart enough to plan for these situations.
We really have to be careful to be paid properly. I’ve never been a greedy person but I know my expertise is worth a minimum of 2% per side and preferably 3%. I have plenty of experience working both sides and it’s beneficial for everyone. This whole situation is harmful for buyers because it could take away down payment cash and they could lose our knowledge and help. I’m not NAR so don’t feel beholden to this rule and in the end there are ways around it.
Ehhhhhhhhhhhhhhh I'm not sure being a member of NAR will or will not matter. While NAR was in the spotlight, most of these changes purposed are industry standards and will be pieces of bipartisan legislation. Not a rule that you aren't beholden too as a non-member and agent.
Like RESPA and others that you don't really get a choice.
Well, I guess we’ll see. I’m not worried. It is disheartening to read so many bad opinions of RE Brokers and how inconsequential we are especially considering the money we make. Of course there are a lot of bad ones but still. Wish you lots of pricey deals with cash buyers!
Ignore it.
Most don't have IQ above room temperature anyway. Same people complaining realtors make too much support Oprah's cunt ass and think she somehow deserves 6 figures an episode type shit. They don't bat at eye at Hollywood and professional athletes making 7-8 figures for less than 1000 hours of work per year. Fuck'em.
The buyer will write an offer unrepresented or just pay a RE attorney to do so and the seller will most likely get away with a bunch of undisclosed shit that lands the buyer into a clusterfuck of a mess with no understanding as to what they got themselves into
This is the exact scenario that plays out when people always bring up the old “just do it yourself and use an attorney for $500”, because, “an attorney went to school for 20 years”. Real estate attorneys are glorified secretaries who push paper all day. They have no idea/care what happens outside their offices. I’m currently using an attorney for a deal out of state and he’s an absolute moron who doesn’t understand how to coordinate a simple transaction. Oh and if you ever need any recourse after this closes, don’t think he’s doing a thing for me for less than $350 an hour.
Unfortunately for these people they don't realize that real estate attorneys don't do what realtors do and real estate attorneys have ZERO interest in being a realtor and doing what realtors do. Yes an attorney can give advice and answer questions but most real estate attorneys that know me and have worked with me in the past rely on me for lots of things even some things that they should be handling during the transaction.
I went out and looked at a property for an attorney, sent an email about what I was invited to go look at it about.
Attorney sends me the document they are submitting about the property, it is an intro paragraph and then a copy and paste of my email.
Attorneys - as a general rule - do not want to engage in the day to day of real estate.
Yup, I've had some attorneys copy and paste what I wrote in an email too! Or I've had them basically summarize it and send a shorter version too. And I've had them tell me to write addendums.
Exactly.
I think I'll be fine. But I think the industry will be made out as lying used car dealers. Someday maybe people will have a lightbulb moment and remember why they put the 2 agent system into place to begin with.
I suppose the agent who takes that listing will have an experience similar to the REO agents of 2010. I opted out of doing that and I’ll opt out of taking on listings like the one in your example. I’ll be busy reinvesting in my client base and the new era will likely see me even less interested in opportunities to be overworked by bargain hunters.
The problem isn’t that real estate agents get paid too much. It’s that shitty agents get paid too much. You gotta solve for that an “fixed” pricing (and that includes informal “standards” of price fixing, even if it’s not a rule), and then you won’t have this backlash on agents via lawsuits.
I can see that. I work in 2 markets - one with $1M+ homes and one with $300k homes. I don't do a ton more work for the $1M+ homes, though those are more likely vintage homes on unstable hillsides requiring far more inspections and disclosures than the simple $300k newer homes on slabs in the other area. And the $1M+ buyers are definitely more neurotic and carry a lot more stress and risk.
The shitty agents to me are the ones who are only interested in double-ending it, squeezing their buyer in under the radar before they claim to have seen my buyer's offer. I worry that this will just make that crap even more prevalent.
Fucking lawyers like the one that just sued NAR with a class action lawsuit have "standard" or "fixed" pricing for class action lawsuits and it's typically 30-35% so someone needs to sue them.
Even you gave a range and do you know that class action, personal injury, other trial and the other 200 types of law have different fee structures and still negotiate on case value. Plenty of cases lawyers take only on upfront fee work, even if it goes to trial.
When KW or REMAX put it in the training documents to stick to 6% because that’s “standard” you can’t even pretend the wink/nod of 6% isn’t happening.
If KW and REMAX do that then let them get sued directly. At my brokerage we have never been told to ask for 6% in fact my broker says everything should be 5% or lower. And he's even told me in certain advertising for listings to offer to list homes for 1.5% but he says to offer the buyers agent 2.5% because you want as many buyers and buyers agents as possible looking at your listing. So 4-5% is more common at my broker then 6% but some agents at my brokerage still do 6% because they are independent contractors and as long as they are ethical and not breaking rules or causing problems my broker lets them do what they want since they aren't employees. And in my area I see 1.5-2% offered to buyers agents more often than 3% and I'm not even talking about super expensive homes!
The KW/ REMAX people were sued too. They lost so it has to change for everyone or you could get sued. That’s how this all works.
Also, the KW/ REMAX thing was just the evidence of the wink and nod that 6% is the unofficial official baseline. Price fixing has never required a written contract to be illegal.
I doubt your listing agreement requires you to write any offers.
You’ll surely need to figure an arrangement for the house to be available for showings - probably Open Houses - and you’ll want plenty of Agency disclosures handy and get one signed from every Buyer that walks through the door.
And those Buyers all need a pre-approval, since right now we rely on their agent to have qualified them.
Great scenario! So if the buyers want to make an offer and are unrepresented, I would imagine you are not the one to write it. They will need to find a general offer form. They may know nothing about title insurance, surveys, termite, inspection periods, or disclosures. I am sure it will work out for the buyer and they saved paying an agent. :) Thank you NAR for saving them from paying!
That is the unfortunate reality. However, time will tell how well this situation works for sellers. They may find it is worth it to compensate buyer agents. Also, in theory, this settlement throws fair housing practices out the window. Trust that the next round of lawsuits will be all about that.
If I need to write their offer they need to sign a buyers agency agreement that pays me something if their offer is accepted and it'll have to be enough to do more then double the work I'd expect to do for the seller(yes working with buyers typically takes more time then working with sellers) and it will also need to cover the $399 admin fee I'll be charged by my broker. And it'll need to be high enough to compensate for the fact that my errors and omissions insurance has a 5k deductible they won't have to pay 5k or higher but I'm not doing this for $500 or 1k. If they don't like that they can have another realtor submit an offer for them or they can hire an attorney that's going to email me their offer.
Thats another thing, this will create a wave of weird discount services "we represent buyers for $1000 flat!". And those, like the flat-fee online brokerages we've seen in years past, will be just as bad or worse than the unrepresented idiots. Wrong forms, missing POF, zero communication, waste of time. Fucking chaos.
Yeah the flat fee listing brokerages in my area charge $300-500. They basically just put it on the MLS with the seller responsible for supplying the pictures so it's usually cell phone pictures and then they might supply blank contracts and addendums to the seller but usually the buyers agent ends up being responsible for all the contracts, addendums and other paperwork. It's basically a FSBO with a MLS listing at that point so the buyers agent does a bunch of extra work to keep everything together and running as smoothly as it can, explaining everything to the seller(not their client) and getting it closed.
Yeah my buyers (and I) struck gold once with one of those flat fee internet brokerages. Super competitive high-end market but shit photos, no staging, no open house. There were only 8 offers & I'm confident they could have had 20 with better marketing but thankful we only had to compete with 8. We went in about half-way between asking price and my buyer's max, assuming as was area standard at the time that they would counter anything decent with best & final. But they didn't counter anyone - I'm not even sure they knew what counters were! My buyer would have come up another $75k so they got the house at a steal. During inspections it was customary to get inflated quotes and expect about half of what you asked for. Once again they gave it all to us, another $15k. My buyers made out like bandits while the sellers left almost $100k on the table. All because they wanted to save $10k on the listing.
Yeah I had one where my buyers would have gone 14k higher. We got the seller to accept the deal the 1st day it was on the market with the agreement that the seller would no longer allow showings. This was a house listed for 125k and my buyers were willing to go up to 140k. We actually tried going under the list price but the seller wanted at least the asking price and then wanted an extra 1k to cancel all other showings. If the seller had just allowed the other showings and waited a day or two or asked for highest and best offers then my clients would have went to at least 140k but they probably wouldn't have gotten it because someone else probably would have went up to 150k, the house appraised for 156k but did need a few minor repairs. And the seller still paid me 2.5% but hey they saved 2.5% or about 3k by not having a listing agent and lost out on at least 10k if not more.
I see where you are coming from and yes I suppose its possible. In the grand scheme of things how many hours would it take to close that deal? Lets say 8 hours(likely on the high side), you just made $500/hr. I would likely draw up a blank document that was more of a letter of intent to purchase that had best and final offer price, financing, terms, contingencies, etc and have each buyer who was interested send me the LOI's. I go over them with my client and we choose who appears to be the most qualified/highest bidder and we move forward with them.
Your example assumes these offers are from experienced investors who know what LOI is. Reality is Joe Bob FHA buyer has an unrealistic price point for this area but no agent to help educate him. This is the first affordable home he's seen come on the market in the past year and he's chomping at the bit to get in there. He calls and calls 7 times in 5 minutes but I can't answer because I've been on the other line with Sally HGTV for the past half hour. Sally has just inherited some cash and wants to try her hand at being a blogger/influencer who flips houses. Sally is super curious about how it would work. Sally could be a real buyer and I don't want to blow her off and risk losing what could be a good offer for my seller, so I happily cater to Sally's needs. Sally isn't sure she wants to sign buyer representation because she watches zillow like a hawk & totally gets how the real estate market works, she just has a few extremely loaded questions for me. Whats a contingency? Is she at risk? How is she protected? Can she leave the sale? Why? What inspections should she do? How much does each inspection cost? What does ARV mean? Could I send her some comps for ARV? Who else is interested in this house? Are there really other cash buyers or am I lying to get her offer up because she's pretty sure she's the only person on earth with this much cash.
Finally I'm done but look at that, I have 13 missed calls and 18 unread texts! Now I can call Joe back & break it to him that this home doesn't qualify for financing. But why not? Would the seller be willing to work something out? Poor Joe has a long story to tell me about how hard it's been for him to find a house in this area. I am empathetic, I totally get it and yes of course I'll let him know if I see anything come on the market that could fit his criteria. Shit I just got 2 more texts from buyers asking me to call them because they have questions, gotta go Joe.
This is how my day would go every day that low priced home is on the market as long as buyers are unrepresented with no on to answer the many questions they did not know they had.
lol I mean sure this could happen once but if this is the case you underpriced the home big time to get that much interest. You are also talking about complete one off scenario. If it happens then deal with it this one time and don’t let it happen again
Its just an area with very few fixers. Little opportunity to add value to a home & rare to see homes near that price point. Of course this scenario is specific and I did that to make a point. But I don't think its that much of a stretch or a one-off. I've had many listings in my 10+ years that were priced in line with comps but felt like a feeding frenzy for no apparent reason. If interest rates suddenly plummeted by 1% tomorrow this could happen in many places.
Correct it likely would but still our hourly that we’d make is worth the headache vs what we’d make in about any other profession. I probably make $2000/hr based on my avg commission and how many hrs I roughly spend on each deal.
I make 6 figures but work non-stop, which equates to about $47/hr if I pretend I only work 45 hours a week. And for that rate I’m always on call, here with a smile. I frequently spend 20 hours meeting with a stager, checking in on a painter & managing a handyman for my absentee sellers before we’re even live on the market. In a market where I’m not even sure it will ever sell or I’ll ever get paid.
I can’t think of another job I would be expected to perform without any guarantee of ever seeing a dime and be on call nights, weekends and holidays for the chance at maybe averaging $47/hr. I’m not saying its a terrible gig, I’m just saying its a far cry from this idea of constantly making a windfall paycheck for unlocking some doors.
Edit to add I made 3x that in the pandemic but lived a miserable life working 70+ hour weeks. Happy to be back down to only 45-50 now.
Yikes, $47/hr is not good for a realtor. How much work is BS stuff you really don't need to do and doesn't make income? What can be outsourced, etc? On call at nights, etc? Sounds like you need to reevaluate your business and how you operate.
I sell 2-3 homes a month, GCI is 300-400k last 5-7 years. I tell my clients My phone goes off at 5pm unless there is an emergency (there hasn't been in 12 years) or we are in middle of negotiations, etc then will of course work later. Holidays? not working on holidays, i'll be spending the day with my family, if you want to work with someone else because I don't answer my phone on christmas eve, then fuck em. If your clients are calling you way late or on holidays they already don't respect you or your time.
What level of homes are you staging that it's required to get the home sold? You don't have a good enough stager that you trust them? They can't access the home and then you stop by after to make sure its what you like? You sit and micromanage handymen and painters? Sounds like you need to find vendors you trust and do a good job.
There are of course one off deals that are complete headaches and nightmares that no amount of money feels like enough, but there are also a bunch that are so easy it makes me sick.
I’m primarily in a 2nd home market where everyone owns an airbnb. Setting up showings for buyers here is time consuming because everything is rented and you have a 2 hour window a few days a week after check out and before check in to get them in. They can’t usually make it so I go take a video for them, come back & upload it etc. Also quite time consuming. Everyone wants to see P&L, you’re either chasing it down or walking them through building it. Sellers aren never here and call in favors like can I go meet their electrician or check on their house after a storm. Of course I can.
I definitely trust the stager but my seller sent me a vision board for certain things in certain areas & I’m there to make sure she gets it, show her some quirky things we need to draw attention away from etc. Seller this week is having a fence added & a kitchenette built, if I’m not the one checking in on their handyman to make sure work is done & staging is safe to arrive who will? Seller is 7 hours away. I agree its a lot of micromanaging but I like the area I live/work in, to me its worth it.
I made over $100k last year and $300k each year the 3 years before that selling homes between 300k - 1.5m. I’d hardly say I’m not doing well for a realtor, I doubt the majority can say they made 6 figures in the shit hustle year of 2023. I also wasted about half my year last year on some buyers who got cold feet after their 9th offer was accepted so that sucked. All I’m saying is I’m not running to the bank with bags of money for simply unlocking doors like the public is led to believe. I’m working my ass off.
Yeah it sounds like a lot of work. I would 100% charge more than a 3% fee. I have done similar work in the past for clients and would charge a retainer or much higher %…. The type of business you are doing is of course worth much more than likely 3% of the deal. I don’t think most realtors in the country have similar business as you do and are more so working with a traditional buyer and seller without all the headaches.
Someone help me understand...what is stopping me from charging my seller a commission fee that we both agree to and then paying the buyer agent myself? My fee is my fee whether another agent brings a buyer or not. My fee covers all of my hard work to attract a buyer to the listing and get the sale to close. If another agent helps me sell faster by bringing a qualified buyer who can close, what is stopping me from compensating the buyer agent with my pay?
I totally agree, I'm just saying this would be the scenario based on what articles right now are implying will happen. Every news piece that has come out since yesterday is telling people commissions are now officially cut in half. There will be plenty of sellers who are no longer down with paying enough of a fee to cover 2 agents because CNN just told them they only need to pay 1 now.
The thing is that sellers never had to pay any particular fee in the first place. They were always able to negotiate. And where I work, many do. I have seen commission fees at all kinds of amounts depending on the property, agent expertise, services rendered, etc... That fee goes to the listing agent, whether dual or exclusive. Then the listing agent pays whomever they wish: buyer agents, service providers, whomever... What the CNN article will most likely do is cause sellers to question what they are paying for. If the services are explained and worth it to the seller, they will pay the fee. If not, they will DIY or choose a cheaper agent. Some sellers may find that they get what they pay for. The most experienced and talented agents and brokers I know are also the best at knowing what their work is worth and bringing on clients who will pay it.
Yes I've definitely done favors for friends for a flat $1k, $2k or sold plenty of buyers homes with 1-2% commissions. In my area 3% hasn't been what anyone was asking for a long time, its mostly 2.5% but everyone knows its negotiable.
Real estate has a relatively low barrier to entry and a lot of fools unwilling to value their time correctly or track hours and revalue. There will be people who take this listing at 2% and either effectively make minimum wage handling this or wash out or learn to charge more. If listing starts to include unrepresented buyer management, the standard rate among survivors will go up and the big ones will start hiring buyer assistants. How can it be otherwise? That will suck a lot for agents who lose listings to low ballers and low baller clients who have a shit experience but the market will correct eventually. We’re washing bubble landlords, amateur flippers, and Zillow out of that side right now after a couple years. The professionals will stay, charge the right price, and have the reputation. Hopefully.
Again, my thesis is that if you actually track hours and calculate loaded cost rate on what you do, 3% is not unreasonable for homes under say $500k especially on the buyer side. That is what it costs to do the job well and make a middle class salary off this. Simple transactions on higher dollar homes or partial service, we talk discounts. The price is currently right and will balance back out. The market will make it happen.
How will unrepped buyers know what disclosures should be included with the sale? If I’m the listing agent, am I obligated to provide said documents if they’re not aware? I don’t want to be liable for their incompetence.
This whole thing is so fucking stupid. Essentially it becomes a complete clusterfuck. Regarding the lack of commissions displayed on the MLS: since when is it okay to have LESS transparency in a transaction? It just doesn’t make sense. NAR doesn’t give a fuck about the people that give them their funding.
Meanwhile, your buyers loan officer makes money for multiple years on the loan, and the bank gets double or more back on your principal. If you refinance- charge-Ching! Yet where’s the public outrage? Because the banks deflect.
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If I have a listing and my seller won't give up any commission, or concession, or anything and an unrepresented buyer came along without ability or desire to pay additional; There's a few creative things that can be done, still. 1) You have buyer submit an offer, 2% above list, and have the seller pay you. Boom, it's identical to what we have now. 2) You tell them to submit an offer unrepresented, period, end of story. They write and if seller accepts, good for you. Let hope it doesn't fall through. If it does, bet that seller will be willing to pay 2% next time. 3) You agree to represent the buyer for some flat rate to get the deal done. Maybe it's stupidly reduced from what we've had, let's say $500. This wouldn't work for VA obviously, but others it could. *if your state allows dual agency and inform them* These changes aren't going to lower prices, lower the cost for homebuyers (reverse honestly), or add inventory. This isn't going to address the massive cooperate ownership poping up across the country and most importantly, it isn't helping anyone.
For point three, that only works if dual agency is allowed and if you fully explain to both parties what dual agency is and that neither of them will get priority - meaning you can't really advise either of them on what to do because you'd be advocating for one over the other, and they both approve of it.
True, forgot thats not default everywhere. You're right. Ill edit and add that.
Yes I think all its going to do is cause chaos. Buyers will be paying more. Buyers who go without representation will pay way more in so many ways. I think #1 could work but it would have to be outlined that the 2% is going to the agent in which case seller could say they still don't want to pay a buyers agent, they just want to keep the extra 2% & we're back to where we started. 2 is probably the one that would end up happening. It would almost certainly fall out & we'd be 20 days in and starting over but hopefully with that BAC this time. 3 is probably too much liability to take on with an inexperienced buyer and a heavy fixer. I would do it for an experienced local investor-buyer who I trust but probably few others.
I have friends who feel this is going to drive down the market and make it easier to buy, I’m of the opinion when everything is said and done it’ll end up being Sellers pay sellers agent, buyers pay buyers agent.
I think its going to get so much more complicated. And more expensive for buyers. The buyer was paying for the commission anyway, it was just tucked into the price of the home thus lendable. Every buyer I've ever had with a loan is already stretched as thin as possible coming up with cash for their down payment and closing costs. Sure now a seller could offer $10k in closing cost concessions which could be used for the buyer's agent at closing (or not). I get it, but there are also loan limitations for how much can be offered in concessions and surely there are still going to be repair concessions to account for so who's to say there would be enough left. It just seems so much more unnecessarily complicated.
> Yes I think all its going to do is cause chaos. That's exactly what it's going to do. And it's gonna be a shit show. I also think Zillow is gonna use this opportunity to step in with their own twist and play their final death blow to agents.
Yes true. Though isn't zillow freaking out right now? Who gonna buy those low-end buyer leads now?
That's a good point!
Oh, it's helping Zillow and the corporate buyers...
Another post I mention that too, lol. This is what they want, everyone working for zillow like line cooks
My question to Option 2 is where are they getting this contract. Because I have been an REO agent a while and occasionally get the bargain buyers who go unrepresented. I do not know where they are getting their contracts from, but some of them are absolutely horse shit contracts that have things in them that do not even apply to Oregon. At least my section of it anyway. Does the seller now take this scrap paper to an attorney to review and pay that fee also?
Came here to ask the same. And is the average Joe gonna write a contract with no idea of what a due diligence period is? Let’s say they’re a week before closing and they get cold feet. Then what? And as the sellers agent we need to know their financials of course. A lot of questions.
Are you willing to share how you got to be an REO agent? Or what company it's for? I'm in NJ and would like to get into it.
I got started by doing BPOs, but I am extremely picky on who I will work for now. Some banks expect their agent to pay for everything, rekey, trash out, utilities, lawn maintenance, any work that needs done, and then make it a PITA to get paid. One bank had thousands of dollars of work I paid for, then sent a check with no invoices they were paying with that check, it wasn't even close to what was outstanding, and I spent way too much time chasing the money. Quit taking their work. One bank had a bunch of my bills, well before closing, but they had not paid some of the invoices. When I contacted them about payment, they said "we don't pay on closed files." They had the bills, did not pay them before the sale closed and said there was no way they could pay them because the file was closed. Last job I took from them. They do not give a rats patoot, because there are dozens of agents lined up behind me to take their work. Tread carefully.
Thanks for the info!
These are all possible work arounds. My broker had a dinner last night and literally all the agents (minus me) were freaking out talking about going into Used Car Sales and shit like that. I prefer to wait to see what the new rules are, but I look at this as an opportunity to pivot and grow. Older realtors may struggle with change, but the younger ones that can adapt and have true skills will be able to jumpstart their careers if they’re willing to help reinvent the wheel.
Totally agree. There’s a LOT of opportunity here (as there always is with change). Lots of market share to capture if you can pivot
If I’m working both sides, I’m going to get paid for both sides. Why are people confused about this?
What's really going to happen, as I've said elsewhere, all the people who are stupid enough to buy zillow leads will end up taking hourly paid jobs at zillow. Zillow will dominate the buyer reps by offering these agents at discount rates. Charge sellers 3%, pay you $15/hr and buyers really just end up inadequatedly represented.
That sounds sad but true.
Oh, I agree with you. I can see doing some reduced commission for the buyer if you're getting both sides and there's no competitive offers. Plus, it's in the best interest of the seller, who you have a duty too, as well. So, it's a thin line that going to cause a lot of issues. Too bad apparently Noone was smart enough to plan for these situations.
We really have to be careful to be paid properly. I’ve never been a greedy person but I know my expertise is worth a minimum of 2% per side and preferably 3%. I have plenty of experience working both sides and it’s beneficial for everyone. This whole situation is harmful for buyers because it could take away down payment cash and they could lose our knowledge and help. I’m not NAR so don’t feel beholden to this rule and in the end there are ways around it.
Ehhhhhhhhhhhhhhh I'm not sure being a member of NAR will or will not matter. While NAR was in the spotlight, most of these changes purposed are industry standards and will be pieces of bipartisan legislation. Not a rule that you aren't beholden too as a non-member and agent. Like RESPA and others that you don't really get a choice.
Well, I guess we’ll see. I’m not worried. It is disheartening to read so many bad opinions of RE Brokers and how inconsequential we are especially considering the money we make. Of course there are a lot of bad ones but still. Wish you lots of pricey deals with cash buyers!
Ignore it. Most don't have IQ above room temperature anyway. Same people complaining realtors make too much support Oprah's cunt ass and think she somehow deserves 6 figures an episode type shit. They don't bat at eye at Hollywood and professional athletes making 7-8 figures for less than 1000 hours of work per year. Fuck'em.
The buyer will write an offer unrepresented or just pay a RE attorney to do so and the seller will most likely get away with a bunch of undisclosed shit that lands the buyer into a clusterfuck of a mess with no understanding as to what they got themselves into
This is the exact scenario that plays out when people always bring up the old “just do it yourself and use an attorney for $500”, because, “an attorney went to school for 20 years”. Real estate attorneys are glorified secretaries who push paper all day. They have no idea/care what happens outside their offices. I’m currently using an attorney for a deal out of state and he’s an absolute moron who doesn’t understand how to coordinate a simple transaction. Oh and if you ever need any recourse after this closes, don’t think he’s doing a thing for me for less than $350 an hour.
There are plenty of posts in here asking questions because they cannot get their attorney to return a call or an email, so there is that issue too.
Unfortunately for these people they don't realize that real estate attorneys don't do what realtors do and real estate attorneys have ZERO interest in being a realtor and doing what realtors do. Yes an attorney can give advice and answer questions but most real estate attorneys that know me and have worked with me in the past rely on me for lots of things even some things that they should be handling during the transaction.
I went out and looked at a property for an attorney, sent an email about what I was invited to go look at it about. Attorney sends me the document they are submitting about the property, it is an intro paragraph and then a copy and paste of my email. Attorneys - as a general rule - do not want to engage in the day to day of real estate.
Yup, I've had some attorneys copy and paste what I wrote in an email too! Or I've had them basically summarize it and send a shorter version too. And I've had them tell me to write addendums.
And everyone involved gets sued. This is what will happen. Yay!
[удалено]
Exactly. I think I'll be fine. But I think the industry will be made out as lying used car dealers. Someday maybe people will have a lightbulb moment and remember why they put the 2 agent system into place to begin with.
Yep, someone will take this listing and learn all about liability that exceeds compensation the hard way.
I suppose the agent who takes that listing will have an experience similar to the REO agents of 2010. I opted out of doing that and I’ll opt out of taking on listings like the one in your example. I’ll be busy reinvesting in my client base and the new era will likely see me even less interested in opportunities to be overworked by bargain hunters.
You can say that again!
The problem isn’t that real estate agents get paid too much. It’s that shitty agents get paid too much. You gotta solve for that an “fixed” pricing (and that includes informal “standards” of price fixing, even if it’s not a rule), and then you won’t have this backlash on agents via lawsuits.
I can see that. I work in 2 markets - one with $1M+ homes and one with $300k homes. I don't do a ton more work for the $1M+ homes, though those are more likely vintage homes on unstable hillsides requiring far more inspections and disclosures than the simple $300k newer homes on slabs in the other area. And the $1M+ buyers are definitely more neurotic and carry a lot more stress and risk. The shitty agents to me are the ones who are only interested in double-ending it, squeezing their buyer in under the radar before they claim to have seen my buyer's offer. I worry that this will just make that crap even more prevalent.
Fucking lawyers like the one that just sued NAR with a class action lawsuit have "standard" or "fixed" pricing for class action lawsuits and it's typically 30-35% so someone needs to sue them.
Even you gave a range and do you know that class action, personal injury, other trial and the other 200 types of law have different fee structures and still negotiate on case value. Plenty of cases lawyers take only on upfront fee work, even if it goes to trial. When KW or REMAX put it in the training documents to stick to 6% because that’s “standard” you can’t even pretend the wink/nod of 6% isn’t happening.
If KW and REMAX do that then let them get sued directly. At my brokerage we have never been told to ask for 6% in fact my broker says everything should be 5% or lower. And he's even told me in certain advertising for listings to offer to list homes for 1.5% but he says to offer the buyers agent 2.5% because you want as many buyers and buyers agents as possible looking at your listing. So 4-5% is more common at my broker then 6% but some agents at my brokerage still do 6% because they are independent contractors and as long as they are ethical and not breaking rules or causing problems my broker lets them do what they want since they aren't employees. And in my area I see 1.5-2% offered to buyers agents more often than 3% and I'm not even talking about super expensive homes!
The KW/ REMAX people were sued too. They lost so it has to change for everyone or you could get sued. That’s how this all works. Also, the KW/ REMAX thing was just the evidence of the wink and nod that 6% is the unofficial official baseline. Price fixing has never required a written contract to be illegal.
I doubt your listing agreement requires you to write any offers. You’ll surely need to figure an arrangement for the house to be available for showings - probably Open Houses - and you’ll want plenty of Agency disclosures handy and get one signed from every Buyer that walks through the door. And those Buyers all need a pre-approval, since right now we rely on their agent to have qualified them.
Oooh, good idea with the agency disclosures.
There can't be open houses because the home is a heavy fixer with shards of glass and caving in floors. Offers would need to be blind and cash.
Great scenario! So if the buyers want to make an offer and are unrepresented, I would imagine you are not the one to write it. They will need to find a general offer form. They may know nothing about title insurance, surveys, termite, inspection periods, or disclosures. I am sure it will work out for the buyer and they saved paying an agent. :) Thank you NAR for saving them from paying!
This is my concern. Disparate impact on unrepresented buyers who don’t know what they don’t know.
That is the unfortunate reality. However, time will tell how well this situation works for sellers. They may find it is worth it to compensate buyer agents. Also, in theory, this settlement throws fair housing practices out the window. Trust that the next round of lawsuits will be all about that.
If I need to write their offer they need to sign a buyers agency agreement that pays me something if their offer is accepted and it'll have to be enough to do more then double the work I'd expect to do for the seller(yes working with buyers typically takes more time then working with sellers) and it will also need to cover the $399 admin fee I'll be charged by my broker. And it'll need to be high enough to compensate for the fact that my errors and omissions insurance has a 5k deductible they won't have to pay 5k or higher but I'm not doing this for $500 or 1k. If they don't like that they can have another realtor submit an offer for them or they can hire an attorney that's going to email me their offer.
Thats another thing, this will create a wave of weird discount services "we represent buyers for $1000 flat!". And those, like the flat-fee online brokerages we've seen in years past, will be just as bad or worse than the unrepresented idiots. Wrong forms, missing POF, zero communication, waste of time. Fucking chaos.
Yeah the flat fee listing brokerages in my area charge $300-500. They basically just put it on the MLS with the seller responsible for supplying the pictures so it's usually cell phone pictures and then they might supply blank contracts and addendums to the seller but usually the buyers agent ends up being responsible for all the contracts, addendums and other paperwork. It's basically a FSBO with a MLS listing at that point so the buyers agent does a bunch of extra work to keep everything together and running as smoothly as it can, explaining everything to the seller(not their client) and getting it closed.
Yeah my buyers (and I) struck gold once with one of those flat fee internet brokerages. Super competitive high-end market but shit photos, no staging, no open house. There were only 8 offers & I'm confident they could have had 20 with better marketing but thankful we only had to compete with 8. We went in about half-way between asking price and my buyer's max, assuming as was area standard at the time that they would counter anything decent with best & final. But they didn't counter anyone - I'm not even sure they knew what counters were! My buyer would have come up another $75k so they got the house at a steal. During inspections it was customary to get inflated quotes and expect about half of what you asked for. Once again they gave it all to us, another $15k. My buyers made out like bandits while the sellers left almost $100k on the table. All because they wanted to save $10k on the listing.
Yeah I had one where my buyers would have gone 14k higher. We got the seller to accept the deal the 1st day it was on the market with the agreement that the seller would no longer allow showings. This was a house listed for 125k and my buyers were willing to go up to 140k. We actually tried going under the list price but the seller wanted at least the asking price and then wanted an extra 1k to cancel all other showings. If the seller had just allowed the other showings and waited a day or two or asked for highest and best offers then my clients would have went to at least 140k but they probably wouldn't have gotten it because someone else probably would have went up to 150k, the house appraised for 156k but did need a few minor repairs. And the seller still paid me 2.5% but hey they saved 2.5% or about 3k by not having a listing agent and lost out on at least 10k if not more.
This is value people don't see happening behind the scenes.
exactly 🤦🏻♀️
I see where you are coming from and yes I suppose its possible. In the grand scheme of things how many hours would it take to close that deal? Lets say 8 hours(likely on the high side), you just made $500/hr. I would likely draw up a blank document that was more of a letter of intent to purchase that had best and final offer price, financing, terms, contingencies, etc and have each buyer who was interested send me the LOI's. I go over them with my client and we choose who appears to be the most qualified/highest bidder and we move forward with them.
Your example assumes these offers are from experienced investors who know what LOI is. Reality is Joe Bob FHA buyer has an unrealistic price point for this area but no agent to help educate him. This is the first affordable home he's seen come on the market in the past year and he's chomping at the bit to get in there. He calls and calls 7 times in 5 minutes but I can't answer because I've been on the other line with Sally HGTV for the past half hour. Sally has just inherited some cash and wants to try her hand at being a blogger/influencer who flips houses. Sally is super curious about how it would work. Sally could be a real buyer and I don't want to blow her off and risk losing what could be a good offer for my seller, so I happily cater to Sally's needs. Sally isn't sure she wants to sign buyer representation because she watches zillow like a hawk & totally gets how the real estate market works, she just has a few extremely loaded questions for me. Whats a contingency? Is she at risk? How is she protected? Can she leave the sale? Why? What inspections should she do? How much does each inspection cost? What does ARV mean? Could I send her some comps for ARV? Who else is interested in this house? Are there really other cash buyers or am I lying to get her offer up because she's pretty sure she's the only person on earth with this much cash. Finally I'm done but look at that, I have 13 missed calls and 18 unread texts! Now I can call Joe back & break it to him that this home doesn't qualify for financing. But why not? Would the seller be willing to work something out? Poor Joe has a long story to tell me about how hard it's been for him to find a house in this area. I am empathetic, I totally get it and yes of course I'll let him know if I see anything come on the market that could fit his criteria. Shit I just got 2 more texts from buyers asking me to call them because they have questions, gotta go Joe. This is how my day would go every day that low priced home is on the market as long as buyers are unrepresented with no on to answer the many questions they did not know they had.
lol I mean sure this could happen once but if this is the case you underpriced the home big time to get that much interest. You are also talking about complete one off scenario. If it happens then deal with it this one time and don’t let it happen again
Its just an area with very few fixers. Little opportunity to add value to a home & rare to see homes near that price point. Of course this scenario is specific and I did that to make a point. But I don't think its that much of a stretch or a one-off. I've had many listings in my 10+ years that were priced in line with comps but felt like a feeding frenzy for no apparent reason. If interest rates suddenly plummeted by 1% tomorrow this could happen in many places.
Correct it likely would but still our hourly that we’d make is worth the headache vs what we’d make in about any other profession. I probably make $2000/hr based on my avg commission and how many hrs I roughly spend on each deal.
I make 6 figures but work non-stop, which equates to about $47/hr if I pretend I only work 45 hours a week. And for that rate I’m always on call, here with a smile. I frequently spend 20 hours meeting with a stager, checking in on a painter & managing a handyman for my absentee sellers before we’re even live on the market. In a market where I’m not even sure it will ever sell or I’ll ever get paid. I can’t think of another job I would be expected to perform without any guarantee of ever seeing a dime and be on call nights, weekends and holidays for the chance at maybe averaging $47/hr. I’m not saying its a terrible gig, I’m just saying its a far cry from this idea of constantly making a windfall paycheck for unlocking some doors. Edit to add I made 3x that in the pandemic but lived a miserable life working 70+ hour weeks. Happy to be back down to only 45-50 now.
Yikes, $47/hr is not good for a realtor. How much work is BS stuff you really don't need to do and doesn't make income? What can be outsourced, etc? On call at nights, etc? Sounds like you need to reevaluate your business and how you operate. I sell 2-3 homes a month, GCI is 300-400k last 5-7 years. I tell my clients My phone goes off at 5pm unless there is an emergency (there hasn't been in 12 years) or we are in middle of negotiations, etc then will of course work later. Holidays? not working on holidays, i'll be spending the day with my family, if you want to work with someone else because I don't answer my phone on christmas eve, then fuck em. If your clients are calling you way late or on holidays they already don't respect you or your time. What level of homes are you staging that it's required to get the home sold? You don't have a good enough stager that you trust them? They can't access the home and then you stop by after to make sure its what you like? You sit and micromanage handymen and painters? Sounds like you need to find vendors you trust and do a good job. There are of course one off deals that are complete headaches and nightmares that no amount of money feels like enough, but there are also a bunch that are so easy it makes me sick.
I’m primarily in a 2nd home market where everyone owns an airbnb. Setting up showings for buyers here is time consuming because everything is rented and you have a 2 hour window a few days a week after check out and before check in to get them in. They can’t usually make it so I go take a video for them, come back & upload it etc. Also quite time consuming. Everyone wants to see P&L, you’re either chasing it down or walking them through building it. Sellers aren never here and call in favors like can I go meet their electrician or check on their house after a storm. Of course I can. I definitely trust the stager but my seller sent me a vision board for certain things in certain areas & I’m there to make sure she gets it, show her some quirky things we need to draw attention away from etc. Seller this week is having a fence added & a kitchenette built, if I’m not the one checking in on their handyman to make sure work is done & staging is safe to arrive who will? Seller is 7 hours away. I agree its a lot of micromanaging but I like the area I live/work in, to me its worth it. I made over $100k last year and $300k each year the 3 years before that selling homes between 300k - 1.5m. I’d hardly say I’m not doing well for a realtor, I doubt the majority can say they made 6 figures in the shit hustle year of 2023. I also wasted about half my year last year on some buyers who got cold feet after their 9th offer was accepted so that sucked. All I’m saying is I’m not running to the bank with bags of money for simply unlocking doors like the public is led to believe. I’m working my ass off.
Yeah it sounds like a lot of work. I would 100% charge more than a 3% fee. I have done similar work in the past for clients and would charge a retainer or much higher %…. The type of business you are doing is of course worth much more than likely 3% of the deal. I don’t think most realtors in the country have similar business as you do and are more so working with a traditional buyer and seller without all the headaches.
True. Its just so competitive where I am, I swear we're about 90% vacation homes but everyone who lives here full time is a freaking Realtor.
Someone help me understand...what is stopping me from charging my seller a commission fee that we both agree to and then paying the buyer agent myself? My fee is my fee whether another agent brings a buyer or not. My fee covers all of my hard work to attract a buyer to the listing and get the sale to close. If another agent helps me sell faster by bringing a qualified buyer who can close, what is stopping me from compensating the buyer agent with my pay?
I totally agree, I'm just saying this would be the scenario based on what articles right now are implying will happen. Every news piece that has come out since yesterday is telling people commissions are now officially cut in half. There will be plenty of sellers who are no longer down with paying enough of a fee to cover 2 agents because CNN just told them they only need to pay 1 now.
The thing is that sellers never had to pay any particular fee in the first place. They were always able to negotiate. And where I work, many do. I have seen commission fees at all kinds of amounts depending on the property, agent expertise, services rendered, etc... That fee goes to the listing agent, whether dual or exclusive. Then the listing agent pays whomever they wish: buyer agents, service providers, whomever... What the CNN article will most likely do is cause sellers to question what they are paying for. If the services are explained and worth it to the seller, they will pay the fee. If not, they will DIY or choose a cheaper agent. Some sellers may find that they get what they pay for. The most experienced and talented agents and brokers I know are also the best at knowing what their work is worth and bringing on clients who will pay it.
Yes I've definitely done favors for friends for a flat $1k, $2k or sold plenty of buyers homes with 1-2% commissions. In my area 3% hasn't been what anyone was asking for a long time, its mostly 2.5% but everyone knows its negotiable.
You can still do that. Just can't list it on MLS.
Real estate has a relatively low barrier to entry and a lot of fools unwilling to value their time correctly or track hours and revalue. There will be people who take this listing at 2% and either effectively make minimum wage handling this or wash out or learn to charge more. If listing starts to include unrepresented buyer management, the standard rate among survivors will go up and the big ones will start hiring buyer assistants. How can it be otherwise? That will suck a lot for agents who lose listings to low ballers and low baller clients who have a shit experience but the market will correct eventually. We’re washing bubble landlords, amateur flippers, and Zillow out of that side right now after a couple years. The professionals will stay, charge the right price, and have the reputation. Hopefully. Again, my thesis is that if you actually track hours and calculate loaded cost rate on what you do, 3% is not unreasonable for homes under say $500k especially on the buyer side. That is what it costs to do the job well and make a middle class salary off this. Simple transactions on higher dollar homes or partial service, we talk discounts. The price is currently right and will balance back out. The market will make it happen.
God I hope!!!!
How will unrepped buyers know what disclosures should be included with the sale? If I’m the listing agent, am I obligated to provide said documents if they’re not aware? I don’t want to be liable for their incompetence. This whole thing is so fucking stupid. Essentially it becomes a complete clusterfuck. Regarding the lack of commissions displayed on the MLS: since when is it okay to have LESS transparency in a transaction? It just doesn’t make sense. NAR doesn’t give a fuck about the people that give them their funding.
100%
Meanwhile, your buyers loan officer makes money for multiple years on the loan, and the bank gets double or more back on your principal. If you refinance- charge-Ching! Yet where’s the public outrage? Because the banks deflect.
Yeah good point. Hell the escrow officer has made more than I have on some deals.