The new NAR rules have actually made buyer agent commissions go up not down
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
The new NAR rules have actually made buyer agent commissions go up not down
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2yI gave an interview to Axios last December where I predicted that average commission rates were likely to go higher due to due to the likely outcome of the class action suit.
Sure enough, a settlement was announced months later, and sure enough average commissions rates have been inching higher, and will continue to do so.
It is simple supply and demand. The settlement was likely to...and ended up leading to a shrinking labor pool for brokerage services. As the supply of labor shrinks, demand becomes higher, and average costs rise.
District Invest Group545 Reviews
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- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes2y
@Henry Lazerow - I agree. My fee is 2.5% and I have not had any push back on that. I have also had a lot of seller's this year and every single one of them was willing to offer 2.5% to the buyer's agent and did not want to wait till the change goes into effect to list.
Second City Real Estate4.821 Reviews - Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes2y
Hey @Henry Lazerow - I am not sure I 100% follow what you are saying. I don't transact nearly as much as you here in Chicago...$55M...AMAZING!
Previously, since the seller set the buyer broker's commission which was sometimes 2%, opposed to 2.5% which is what you are now seeing as the minimum buyer broker's are charging...NOW THAT THE BUYER BROKER SETS THAT COMMISSION WITH THE NEW NAR RULES?
My guess is there will be some i-buyer brokers that set a lower rate of 1% just like redfin did...all in all I noticed smart people see the value in a quality agent like Henry!
Can you clarify one thing with the new rule...is the buyer broker commission now a debt to the buyer on the settlement statement? So it essentially increases the cost to the buyers by 2%?
Quality Builders4.966 Reviews - Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes2y
Thanks man, next goal to break 100 million sold haha. Yes I mean that in the past we occasionally took 2% *didn't like it but let it slide and now that the buyer broker sets minimum percent we are now at 2.5% firm minimum which is an interesting turn of events. I assume could do the charge on settlement statement but we have just instead increased offer price and seller bump co-op to 2.5% co-op that way its not out of pocket fully for buyer and just financed as part of the total purchase. I have not seen any seller offering 0 co op but have seen more and more sellers offering 1.75 to 2 percent so it just increases the buyers price by .5% or .75% not the full commission.
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes2y
@Jonathan Klemm - You have to understand that what @Henry Lazerow and I do is very different than the retail side of things. Sure if you are buying a condo downtown you can probably get away with using a discount broker. But 2-4 units is Chicago is extremely complex with 100+ year old buildings, Chicago zoning, department of buildings with violations and inspections, plus the RLTO. Our business requires a much more in depth knowledge base to advise investors.
The new contracts are not release yet but here is how it is going to work:
* Buyer's are required to sign a agreement with their agent that sets a commission amount
* Seller's will sign a listing agreement only for the listing agent's commission
* Offers to purchase will include a buyer's agent commission amount
* Offers will be presented as net to the seller
* Buyer's may have to cover the difference between their contract commission amount with their agent and what the seller is willing to pay.
One important thing to note is when we run comps on the MLS both commissions were always included, so that needs to be adjusted if a seller is not willing to pay a commission. They won't be able to sell their home for the same amount as their neighbor with the exact same house if their neighbor paid 2.5% and they are paying 0%
Second City Real Estate4.821 Reviews - Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
I gave an interview to Axios last December where I predicted that average commission rates were likely to go higher due to due to the likely outcome of the class action suit.
Sure enough, a settlement was announced months later, and sure enough average commissions rates have been inching higher, and will continue to do so.
It is simple supply and demand. The settlement was likely to...and ended up leading to a shrinking labor pool for brokerage services. As the supply of labor shrinks, demand becomes higher, and average costs rise.
District Invest Group545 Reviews - Member since 2018 · 1k+ posts · 1k+ votes2y
I have never used a buyer’s agent. If I go to you to see a property, are any of you going to try to get me to sign a buyer’s broker agreement?
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2yYes starting 8/17/24 a written agreement will be required for buyers to see a property. I’ve been doing this ever since I got my license anyway so no change for me. https://www.nar.realtor/the-facts/written-buyer-agreements-1...
Quote from @John Clark:
I have never used a buyer’s agent. If I go to you to see a property, are any of you going to try to get me to sign a buyer’s broker agreement?
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
My last 3 listings offered 3, 3.2, and 3.8% to the buyers agent and my most recent buy-side transactions were all 2.8%. Before the settlement it was typically 2.5-2.8% buy-side here. I’ve seen a few advertised at 2% recently and one with 0%, but they were really crappy listings with basically zero marketing or effort that went into the listing, and they haven’t sold even after several big price drops. The media got this one completely wrong. Pretty shocking how inaccurate the coverage on this settlement has been actually.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
Quote from @John Clark:
I have never used a buyer’s agent. If I go to you to see a property, are any of you going to try to get me to sign a buyer’s broker agreement?
You can see a property at an open house or if the listing agent shows it to you directly. A buyer's agent will not be allowed to open a door without a signed agreement or they risk a contempt of court charge.
District Invest Group545 Reviews - Member since 2018 · 1k+ posts · 1k+ votes2y
I always go to the list agent. I was just wondering if alisting agent would try to get me to sign a buyers agreement
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes2y
Moving forward they will need you to sign a buyers agent form unless its an open house. That buyers agency form could just be a no agency form though so you do not need to use the list agent as your agent.
- Member since 2018 · 1k+ posts · 1k+ votes2yI can just see the complaints and suits now, where listing agents try to force potential buyers into using an agency form vice a no agency form.
Quote from @Henry Lazerow:
Moving forward they will need you to sign a buyers agent form unless it’s an open house. That buyers agency form could just be a no agency form though so you do not need to use the list agent as your agent.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @John Clark:
I always go to the list agent. I was just wondering if alisting agent would try to get me to sign a buyers agreement
What would be the incentive for the listing agent to show you the house if you didn't want to sign a dual agency agreement?
Skyline Properties - Member since 2018 · 1k+ posts · 1k+ votes2y
Quote from @JD Martin:
Quote from @John Clark:
I always go to the list agent. I was just wondering if alisting agent would try to get me to sign a buyers agreement
What would be the incentive for the listing agent to show you the house if you didn't want to sign a dual agency agreement?
Because dual agency is an impossibility (I’m a lawyer) and if I want to see one property I don’t want to be tied to an agent simply because I wanted to see a different property.
The listing agent’s fiduciary duty to his seller client should be sufficient for the listing agent to just do a no agency showing agreement with the potential buyer. Watch though, some listing agents will try to refuse, and get hammered.So the listing agent’s incentive is to live up to his contractual obligation to his owner principal, like he agreed to do.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @John Clark:
Quote from @JD Martin:
Quote from @John Clark:
I always go to the list agent. I was just wondering if alisting agent would try to get me to sign a buyers agreement
What would be the incentive for the listing agent to show you the house if you didn't want to sign a dual agency agreement?
Because dual agency is an impossibility (I’m a lawyer) and if I want to see one property I don’t want to be tied to an agent simply because I wanted to see a different property.
The listing agent’s fiduciary duty to his seller client should be sufficient for the listing agent to just do a no agency showing agreement with the potential buyer. Watch though, some listing agents will try to refuse, and get hammered.So the listing agent’s incentive is to live up to his contractual obligation to his owner principal, like he agreed to do.
I haven't read all the new requirements but I doubt a seller's agent has any requirement to sign an agreement with you as a buyer just because you want to see a house. If I am wrong about that perhaps @Russell Brazil or @Steve K. can clarify.
Skyline Properties - Member since 2018 · 1k+ posts · 1k+ votes2y
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes2y
There is one agent that didnt get their 2.5% . I am selling my house FSBO ( just finished last weekend with new carpet) . I had an agent lined up to go live with it for the 4th of July weekend . And last week I had a young couple stop by , looked at the house , fell in love with it . Came back with a buyers agent . Next day I had an offer for less , with a 2.5% commission to the agent . I handed it back and said no thanks . I told her its the asking price and I will give a flat fee of $6000. He told me that he doesnt reduce his commission . I told him thats fine ,have a good day , good bye . Next day he came up to the sale price with the same commission , I said no . ( last 4 houses had biding wars and sold over asking ) . The next morning , he handed me a new offer with 1% and 20K over asking . I told him he will have an answer tomorrow . We are under contract .
There are 2 houses under $700K in my zip code , none in my school district .
Every area is different . This is just my example .
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
Skyline Properties - Member since 2018 · 1k+ posts · 1k+ votes2yThey represent the seller. They have a fiduciary responsibility to the seller. The best way for the seller to sell for the most money is to have lots of potential buyers look at the property and bid on it. Refusing showings because the agent isn’t getting paid for it is the antithesis of carrying out one’s fiduciary duty to the seller.
Quote from @JD Martin:
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
The value to the agent is that he gets to keep license, and not get sued by his own principal, the seller. - Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes2y
@John Clark what you are going to find is that there will be zero incentive for a listing agent to work with someone like yourself now because the 'double bubble" will not be possible. In a lot of ways, the NAR agreement is going to help clarify these situations a lot, which is a really cool thing. Buyer on BP have often "gone to the listing agent" which created a perverse incentive which will no longer be able to be swept under the rug by a listing agent. Everything will have to be in writing with the buyer and in this case, it is way less likely the seller will be excited about paying a buy side commission.
Ultimately, representing the buyer IS a lot of work (especially in Chicagoland) and representing a seller is also a lot of work. Obviously, there are plenty of folks who disagree, but ultimately no one has ever HAD to use an agent.
You also are welcome to do your own plumbing, taxes, legal work, electrical work, landscaping, etc.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
Quote from @JD Martin:
Quote from @John Clark:
Quote from @JD Martin:
Quote from @John Clark:
I always go to the list agent. I was just wondering if alisting agent would try to get me to sign a buyers agreement
What would be the incentive for the listing agent to show you the house if you didn't want to sign a dual agency agreement?
Because dual agency is an impossibility (I’m a lawyer) and if I want to see one property I don’t want to be tied to an agent simply because I wanted to see a different property.
The listing agent’s fiduciary duty to his seller client should be sufficient for the listing agent to just do a no agency showing agreement with the potential buyer. Watch though, some listing agents will try to refuse, and get hammered.So the listing agent’s incentive is to live up to his contractual obligation to his owner principal, like he agreed to do.
I haven't read all the new requirements but I doubt a seller's agent has any requirement to sign an agreement with you as a buyer just because you want to see a house. If I am wrong about that perhaps @Russell Brazil or @Steve K. can clarify.
Here is a summary of the new requirements:
https://www.nar.realtor/sites/default/files/documents/mls-po...
"9. Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home."
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
Quote from @John Clark:
They represent the seller. They have a fiduciary responsibility to the seller. The best way for the seller to sell for the most money is to have lots of potential buyers look at the property and bid on it. Refusing showings because the agent isn’t getting paid for it is the antithesis of carrying out one’s fiduciary duty to the seller.Quote from @JD Martin:
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
The value to the agent is that he gets to keep license, and not get sued by his own principal, the seller.I don't think so. I don't think there's going to be a court anywhere that says a seller's agent is required to represent any potential buyer without a fee. That is akin to working for free. Buyers and sellers have one singular common interest (closing a deal) and a number of opposing interests. Besides, what gives you the idea that signing a (free) contract with a perfect stranger is acting in the seller's fiduciary interest? You may not be a buyer at all. You may have no ability whatsoever to purchase the home, and by the agent wasting time with you is shirking or ignoring other duties or opportunities that could result in a sale for the seller. Walking random strangers through a house is not the same thing as acting in the seller's best interest.
In any case, I'm sure there will be plenty of litigation in the coming years that will sort all of this out.
Skyline Properties - Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
Quote from @JD Martin:
Quote from @John Clark:
They represent the seller. They have a fiduciary responsibility to the seller. The best way for the seller to sell for the most money is to have lots of potential buyers look at the property and bid on it. Refusing showings because the agent isn’t getting paid for it is the antithesis of carrying out one’s fiduciary duty to the seller.Quote from @JD Martin:
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
The value to the agent is that he gets to keep license, and not get sued by his own principal, the seller.I don't think so. I don't think there's going to be a court anywhere that says a seller's agent is required to represent any potential buyer without a fee. That is akin to working for free. Buyers and sellers have one singular common interest (closing a deal) and a number of opposing interests. Besides, what gives you the idea that signing a (free) contract with a perfect stranger is acting in the seller's fiduciary interest? You may not be a buyer at all. You may have no ability whatsoever to purchase the home, and by the agent wasting time with you is shirking or ignoring other duties or opportunities that could result in a sale for the seller. Walking random strangers through a house is not the same thing as acting in the seller's best interest.
In any case, I'm sure there will be plenty of litigation in the coming years that will sort all of this out.
Yes and all the lawyers will collect their standard fees.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
Quote from @JD Martin:
Quote from @John Clark:
They represent the seller. They have a fiduciary responsibility to the seller. The best way for the seller to sell for the most money is to have lots of potential buyers look at the property and bid on it. Refusing showings because the agent isn’t getting paid for it is the antithesis of carrying out one’s fiduciary duty to the seller.Quote from @JD Martin:
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
The value to the agent is that he gets to keep license, and not get sued by his own principal, the seller.I don't think so. I don't think there's going to be a court anywhere that says a seller's agent is required to represent any potential buyer without a fee. That is akin to working for free. Buyers and sellers have one singular common interest (closing a deal) and a number of opposing interests. Besides, what gives you the idea that signing a (free) contract with a perfect stranger is acting in the seller's fiduciary interest? You may not be a buyer at all. You may have no ability whatsoever to purchase the home, and by the agent wasting time with you is shirking or ignoring other duties or opportunities that could result in a sale for the seller. Walking random strangers through a house is not the same thing as acting in the seller's best interest.
In any case, I'm sure there will be plenty of litigation in the coming years that will sort all of this out.
We have unrepresented buyers come to our listings asking us to write their offers all the time. Every single one is shocked when I tell them we charge for that service. I say you can write your own offer on a napkin and I'll present it, but I'm under no obligation to write an offer for you and provide services to you for free.
District Invest Group545 Reviews - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @John Clark:
They represent the seller. They have a fiduciary responsibility to the seller. The best way for the seller to sell for the most money is to have lots of potential buyers look at the property and bid on it. Refusing showings because the agent isn’t getting paid for it is the antithesis of carrying out one’s fiduciary duty to the seller.Quote from @JD Martin:
Quote from @John Clark:
My impression was that a seller’s agent cannot show a potential buyer a property without some sort of agreement with that potential buyer in place. A no agency agreement limited to the one property would suffice.
That's my understanding as well, which again brings me back to what is the incentive to sign you up even for just that house? They don't know anything about you, have no proof you can even buy the house; for all they know you could just be casing the place. Without collecting some kind of fee I just don't see the value proposition here.
The value to the agent is that he gets to keep license, and not get sued by his own principal, the seller.The requirement of no showing without documentation is to defend against BS lawsuites, because that's exactly what got us here.
All my agents are BANNED from doing ANY showing of any kind to ANYONE even a family member, their priest, their wife, I don't care who it is or why NOBODY get's a showing without signing SOMETHING.
Now, that does not have to be agency agreement.
It can be agency for a day, for a specific property, OR not at all as it can be facilitator. I don't care which it is but NOBODY is doing anything without clear DOCUMENTATION of exactly what was being done and that all knew full well and agreed to it in full up front.
If it's annoying, I agree, lawsuits after-the-fact ARE very annoying and due to such that's why everyone get's to enjoy this new universal annoyance.
And to be clear, this is literally the only thing it's changed for us. We always operated within compliance in every other way, always let sellers choose, always disclosed to buyers, so literally the only change is now we can't let people just parooz a property we must have documentation that there was no other agreement because who knows what they could sue for 6 months later after the fact on what they think they "shoulda" had happen.
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