Are you seeing Flat Fee Buyer Agents in your market?
Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes
Are you seeing Flat Fee Buyer Agents in your market?
Most Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @Albert Hepp:
I've seen huge growth in listings not offering a commission, but expecting a commission, and instructing the buyer agent to include the buyer agent commission with the offer.
This is the first step towards buyers evaluating what an appropriate amount for their buyer agent to earn, which is a very good thing for buyers.
here in Portlandia the listing agents are NOT Allowed to offer a commish.. I think its just understood in the industry that the buyers agent will include one with their offer.
thats what we have seen on our new builds.. So i negotiate each one as they come in as a seller it has saved us substantially.. Many people / and or agents really cant do simple math. So I dont counter with a % I Counter with a dollar amount and the buyer see's exactly how much that is and when on my homes that are 750k and 2% is 15k I counter at 10k flat fee.. agents get it start to howl but the buyers are like whats the issue your making 10k thats great money :)
26 Replies
- 1yTim DelaneyPro MemberBuffalo, NY · Member since 2018 · 790 posts · 530 votes
In my market the listings are still typically offering 2-3% for the buy side so I'm not sure that there is a need or demand for lat rate buyers agents yet. Are sellers offering anything to buyers in your market?
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
I've seen huge growth in listings not offering a commission, but expecting a commission, and instructing the buyer agent to include the buyer agent commission with the offer.
This is the first step towards buyers evaluating what an appropriate amount for their buyer agent to earn, which is a very good thing for buyers.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Albert Hepp:
I've seen huge growth in listings not offering a commission, but expecting a commission, and instructing the buyer agent to include the buyer agent commission with the offer.
This is the first step towards buyers evaluating what an appropriate amount for their buyer agent to earn, which is a very good thing for buyers.
here in Portlandia the listing agents are NOT Allowed to offer a commish.. I think its just understood in the industry that the buyers agent will include one with their offer.
thats what we have seen on our new builds.. So i negotiate each one as they come in as a seller it has saved us substantially.. Many people / and or agents really cant do simple math. So I dont counter with a % I Counter with a dollar amount and the buyer see's exactly how much that is and when on my homes that are 750k and 2% is 15k I counter at 10k flat fee.. agents get it start to howl but the buyers are like whats the issue your making 10k thats great money :) - Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1yInteresting development in Oregon to increase buyer agent commission visibility. To clarify, in every area I know of, listing agents are allowed to offer a commission, they just aren't allowed to use the MLS to communicate it. Is that what you mean?
Quote from @Jay Hinrichs:
Quote from @Albert Hepp:
I've seen huge growth in listings not offering a commission, but expecting a commission, and instructing the buyer agent to include the buyer agent commission with the offer.
This is the first step towards buyers evaluating what an appropriate amount for their buyer agent to earn, which is a very good thing for buyers.
here in Portlandia the listing agents are NOT Allowed to offer a commish.. I think its just understood in the industry that the buyers agent will include one with their offer.
thats what we have seen on our new builds.. So i negotiate each one as they come in as a seller it has saved us substantially.. Many people / and or agents really cant do simple math. So I dont counter with a % I Counter with a dollar amount and the buyer see's exactly how much that is and when on my homes that are 750k and 2% is 15k I counter at 10k flat fee.. agents get it start to howl but the buyers are like whats the issue your making 10k thats great money :) - Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes1y
Seller is still paying both sides in the majority of ones. When I work with a buyer we ask the seller. When one of my sellers gets an offer they ask for a commission. It ranges in percentage but nothing has felt different. Initially it was more prominent but most are used to it now
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Albert Hepp:
Interesting development in Oregon to increase buyer agent commission visibility. To clarify, in every area I know of, listing agents are allowed to offer a commission, they just aren't allowed to use the MLS to communicate it. Is that what you mean?Quote from @Jay Hinrichs:
Quote from @Albert Hepp:
I've seen huge growth in listings not offering a commission, but expecting a commission, and instructing the buyer agent to include the buyer agent commission with the offer.
This is the first step towards buyers evaluating what an appropriate amount for their buyer agent to earn, which is a very good thing for buyers.
here in Portlandia the listing agents are NOT Allowed to offer a commish.. I think its just understood in the industry that the buyers agent will include one with their offer.
thats what we have seen on our new builds.. So i negotiate each one as they come in as a seller it has saved us substantially.. Many people / and or agents really cant do simple math. So I dont counter with a % I Counter with a dollar amount and the buyer see's exactly how much that is and when on my homes that are 750k and 2% is 15k I counter at 10k flat fee.. agents get it start to howl but the buyers are like whats the issue your making 10k thats great money :)
Exactly on the MLS listing in our market there was a field called BAC and that is where you put in the commish that your offering to a buyers agents. That field has been removed. Its up to the buyers agent to submit their commission desires on the original offer . . And since buyer brokers agreements were fairly rare on the west coast this is also a learning curve for agents and for buyers.. Many buyers have never heard of this and wont sign them :( - Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1yYes, I saw some statistics from a big transaction manager and the seller is paying both sides of the commission in almost every transaction. The fact that the buyer agent commission is visible and being discussed by the buyer and buyer agent is a big step forward, so that buyers know how much the buyer agent is earning.
Quote from @Caleb Brown:
Seller is still paying both sides in the majority of ones. When I work with a buyer we ask the seller. When one of my sellers gets an offer they ask for a commission. It ranges in percentage but nothing has felt different. Initially it was more prominent but most are used to it now
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
I haven't really noticed any change at all in my market except minor changes to the standard contracts (minor language changes in contract to buy and sell, listing agreement, and buyer's agency agreement). Almost all sellers are still offering 2.5-2.8% BAC just like before.
Buyer's agents now have to ask the listing agent what the seller is offering now instead of simply looking at the MLS. Or the listing agent includes it in the property info on their website, or shares it when a showing is scheduled. Kind of a pain and also both less transparent and less efficient than before, but not drastically different.
Buyer's agency agreements were already required here before, our regulatory agency just went from strongly recommending them be signed right away but not really requiring them until writing a contract to 100% requiring them to be signed prior to showings. That's good IMO, as I always got them signed before any showings before (I don't like working for free) and now that's standard whereas before not every agent did that. Buyers don't always like it but now that it's a hard requirement for everyone, they have no choice.
Pretty pointless lawsuit IMO. Fascinating how all of the reporting about it in the news media was so inaccurate though. They were all saying it would be the end of buyers agents and the 6% standard commission structure (actually the lawsuit that ended fixed commissions was in 1950, US vs. NAREB but I never saw that in any of the articles). Really surprisingly bad reporting.
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
Quote from @Steve K.:
I haven't really noticed any change at all in my market except minor changes to the standard contracts (minor language changes in contract to buy and sell, listing agreement, and buyer's agency agreement). Almost all sellers are still offering 2.5-2.8% BAC just like before.
Buyer's agents now have to ask the listing agent what the seller is offering now instead of simply looking at the MLS. Or the listing agent includes it in the property info on their website, or shares it when a showing is scheduled. Kind of a pain and also both less transparent and less efficient than before, but not drastically different.
Buyer's agency agreements were already required here before, our regulatory agency just went from strongly recommending them be signed right away but not really requiring them until writing a contract to 100% requiring them to be signed prior to showings. That's good IMO, as I always got them signed before any showings before (I don't like working for free) and now that's standard whereas before not every agent did that. Buyers don't always like it but now that it's a hard requirement for everyone, they have no choice.
Pretty pointless lawsuit IMO. Fascinating how all of the reporting about it in the news media was so inaccurate though. They were all saying it would be the end of buyers agents and the 6% standard commission structure (actually the lawsuit that ended fixed commissions was in 1950, US vs. NAREB but I never saw that in any of the articles). Really surprisingly bad reporting.
Thank you for sharing what's happening in your market. I respectfully disagree that this lawsuit is pointless. Let's think about how real estate agents get paid:
The buyer and their agent should decide how much the buyer's agent is paid, not the seller. Before the Sitzler lawsuit rule changes in August, the seller always sets this amount. (Some say the seller isn't really paying because they use the buyer's money and include it in the home's price, but that's a separate issue.)
This lawsuit is a small first step towards letting buyers and their agents decide on a fair payment.Consider this: Why should a buyer's agent get paid the same amount whether they:
- 1.Work with buyers for months and show 20 houses, or
- 2. Just show up at an open house and help write up an offer right there?
The U.S. Department of Justice (DOJ) agrees that sellers shouldn't set the buyer's agent's pay. They say sellers "choose" a buyer agent amount under the threat of that agents might refuse to show a house if they (agents, not consumers) think the pay isn't enough. The DOJ wants to stop listing brokerages from offering/setting the buyer's agents commission, but that might not happen.
I understand why agents don't like this view. Many aren't used to explaining why their services are worth $12,000 (the typical pay for selling an average-priced U.S. home).
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
Quote from @Albert Hepp:
Quote from @Steve K.:
I haven't really noticed any change at all in my market except minor changes to the standard contracts (minor language changes in contract to buy and sell, listing agreement, and buyer's agency agreement). Almost all sellers are still offering 2.5-2.8% BAC just like before.
Buyer's agents now have to ask the listing agent what the seller is offering now instead of simply looking at the MLS. Or the listing agent includes it in the property info on their website, or shares it when a showing is scheduled. Kind of a pain and also both less transparent and less efficient than before, but not drastically different.
Buyer's agency agreements were already required here before, our regulatory agency just went from strongly recommending them be signed right away but not really requiring them until writing a contract to 100% requiring them to be signed prior to showings. That's good IMO, as I always got them signed before any showings before (I don't like working for free) and now that's standard whereas before not every agent did that. Buyers don't always like it but now that it's a hard requirement for everyone, they have no choice.
Pretty pointless lawsuit IMO. Fascinating how all of the reporting about it in the news media was so inaccurate though. They were all saying it would be the end of buyers agents and the 6% standard commission structure (actually the lawsuit that ended fixed commissions was in 1950, US vs. NAREB but I never saw that in any of the articles). Really surprisingly bad reporting.
Thank you for sharing what's happening in your market. I respectfully disagree that this lawsuit is pointless. Let's think about how real estate agents get paid:
The buyer and their agent should decide how much the buyer's agent is paid, not the seller. Before the Sitzler lawsuit rule changes in August, the seller always sets this amount. (Some say the seller isn't really paying because they use the buyer's money and include it in the home's price, but that's a separate issue.)
This lawsuit is a small first step towards letting buyers and their agents decide on a fair payment.Consider this: Why should a buyer's agent get paid the same amount whether they:
- 1.Work with buyers for months and show 20 houses, or
- 2. Just show up at an open house and help write up an offer right there?
The U.S. Department of Justice (DOJ) agrees that sellers shouldn't set the buyer's agent's pay. They say sellers "choose" a buyer agent amount under the threat of that agents might refuse to show a house if they (agents, not consumers) think the pay isn't enough. The DOJ wants to stop listing brokerages from offering/setting the buyer's agents commission, but that might not happen.
I understand why agents don't like this view. Many aren't used to explaining why their services are worth $12,000 (the typical pay for selling an average-priced U.S. home).
Sellers set the buyer's agency commission (in most cases both before and after the lawsuit, so virtually no change there) because that is the most practical way for these transactions to be structured. This way the commissions get rolled into the loan (in most cases) and buyers (most of whom are using financing) don't have to pay their agents commission out of pocket in addition to their down payment. Sellers had the option of offering or not offering BAC both before and after the lawsuit, and those commissions were negotiable both before and after the lawsuit, so again, no change there (ever since US vs. NAREB, 1950, prior to that commissions were fixed). Sellers realize that offering the BAC means that their property will be more easily marketable to the highest number of buyers and have the best chance of fetching the highest price, that's why they choose to offer BAC. This is a logical function of market forces.
If the intention was more transparency, then the lawsuit failed because taking the BAC out of the MLS is clearly less transparent, and doesn't solve the (non)issue of agents not showing properties that aren't offering BAC (I don't believe that was really happening but if they want to do that, they still can). Agents are still aware whether or not BAC is being offered before showing the property, they just have to ask beforehand instead of simply checking the MLS. Less transparency generally hurts consumers as opposed to helping them.
I don't think most buyers, especially investors, appreciate having to sign an exclusive buyer's agency agreement prior to seeing their first property. So that change really helps buyer's agents more than buyers. Of course it can be written for a single property, a single day etc. there are work-arounds, but needing something in writing prior to any showings probably annoys some buyers. Personally I think it's great as I was already doing this (I do not work for free) and now my competition has to as well.
Regarding your points 1 & 2: Some deals require less work and some require more but it's much more complicated than this. For every #2 scenario (an easy transaction) there are probably 9 #3 scenarios when agent shows 20 houses to clients who don't end up buying anything and the agent makes $0. Also just because getting under contract was easy, that doesn't mean the rest of the transaction will go smoothly or that there isn't a lot more work to be done. A lot of times the contract period is actually when an agents expertise and experience is the most valuable to a buyer. Many deals fall out of contract so it's not like the transaction is over when the contract is fist signed. Unfortunately due to the entirety of an agents pay being earned by commission (in most cases, with the exception of a very few agencies with different pay structures), sometimes agents work for free and other times they get a big paycheck. Hopefully it balances out and ends up net positive. The lawsuit does nothing to address this.
To your point about agents not being used to explaining why their services cost an average of $12k... In my market the buyer's agency agreement form (previously required but not often enforced, and many agents waited until writing a contract for the buyer to get it signed, and is now more strictly required prior to any showings) already explained this. I believe in every market commissions were already clearly spelled out in closing statements. This is easy to explain and I think it would be helpful for the public to understand that agents are typically independent contractors and not employees, and that their brokerage actually receives the commission, not the agent. The brokerage then pays the agent only part of it. For example most agents will get between 50-85% of the total commission. Since they are 1099 independent contractors, payroll taxes are not paid by the brokerage so agents have to pay about 20-30% out of the portion of the commission they get to Uncle Sam for income taxes, depending on their tax bracket and individual tax situation of course. So most agents are only putting about half of that $12k in their pocket, and out of that $6k they have to cover all of their operating expenses: licensing fees, MLS/ Realtor Association fees, continuing education classes to stay compliant with licensing requirements, monthly "desk" fees/ technology fees to their brokerage, health insurance for themselves and their family, errors and omissions insurance (required), marketing, car, car insurance, gas, clothes, computer/ software, cell phone, closing gifts, signs, photography, staging if they offer that, etc. A $12k commission may actualy break down to less than minimum wage with brokerage commission splits, taxes, insurance and all expenses factored in.That's why agents are careful to make sure they are going to be paid for their work, if they want to stay in the business.
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
I think the fundamental question buyers, sellers, and agents have to answer, is why do US consumers pay three times as much in commissions (5-6%) as other developed countries(1.5-2%)?
Please let me correct your first statement: Sellers "PAY" the buyer agent commission because that is most practical. They should not SET the commission amount, because as the DOJ says, they do so under the threat of a group boycott if they don't offer the "standard" (which I know is a word you are not supposed to say).
The reason Realtors and the NAR are fighting so hard to keep seller set commissions, is that buyers do not believe they get $12,000 worth of service when they buy the average $400k home. You can list off all the fees you want, but buyers don't believe the value and price of the service are in line with each other and would not pay it in a free market. Again, why do US consumers pay three times as much as the rest of the world?
As a result, Realtors and the NAR are doing whatever they can to keep the cooperative commission system that doesn't ask the buyer to discuss and agree that their agent is worth 2.5% of the sales price. Yes, agents would say buyers agree to 2.5% when the sign the buyer contract, but most only do so because they are repeatedly told that they "aren't really paying the commission, the seller is." In addition, since the rule changes, it seems like many agents are delaying the whole conversation until the very last minute when the buyer has little or no opportunity to object, research, or think about what they are agreeing to, without risking losing the home they just decided to offer on.
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
Quote from @V.G Jason:
Everything I've seen has been since before the ruling; the seller is paying both sides.
Yes, me too, sellers pay both sides of the commission, but the key is WHO is setting the buyer agent commission amount? The seller, or the buyer?
In the markets I watch, now nearly 60% of listings are EXPECTING to pay a commission, but asking the buyer to SET the buyer agent commission amount, and making that part of the offer discussion. If a buyer agent asks how much commission the seller is offering, the response is: "seller is expecting to pay a commission, buyer and buyer agent should decide on the amount and include it in your offer"
This is a huge improvement for buyers, because the buyer agent commission is more transparent, and easier to negotiate. I understand that agents hate this change, they would rather the buyer agent commission not be discussed, be buried or not disclosed, like before.
- 1yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Albert Hepp Northern New Hampshire. I’ve just made an offer on a building and the listing commission was 3% paid by the sellers. The seller declined to offer any compensation for the buyers agent which falls on me as the buyer and the agent that provided me with the listing requires a 3% buyers commission.
So not much has changed. Just that now I’m responsible for 3% that prior to the lawsuit I wouldn’t have been required to pay.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
Quote from @Albert Hepp:
I think the fundamental question buyers, sellers, and agents have to answer, is why do US consumers pay three times as much in commissions (5-6%) as other developed countries(1.5-2%)?
Where are getting that consumers pay three times as much in commissions as other developed countries? The average commission in other developed countries is actually very similar to that of the US:
https://tranio.com/articles/real_estate_agents_commissions_i...
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Steve K.:
Quote from @Albert Hepp:
I think the fundamental question buyers, sellers, and agents have to answer, is why do US consumers pay three times as much in commissions (5-6%) as other developed countries(1.5-2%)?
Where are getting that consumers pay three times as much in commissions as other developed countries? The average commission in other developed countries is actually very similar to that of the US:
https://tranio.com/articles/real_estate_agents_commissions_i...
Albert as an investor have you ever bought a home through a non licensed wholesaler ?? most of those transactions you as the buyer pay a premium FAR exceeding a 3% RE fee but people still use them and seek them out thinking they are getting some off market deal when in fact its on market .. its just the wholesalers market not the mLS> - Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
I haven't worked with wholesalers. Does they offer some of that buyer premium to buyer agents who bring them a buyer?
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
Quote from @Steve K.:
Quote from @Albert Hepp:
I think the fundamental question buyers, sellers, and agents have to answer, is why do US consumers pay three times as much in commissions (5-6%) as other developed countries(1.5-2%)?
Where are getting that consumers pay three times as much in commissions as other developed countries? The average commission in other developed countries is actually very similar to that of the US:
https://tranio.com/articles/real_estate_agents_commissions_i...
All over the web. Example: https://www.nytimes.com/2024/03/18/briefing/real-estate-agen...
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
Quote from @Alecia Loveless:
@Albert Hepp Northern New Hampshire. I’ve just made an offer on a building and the listing commission was 3% paid by the sellers. The seller declined to offer any compensation for the buyers agent which falls on me as the buyer and the agent that provided me with the listing requires a 3% buyers commission.
So not much has changed. Just that now I’m responsible for 3% that prior to the lawsuit I wouldn’t have been required to pay.
Thanks. I'm not following you, can you explain in more detail? These two statements are contradictory the way I read your comment:
"the agent that provided me with the listing requires a 3% buyers commission."
"The seller declined to offer any compensation for the buyers agent" - Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
Quote from @Albert Hepp:
Quote from @Steve K.:
Quote from @Albert Hepp:
I think the fundamental question buyers, sellers, and agents have to answer, is why do US consumers pay three times as much in commissions (5-6%) as other developed countries(1.5-2%)?
Where are getting that consumers pay three times as much in commissions as other developed countries? The average commission in other developed countries is actually very similar to that of the US:
https://tranio.com/articles/real_estate_agents_commissions_i...
All over the web. Example: https://www.nytimes.com/2024/03/18/briefing/real-estate-agen...
This article only gives 3 examples (Germany 4.5%, 1.3% in Britain, and 2.5% in Australia). They don't say where the info comes from however and they are incorrect with these few examples. In Germany the buyer pays 2-6% or 4-4.5% average which is similar to here. In Britain it's typically split between buyer and seller, 1-7% total, average 4% but with total transaction costs factored in it's actually more expensive there. Australia they are correct about the avg. percent but fail to mention how much higher property values are there. The average commission there is actually higher than the average commission here, (the average percentage is lower but the average commission is higher in total dollar amounts).
The article also fails to mention that overall transaction costs can actually be higher in countries where commissions are lower because the agent plays a different role, and due to needing to pay a lawyer for paperwork that agents complete here as part of their job (called a solicitor in Britain) plus VAT taxes and other closing costs need to factored in on top of the sales commissions, which we don't have here, overall costs can actually be higher even if commissions are lower. So in order to really compare apples to apples it is more complicated than just the commission portion of the transaction costs. Check out the table that I sent you, it does a good job demonstrating that commissions on real estate transactions in the US are actually right in line with many other developed countries.
Be aware that almost all of the major reporting on the NAR vs. Sitzer-Burnett lawsuit has been inaccurate, so I recommend fact-checking anything you read. For example it was widely reported that US commissions were previously fixed at 6% and the lawsuit ended that (the article you referenced makes this false claim also, and frankly is terrible reporting IMO). This is not true, commissions have in fact been negotiable here ever since the US vs. NAREB lawsuit in 1950. If you read the actual settlement, it does mention ending 6% commissions of course, and the average is actually in the 4-5% range anyway. I didn't see any of the major news outlets report on the settlement accurately. It seems like not one of these reporters has actually read the 144 page settlement, or even any part of it.
The only real changes brought by the settlement are requiring buyers to sign an agency agreement prior to seeing properties, and the removal of the buyers agent commission from the MLS listing. From the reporting on it, you'd think the whole industry was changing drastically. Now that we are 5 months into it, we can see how wrong the reporting actually was, because there haven't really been any noticeable changes except minor procedural ones.
- Real Estate Agent · Austin, TX · Member since 2024 · 14 posts · 18 votes1y
Fees for buyers side has never been set in stone. It has been the case for many years, even before the lawsuit. Its market driven. It will be very interesting to see how this plays out for first time home buyers that don't have money to pay a commission to buyers agents.
@Albert Hepp I see that you have been offering flat fees for years and that is your business model to undercut market rates. Nothing wrong with that as I am sure that you increased your volume. Awesome strategy!
When folks start to argue one way or the other with it, there seems to be an assumption that the buyers agent does very little before or during the transaction. The best buyers agents provide insight to the market, negotiate to get a better deal, provides clarity to the transaction, steadies the nerves of buyers (first time home buyers for example), identifies problems with the property, introduces a whole cast of players to get the deal done etc. Oh and I forgot to mention that they are a ton cheaper than an attorney.
Some people that my broker knows spent money on an attorney to draw up a contract who meant well but caused more harm than good. It was a several million dollar commercial deal that was going sideways before we got involved and steadied the ship. I could go on and on but some folks have their minds made up until they find a superb agent who takes their craft seriously.
- Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes1y
Quote from @Mary Jo Carruthers:
Fees for buyers side has never been set in stone. It has been the case for many years, even before the lawsuit. Its market driven. It will be very interesting to see how this plays out for first time home buyers that don't have money to pay a commission to buyers agents.
Thanks for the comment. What the DOJ and consumer advocates are saying, is that buyers and buyer agents should be setting the buyer agent compensation amount, not the seller. The seller setting the amount is illogical, and anti competitive because they set the amount under the threat of a group boycott if they offer too little.
I respectfully disagree with your assessment of buyer's agent commissions and their implications. Here's why:First, the claim that buyer's side commissions have never been "set in stone" is not entirely accurate. While technically negotiable, the Sitzer/Burnett case revealed that the industry practice effectively standardized these rates. When 99% of transactions have commissions above 2%, it's essentially a fixed rate, not a truly negotiable one.I respectfully disagree with the concern about "buyers that don't have money to pay a commission to buyer agents." This scenario is highly unlikely and seems to be used as a scare tactic. Here's why this argument is problematic:
- 1. Misdirected concern: This rare scenario is being overemphasized, likely to maintain the status quo of seller-set commissions.
- 2. Potential for manipulation: Some agents may be using this argument to discourage sellers from allowing buyers and their agents to negotiate commissions directly.
- 3. Unethical practices: There are reports of agents coaching buyers to avoid properties where commissions aren't pre-set by sellers. This behavior:
- Limits buyer choices
- Excludes sellers willing to negotiate commissions
- Hinders fair market competition
- 4. Legal and ethical implications: Agents engaging in such practices may face:
- Legal consequences
- Licensing penalties
- Ethical violations
These actions ultimately harm consumers by restricting options and potentially inflating costs.The new system, allowing buyers and their agents to negotiate commissions directly, promotes transparency and fair competition. This change benefits consumers and aligns with more efficient real estate markets seen in other countries.
- 1yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Albert Hepp Northern New Hampshire. The more reputable agencies in my area will not become a buyers agent for less than 3%.
Any flat fee agents are not with the larger local agencies that have the market share of the listings and buyers.
For those listings with agents from out of the area, the sellers typically get lousy service, lousy response from their listing agents, and much less of the market share of potential buyers.
My area is somewhat geographically bounded by various different mountain ranges and the agencies from “East” or “Down South” might get 1-2 listings a year but will likely never gain much of a foothold due to their distant locations.
- Real Estate Agent · Austin, TX · Member since 2024 · 14 posts · 18 votes1y
@Albert Hepp Did you know that there are quite a few non profits and also the city of Austin in the austin texas area that provide down payment assistance for first time home buyers? If first time home buyers are having a difficult time coming up with the funds for even the costs to play as a first time home buyer then are the non profits supposed to pay the buyers agent commission too?
Given that affordable housing is a national issue it seems that the more pathways to home ownership is a good thing. If the costs for home buying goes up for first time home buyers then the results will probably be that less starter homes will be moving in the market unless non profits and the sort step up. What is happening in this market is that sellers are still paying but its negotiable like it was before.
Commissions have never been set. Its set by the market. The market tends to be 3% for buyers agent that is paid for by the seller in my area. In areas such as NYC the market tends to be a little lower, from what I understand. What is your source for 99% of transactions are above 2%?
In Minneapolis, are there programs in place from non profits and the government to aid first time home buyers with costs? A quick google search reveals that Minneapolis provides assistance for first time home buyers so there seems to be a problem with funds for first time home buyers in your locale too. In your ideal world who pays the buyers agent in that first time home buyers niche in Minneapolis?
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes1y
@Albert Hepp the flawed logic your using to state there must be some conspiratorial aspect to commissions because commissions are all but uniformed over 2%.....
We can apply that exact flawed logic to Apples at grocery stores and say since apples, at every grocery store are uniformed at a price over $0.10 a piece, it "must be a conspiracy"........
Take off the tinfoil hat.
How about the simple obvious that the inputs to deliver the service/product have a base-line and market prices have, OBVIOUSLY, been at about as lean of operating profit margins as can be.
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