Zillow Plunges After Verdict on Real Estate Brokerage Commissions

[alarmguy]

... I sell 90% of my commercial listings myself to my network. I will not take an offer of any kind from a residential agent for any reason.

TH

This concerns me unless your seller gives you a power of attorney or we are dealing with agency other then what is common.
Your responsibility to your client is to present all offers and let them decide based on guidance from you. Based on this statement your sellers allow you to be a gate keeper?
Sounds sketchy to me unless I am misinterpreting something or someplace in writing your clients are giving you the right to filter offers.
IF I was selling my building in NYC and found out my agent did not present me with offers and I was harmed buy that action I would see to it they lost their license.
Im assuming you are licensed.

 

[DwightFrye]

Regarding the sentiment that home buyers and sellers don't have the right to dictate how much other people should make, that overlooks what has historically been the case when there is a monopoly and collusion among real estate agents to keep commission rates at 3%+3%. Sure there have been some outliers who work for less but as I found out they didn't work very hard either. As someone else quipped, the gravy train is over.

So if we will now have real competition, we'll soon find out what the real prevailing wage rate is for real estate agents. And my guess is it won't be as high as it has been for the last 20-30 years except for those agents who hustle, are in a hot market and complete a lot of sales each month. They will do just fine.

Those who can't make as much as they are used to or think they deserve will move on to a different career. For those who would rather make a fast nickel than a slow dime, they will be successful.

 

[alarmguy]

Regarding the sentiment that home buyers and sellers don't have the right to dictate how much other people should make, that overlooks what has historically been the case when there is a monopoly and collusion among real estate agents to keep commission rates at 3%+3%. Sure there have been some outliers who work for less but as I found out they didn't work very hard either. As someone else quipped, the gravy train is over.

So if we will now have real competition, we'll soon find out what the real prevailing wage rate is for real estate agents. And my guess is it won't be as high as it has been for the last 20-30 years except for those agents who hustle, are in a hot market and complete a lot of sales each month. They will do just fine.

Those who can't make as much as they are used to or think they deserve will move on to a different career. For those who would rather make a fast nickel than a slow dime, they will be successful.

Yes, and you will learn nothing will change because nothing is different.
Here is another misconception which you and others are not aware. Not everyone that holds a real estate license is a realtor. National Association of Realtors is an association and only 50% of real estate agents are part of NAR.
You DO NOT have to be a realtor to sell and market homes. You do have to have a STATE issued real estate license.

I dont know why I keep coming in here and posting *LOL*
Its just the uniformed public commenting for over 50 years on a subject they have zero knowledge
One thing for sure, you and all the others will over the years learn nothing has changed because of this ruling because it's a nothing.
The biggest change to real estate WILL BE corporations direct buying of homes on the market at wholesale prices cash to the seller and reselling them at retail prices that an agent would have got for them. Not different than the trade in your car deal with Car Max or the others. Again, its convenience that people chose/

"Nov 30, 2022According to estimates from the Association of Real Estate License Law Officials (ARELLO), there are more than 3 million people holding active real estate licenses in the United States. Of those agents, there are 1.6 million Realtors®, as of November 2022, according to a 2022 NAR report."

https://www.homelight.com/blog/how-many-realtors-in-the-us/

All this stuff is easy to find. Its an organization no different than ANY trade, in fact their standards are higher than state licensing laws (for lack of a better word) *LOL* good god...
https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics

https://www.nar.realtor/membership

Back to the media, the public controlled like drones in how they think. Quite scary.

 

[Tharber]

My listing agreement's allow me to do what's in my clients best interest and to refuse offers from anyone who is not in their best interest. Commecial properties are too complex for a residential agent. If they have a bonafide offer, I will arrainge to take over that offer and pay them a referral fee which I will happliy pay and possible ediucate them in the process. I deal mainly in 1031 exchanges so dates and proceedures are far more complex to be accomodated on a generic FL based purchase contract. I have received many offers over the years for commercial property on a residential form, so that should tell you something.

In FL (this is an over simplified version) if an agent is dealing with someone with a net worth of over $1M, they need to represent them as a designated agent, so that is a little different, however, 99% of agents don't even know this.

I also buy and sell businesses (example car dealerships) and this is a whole different world all together when you convey assets and is not something that a residentail agent should get involved in. As Realtors, one of our professional standards

 

[Tharber]

You can not call yourself a Realtor unless you are a member of NAR. It is true that you need not be a Realtor to buy and sell properties. The advantage of being a Realtor is that all Realtors are bound by the NAR code of ethics and standards of practice, mandatory mediation, etc.

 

[alarmguy]

You can not call yourself a Realtor unless you are a member of NAR. It is true that you need not be a Realtor to buy and sell properties. The advantage of being a Realtor is that all Realtors are bound by the NAR code of ethics and standards of practice, mandatory mediation, etc.

Well said.
I cant take the posts in here from some others ... *LOL* it's like beating your head on the wall.

 

[alarmguy]

In FL (this is an over simplified version) if an agent is dealing with someone with a net worth of over $1M, they need to represent them as a designated agent, so that is a little different, however, 99% of agents don't even know this.

This can be anywhere in the USA however without that $1M requirement. Meaning real estate firms in many states (and you know this varies all over, including different companies) will not allow agents to work with buyers unless they are representing that buyer as a client.
Ok, now I am out of here for the last time *LOL* ... I got 5,500 lbs of cobblestone to install on my property.

 

[Owen Lucas]

You gotta stop believing you are entitled (for some crazy uninformed reason) to dictate how much others should get paid for performing a service, its servitude …LOL scary stuff man!!!
I mean, in today’s society wanting the power to force people to work for what you are willing to pay is … well, I don’t even know if they do that in N Korea and im sure even in China can work as individuals providing services at thier own rates.

I can understand some frustrations in here with agency but it’s born out of ignorance when you want someone to provide a service to you and force what you are willing to pay on them. That was ended a long time ago back in the dark ages my friends!

I'm not intending on forcing anyone to do anything. If they ask too much commission, I'll move on to the next guy. I called 12 agents and the most they would budge was to 5.5%. It looks like a trend to me and as indicated by lawsuits which is the crux of the issue. A few of the agents had no idea what will happen in the next few months, it seems like no one does. Hopefully more options.

Either way, we won't convince each other of anything, you realtors are the experts, I'm a noob reverse engineering the process. Had I known there were discount brokers out there, I might have never made any posts. I'll give FSBO a try before a discount broker but it seems possible we'll be selling to the neighbor.

Regarding the sentiment that home buyers and sellers don't have the right to dictate how much other people should make, that overlooks what has historically been the case when there is a monopoly and collusion among real estate agents to keep commission rates at 3%+3%. Sure there have been some outliers who work for less but as I found out they didn't work very hard either. As someone else quipped, the gravy train is over.

This is what I'm talking about. The next year will be interesting to see what happens especially if you are a realtor.

We are in affluent country, and people will pay for convenience, no matter what the services and I stress that over and over again. The only ones that complain of the only ones that want services at a discount that they think they should get.

That's me! I don't see the value of convenience in large commissions, some of this is ignorance and lack of financial awareness by the public too. Even at a measly $9000 I think I can spend a few hours and get the job done safely.

I think we've beat this topic to a pulp. No one is convincing anyone here so no hard feelings, I'll spot you a Chicken Bryan at Carrabbas one day.

Stay tuned for updates in my thread on what I'm doing, hopefully I pull this off on the cheap!

 

[zzyzzx]

 

[alarmguy]

This is a perfect example of producing a so called "News Story" to fit the price of a stock or its behavior.
If at the time of this posting Nov 1st 2023 you mortgaged your house and borrowed all the money you could to buy Zillow stock, you could sell it today just over 2 years of holding it and have made over 100% on your investment. (doubled your money and more)

However I wasnt looking for this thread for this reason above. I was going to ask for news stories on how much commissions have dropped for buyers and sellers of homes? Spoiler = $0.00

The new law will be close to 6 months now ... nothing but crickets from the media and yet a search engine on the subject will give you pages and pages of the evils and how much money was going to be saved for purchasers back in 2024.
AS I said, nothing changes, you either hire an agent to help you buy a house or not, they get paid the same and in many cases the selling agents make more money now. They no longer have to feel greedy by not accepting the commission offered to the selling agent on a listing, which is now illegal. Many times that offer was 2%, now an agent can feel comfortable charging 3, 4, 5% to show homes and the seller still pays the 2 or 3% listing fee. SO you can be looking at 5 to 8% commission and the sky is the limit.
With so many buyers wanting homes and so few homes, as an agent, I could charge and get any commission I want.

In the heydays of the early 2000's I had stacks of buyers inches think, I accepted (for a short period of time) the commission offered but I narrowed down buyers by not bothering with people looking for lower cost homes. We eventually did buyer agency and made the seller pay the extra commission for my buyers if they wanted to sell to my buyer. So here we are, over 20 years later and the media somehow thought things would be cheaper, ummm, no, it is going to make commissions better for selling agents. The homeowner will no longer be able to dictate the commission to the selling agent.

The media and courts got it all backwards *LOL* but not exactly.
You see, the courts have freed up the selling agents to charge whatever they want, so in that sense, the courts were right, the media and grandstanders and people who have no clue about due diligence and client services vs customer relationships. One just need look at the post above this one is what I am talking about. Now that agents will feel unleashed, that commission can easily be $25,000 instead of $20,000

 

[Tharber]

Zillow is a Real estate brokerage and is treated no differently than say a ReMax or C21. That has not always been clear to the public. Commissions have always an will always been a negotiable fee. That will never change. There are brokers that will sell for less but they also typically offer less. Its up to the seller.

The current rules are putting the buyers agent fee's on the buyer which in my opinion is not the best method. Some lenders will not allow you to finance that rate, some will. Who does it hurt? Typically first time home buyers the most, then retired people.

In commercial, which is what I do, buyers agent commisions have never been guaranteed, they are negotiated. Thats all that this new rule changes on residential, for far too long residential agents on the buy side have done very little work and been guaranteed a commsison that was negotiated by the listing broker.

I do not work for free and therefore rarely if ever reduce my fee's but I also do not need to get rich of a single client. I am worth what I am worth and thats it.....if that makes sense.

 

[GON]

I had a hard to sell property. The listing broker offered to cut the commission from six percent to five percent to earn my business. I insisted on six percent. I wanted to make sure the Buyer's broker made the full three percent commission as an incentive to show the home and be incentive to "get to yes".

With this new structure- home sellers may be at a disadvantage, that are wanting to pay higher commissions, that would be received by the Buyer's broker.

 

[alarmguy]

...

The current rules are putting the buyers agent fee's on the buyer which in my opinion is not the best method. Some lenders will not allow you to finance that rate, some will. Who does it hurt? Typically first time home buyers the most, then retired people.

...

Im curious about this statement. Retired now but I have moved a lot of real estate in the NY Metro area. (Long Island)
Our organization is what brought buyer agency to the NY Metro area. Threats of lawsuits from attorney organizations everything, of course we prevailed. We even made headline news stories.
Maybe this will explain all the previous statements I have made in here. Regarding people who and the media who THOUGHT eliminating the SBC from MLS listings was going to lower costs to the buyers (or sellers)
The reason I said it will not and will not have any effect (or very little or might make it more expensive) is much the same of your postings but you are in Florida so you may do things differently.

Bottom line, we broke out buyer agency in Metro NY we had A LOT of pushback. Selling brokers had a hard time understanding they have no control over my commission when a buyer hires me to find them a house. A buyer, just like a seller has a right to representation and a court has never said they do not.

Ok, so let's get to the point. Anytime we represented a buyer, we would take them into ANY home and if the buyer liked the home, we would make an offer, that offer contained my fee that the seller would agree to pay at the time of closing. The seller could chose to take our offer or not. Simple stuff.

Example, my buyer wants to buy a $500,000 (for round numbers) in that offer was my SBC (SBC is selling broker commission) as agreed by my buyer when they signed up with me. SO let's take the most extreme example of my SBC being 4%.

My buyers offer of $500,000 includes an agreement for the seller to pay my $20,000 SBC on the buyers behalf at closing. If this was a for sale by owner that is all they would pay, however if the seller was listed with an agency he would also owe the commission to that real estate company when he listed the house with them.

I used the above as an example, typically we would ask 3% if listed with another agency and up to 5% if a FSBO as an SBC and then the seller would have to pay any commissions due their agency if they had one.

So after all said and done, owner accepts $500,000 offer, buyer puts down 10%. House closes at $500,000 and buyers have a $450,000 mortgage. Out of the sale price to the seller, seller paid my $20,000 plus any commission owed to his agent whop represents him which might be another 3% 7% total. Nothing has changed. Seller paid the commissions and buyer financed the house with no out of pocket commission fees.

 

[alarmguy]

I had a hard to sell property. The listing broker offered to cut the commission from six percent to five percent to earn my business. I insisted on six percent. I wanted to make sure the Buyer's broker made the full three percent commission as an incentive to show the home and be incentive to "get to yes".

With this new structure- home sellers may be at a disadvantage, that are wanting to pay higher commissions, that would be received by the Buyer's broker.

AS you know we moved to a new home last year. I didnt want to sell my own house. I knew a well respected agency and the agent/
Since he was newer to our tight knit community he wanted a leg in doing business there. I saw all his and his groups work, photos, etc

At his presentation to us he offered to do the listing at 5%. 2.5% to him 2.5% to buyers agent. I told him to make it 2.5% to him 3% to buyers agent. 5.5% total. I also told him to list the house $20,000 higher than he suggested. He gave a range where one price might have come closer to $15k higher.
I know real estate and what buyers look for. Our house was pristine but everything was 16 years old and why we decided the right time to sell, downsize and move to another new home. It was too big and if we were to stay, we would redo all flooring, kitchen, appliances, 2 HVAC units and roof.

Listed at the highest asking price ever, at a time when the real estate market was starting to be questioned with rising rates Sept 2022 it sold in the first weekend with multiple offers. At 1k above asking. I think today we still hold the record because of the condition of the home. Loved that house, but was time to move into near the coast, kids gone, new lifestyle.
The buyers from out of state that we chose, young family, solid offer and he was a back officer from up north with connections to his bank that was going to do the mortgage. We didnt play games and try to hold off accepting their offer and pushing final offer to all buyers. We were in contract on a new home build at a time interest rates where rising and these buyers were golden. The only catch is, they were so motivated we needed to be out in 4 weeks!! Holy smokes. I ll never forget that. I think we were able to negotiate 5 weeks *LOL* ... moved into an apartment while the new home was built.

 

[Tharber]

Alarmguy,

That might work but you have to disclose the compensation on the closing statement. Some lenders will not finance a buy side fee no matter what. I think it would be problimatic is all. What is happening with my residential friends is that buyers are going direct to them as listing agents and they end up getting full commissions anyway. Commissions as you know have always been negotiable and in the perfect sense, a buyers agent should have to negotiate their fee with the seller or sellers agent. That is how commercial has always been and it works well.

 

[GON]

Alarmguy,

That might work but you have to disclose the compensation on the closing statement. Some lenders will not finance a buy side fee no matter what. I think it would be problimatic is all. What is happening with my residential friends is that buyers are going direct to them as listing agents and they end up getting full commissions anyway. Commissions as you know have always been negotiable and in the perfect sense, a buyers agent should have to negotiate their fee with the seller or sellers agent. That is how commercial has always been and it works well.

Our latest home purchase (AUG 2024) we used the listing agent also as our buyer's agent. I think the technical word may have been "dual agency". I know some states limit certain activities in the listing agent is also the buyer's agent.

Although ethically wrong, we felt the listing agent would have more incentive for us as the buyer of the home she had listed, when compared to buyers with a "buyer's agent". The listing agent made a six percent gross commission with us as the home buyer. Buyers with buyer's agent, the listing agent commissioned was three percent (cut by 50 percent- which is a lot of money).

The home we purchased had a lot of interest immediately after being listed. Us indirectly paying the listing agent six percent- we felt we had an advantage over other buyers that had buyer's brokers. Of note, paid $30k USD over listing price, waived inspection, and waived appraisal.

 

[Owen Lucas]

Follow up. I helped a family member buy and sell a house recently. No real-estate agents used on our side. I used the same real estate attorney for the same of one property for the second one. $1500 retainer and like another $600 in hourly fees for property 1. All documents were reviewed and updated according to the attorney's recommendations. They dealt directly with the real estate agent. The buyers agent wanted a commission, I said "for what? I listed the property, showed it, took the pictures, and handled all of the phone calls". They were quiet lol.

For the second property the attorney charged probably $800 as it was a less complicated purchase. I saved THOUSANDS in commission fees.

Oh and the first real estate agent that the probate attorney recommended wanted to sell the house for about $40k less than we were able to sell for. The guy had no interest in pricing it right and I think just wanted to make a quick sale...so much for representing and having the client's interest in mind eh? I also beat the day of death appraisal by a wide margin. DIY all the way.

 

[alarmguy]

Alarmguy,

That might work but you have to disclose the compensation on the closing statement. Some lenders will not finance a buy side fee no matter what. I think it would be problimatic is all. What is happening with my residential friends is that buyers are going direct to them as listing agents and they end up getting full commissions anyway. Commissions as you know have always been negotiable and in the perfect sense, a buyers agent should have to negotiate their fee with the seller or sellers agent. That is how commercial has always been and it works well.

This has never been my experience in real estate.

Real estate fees have nothing to do with the bank.
The homeowner accepts an offer.
The bank finances the house
At closing the homeowner pays the real estate agents fee from the proceeds of the sale.
It’s coming out of the proceeds of the home the bank really can’t say anything about it.
The house is sold. It’s the homeowner’s money.

It actually works the same exact way as when builders and even homeowners will reimburse a buyer for closing costs.
Once again, the house gets sold and at closing the homeowners proceeds get cut up to satisfy any outstanding bills, any outstanding mortgage or money promised to the buyer.

Bank has no say in anything. It’s not the banks money it’s the homeowner. The homeowner gets to spend his money any way he desires.

The bank has no saying how the proceeds are divided up on the closing documentation.

When a home is listed in the United States, the listing agent gets his fee from the homeowner as that is who he represents. There is no such thing as keeping the whole fee because there is only one fee.

A buyers agent gets the fee from the buyer because the buyers agent is representing the buyer. However, when that buyers agent presentsan offer to the seller, it will be contingent on the homeowner paying the buyers agent fee from his proceeds at time of sale.

Of course the homeowner has the right to say no, and the buyers move on and don’t get the house or pay the fee themselves.

I could’ve made this even shorter, if you think about it, it makes perfect sense and it has been practice. When a house is sold a bank cannot cannot tell a homeowner what he has to do with his money.
The closing statement shows for tax purposes, and of course, government tracking with the proceeds of that money is going and how much the homeowner is keeping

 

[Tharber]

Thats not how it works with the new rules. If a seller does not want to pay the cobroke fee, the buyer has to pay their buyers agent. If said buyer does not have the funds, it must be financed. Initially this was a huge road block for VA buyers but the VA has since backed off a little and will pay a certain percentage of the buyers agent fee's.

Even in commercial, if there is no co-broke fee, the buyer pays his agent at closing.

 

[alarmguy]

So, here is a follow up to all those who thought real estate commissions would go down. They actually believed the media reports and in this thread as well as others I tried over and over to explain, nothing changes do to the OP "

"Zillow Plunges After Verdict on Real Estate Brokerage Commissions"​

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So here we are, real estate commissions have not changed and according to this have actually gone up slightly after the verdict against the National Association Of Realtors​

Dont say I told you so but I told you so. No agent has to work for free, the verdict against NAR has made it easier for experienced selling agents to make more money and higher commissions, not less. Maybe I somehow didnt make that clear in past posts but I went over it and over it.​

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All the grandstanding by politicians and people in forums who had no idea what they were talking about, well... anyway. ( I didnt mean to type all caps, but when I copied the OP post, it came all caps and I cant reduce it and my wife calling me for dinner*LOL*)​

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https://www.cnn.com/2025/02/17/economy/new-nar-rules-home-buying-update/index.html​