Zillow Plunges After Verdict on Real Estate Brokerage Commissions

[SwampSurvivor]

Did Zillow ever get out of the house flipping game? I remember for a while there was some controversy because Zillow was buying up a large number of houses.

At least in NY, you can view homes on the MLS Matrix and avoid 3rd parties like Zillow, trulia, redfin.

 

[MSCH]

it' is about time the Real Estate Industry faced some of the effects of internet competition in much the same manner as stockbrokers have.

basis of argument was since many buyers find their own home on the internet, the tradition of splitting the 6% commission with buyer and sellers broker when many current buyer's found house themselves on the internet seems to be unfair to the buyer since the seller broker only represents the selller.

 

[fsdork]

My last house was sold by a realtor who accepted a lower than 6% total commission (to be split with the buying agent). He told me flat-out that my house would have a harder time selling than a comparable house on a 6%+ contract because the buying agents would be reluctant to show it to their clients due to the decreased commission. The selling agent did a great job marketing my house, so no complaints on that end - and I believe our recent renovations set our place apart from others in the segment. I would imagine buying agents can only deter their clients so much from looking at a house they see and love on MLS.

On the purchase of my current home, I experienced that behaviour with my buying agent. I asked about a house listed on MLS by a smaller agency. He said he wouldn't deal with that selling agent because [insert vague references to that agent being difficult to deal with]. I'm quite sure that listing agent was splitting a lower commission percentage. Another confounding issue is that my buying agent would tell me there were offers pending on certain houses I asked about. Maybe he was being 100% truthful - I'd have no idea.

 

[GON]

Did Zillow ever get out of the house flipping game? I remember for a while there was some controversy because Zillow was buying up a large number of houses.

At least in NY, you can view homes on the MLS Matrix and avoid 3rd parties like Zillow, trulia, redfin.

Yes, Zillow did get out of the home flipping business. Likely a bad move, as after Zillow exited the home flipping business- homes have continued to rise in price.

 

[alarmguy]

It's nothing more than a jury decision, it will be repealed. Pretty much, as a listing agent, on a listing, an offer to buyers agents is made on how much they will offer to a selling agent even though the selling agent can demand their own Commission rate. The jury considered it price fixing since the listing company was listing the commission offered to the selling broker.
Or something along that line. It wont be as big a deal as the media makes it when it's all said and done.

I can see the day that maybe they will not in some way be able to offer a selling agent a commission, yet as a homeowner you can do whatever you want, so it's kind of weird. I need to read up on it more.

Listing agents do typically advise a homeowner on how much they should offer a selling agent and that is where maybe this case was.
We sold our house last Nov 2022. Having been very successful in real estate I hired a company. He suggested a 5% commission, 2.5 for him and 2.5 for a selling agent. He really wanted our house. I knew it would sell and it did in two days.
Anyway, I told him I wanted to pay the selling agent 3% and he was ok with him taking 2.5% for himself. So 5.5% total.

I think the gray area might be, many homeowners are clueless about agency and dont understand that they select the commissions being offered. I CAN see how a jury would consider it price fixing. It will be interesting. I can assure you, if anything out of this settlement, we may see commissions go up, not down. *LOL*

Either way, If this stands YEARS of applies and court cases, the individual selling real estate agent will possibly make more money than they as selling agents and the listing agents the same amount. One thing for sure, cost will not go down. It's not possible.

 

[BMWTurboDzl]

It's nothing more than a jury decision, it will be repealed. Pretty much, as a listing agent, on a listing, an offer to buyers agents is made on how much they will offer to a selling agent even though the selling agent can demand their own Commission rate. The jury considered it price fixing since the listing company was listing the commission offered to the selling broker.
Or something along that line. It wont be as big a deal as the media makes it when it's all said and done.

I can see the day that maybe they will not in some way be able to offer a selling agent a commission, yet as a homeowner you can do whatever you want, so it's kind of weird. I need to read up on it more.

Listing agents do typically advise a homeowner on how much they should offer a selling agent and that is where maybe this case was.
We sold our house last Nov 2022. Having been very successful in real estate I hired a company. He suggested a 5% commission, 2.5 for him and 2.5 for a selling agent. He really wanted our house. I knew it would sell and it did in two days.
Anyway, I told him I wanted to pay the selling agent 3% and he was ok with him taking 2.5% for himself. So 5.5% total.

I think the gray area might be, many homeowners are clueless about agency and dont understand that they select the commissions being offered. I CAN see how a jury would consider it price fixing. It will be interesting. I can assure you, if anything out of this settlement, we may see commissions go up, not down. *LOL*

Either way, If this stands YEARS of applies and court cases, the individual selling real estate agent will possibly make more money than they as selling agents and the listing agents the same amount. One thing for sure, cost will not go down. It's not possible.

Ya. I agree. This ruling is not going to make it any cheaper unlike say removing the home mortgage interest deduction. Commissions are just the cost of doing business. No different than other costs associated with selling real estate (ex, appraisal, Title work, closing attorney, etc). The selling broker will always have an incentive to sell the home at the highest possible price, although my mother would disagree with me because she thinks realtors will accept a low ball price if it means less effort to sell the house.

Another thing is that while the 6% figure has been routinely thrown around by the media the reality is that this percentage is fluid especially when you start selling multi-million dollar homes.

 

[MSCH]

I remember when stockbrokers charged 10% commission. Those days are long gone.

I suspect the Real Estate Industry is going to face the same competition from the internet and alternative methods of sales as this court case was about.
Whether it is a quick moving train wreck for the industry or they start competing outside of the old monopoly system they were used to, I think they have to change because ultimately the market will make the decision for them.

 

[97K15004WD]

From CNN:

What was the case about?​

The cornerstone of the plaintiff’s argument is that NAR is forcing homesellers to pay an inflated commission that is then split between their agent and the buyer’s agent. The homesellers argued commission sharing as a condition for access to the Multiple Listing Service was unfair and kept commissions artificially high.

Typically, when a home goes on the market for sale, the seller offers their broker a set commission. For decades, the commission has consistently been around 6% of the sale price, usually with a 3% split for the buyer’s and seller’s agent.

In a competitive market, the homesellers argue, the cost of the buyer’s agent’s commission would be paid not by the seller, but by the buyer who received the service. The sellers said that the buyers should be able to negotiate the fee with their agent, and that the sellers should not be on the hook for paying it.

NAR and the other defendants argued in court that their commissions are always negotiable. They also said that the system of having the seller’s agent split the commission with the buyer’s agent allows buyers, who are already weighed down with expenses like a downpayment, closing costs, inspections and appraisals, to avoid the added expense of having to pay an agent as well.

Consumer advocates celebrated the verdict and hoped that plaintiffs would also receive their request for the judge to order changes to how commissions are structured in the industry.

 

[zzyzzx]

My take away was that as a seller, I had no choice but to agree to the real estate agent's required fee (6%, which is ridiculous), or they wouldnt list it in MLS. That to me is, well, extremely unfair.

Or even if you can supply the more then adequate 1% to a seller's agent, then selling agents won't show anyone your house out of spite.

 

[zzyzzx]

Zillow Plunges After Verdict on Real Estate Brokerage Commissions​

 

[zzyzzx]

Realtors are pretty much as useful as travel agents.

 

[zzyzzx]

Is lying common practice in negotiations?​

 

[97K15004WD]

Is lying common practice in negotiations?

You've never bought a new car?

 

[CKN]

Realtors are pretty much as useful as travel agents.

You obviously have never been involved in an ultra complex real estate transaction......

 

[PandaBear]

There are agents who either do payback or fixed / reduced fees. I bought a condo using a buyer agent who does nothing but writing offers and negotiation. Got 2/3 of the usual fees back. He doesn't show houses.

What would these rulings change is that the agents would eventually be competing for the fee vs having to set the same fee, then let marketing decide who is picked instead of the fee structure. I think it is healthy in the long term, but I don't think we can magically see the fees dropped to McDonalds price.

Remember there are existing low cost agents yet they are not the trend at least on the selling agent side. People don't always pick the lowest cost option when their negotiation skills are needed.

 

[PandaBear]

Realtors are pretty much as useful as travel agents.

You don't negotiate your plane ticket price, but you do when you buy a house or a car.

 

[PandaBear]

Thanks for posting the article. I still don't see a issue. I comprehend the commission structure on the listing triggers a hard percentage, but I am not smart enough to see a wrongdoing in it. And yes, I would expect a buyers agent to favor listings that offer higher commissions. That is real life.

There is always a risk of the buyers walking away. Real estate agents aren't monopoly and if you screw up your deal you get paid nothing after you wasted hours and days on it.

My parents were real estate agents and they probably lost 80%+ of the hours they work on with no closing, and then get accused of being greedy when someone wants to negotiate down the commission after the deal is closed because it is excessive pay for the percentage they initially agreed to.

There are lots of cost on the failed deals in sales, people just don't understand that.

 

[PandaBear]

Sorry, Additional rant; Closing Cost / Title Company fees are total BS.... Example, I am paying a document fee, a processing fee and a examination fee (Apparently paying hundreds for preparing a document does not include said document being reviewed )

Don't even get me started with Uncle Sam getting his share... $3,300+ in recording fees, stamps and taxes! For what? Some government worker spends 5 minutes or less updating a database is updated and maybe printing/filing a hard copy. Does that cost $3,300? Heck no, just the local gubernant getting their piece

I can see some of them being important, but refinancing requires another set of title insurance and fees is just crazy IMO. Local tax is just what it is, you need to factor that in before you make the offer. Some places have higher taxes but use those taxes in things that make their places desirable. Nobody points a gun to your head to buy in the area you buy.

Personally if I want to start a new business Title Company would be my first choice.

 

[eljefino]

On the purchase of my current home, I experienced that behaviour with my buying agent. I asked about a house listed on MLS by a smaller agency. He said he wouldn't deal with that selling agent because [insert vague references to that agent being difficult to deal with]. I'm quite sure that listing agent was splitting a lower commission percentage. Another confounding issue is that my buying agent would tell me there were offers pending on certain houses I asked about. Maybe he was being 100% truthful - I'd have no idea.

Wow, with realtors screaming for inventory and interest rates being what they are, you'd think the "difficult" one would have found time to wheel and deal, even for slightly less.

 

[zzyzzx]

There is always a risk of the buyers walking away. Real estate agents aren't monopoly and if you screw up your deal you get paid nothing after you wasted hours and days on it.

My parents were real estate agents and they probably lost 80%+ of the hours they work on with no closing, and then get accused of being greedy when someone wants to negotiate down the commission after the deal is closed because it is excessive pay for the percentage they initially agreed to.

It's generally accepted for the amount of education and skillset required; realtors are grossly overpaid. Maybe the agents aren't a monopoly, but the MLS is.

There are lots of cost on the failed deals in sales, people just don't understand that.

Like what?