Zillow Plunges After Verdict on Real Estate Brokerage Commissions
- Thread starter GON
- Start date
Nah, agents aren’t colluding in general, you guys are pawns in the game.
But the MLS is a central control system, like BAR for lawyers. Its very centralized nature pretty much guarantees a form of collusion.
Owen Lucas
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I'll document my FSBO journey here on BITOG for everyone to see in this thread: https://bobistheoilguy.com/forums/threads/my-for-sale-by-owner-journey-home-sale.380572/
You can list on MLS for $100 via 3rd parties and do the rest with a real estate attorney. Boom, no agent needed.
You’re right on with your remarks.
Believe it or not, I get too involved in conversations in here and I’m going to sit this one out.
It’s absolutely laughable, ridiculous and ignorant how armchair home sellers want to tell another profession, how much money to make.
It’s so ridiculous and ignorant that I won’t even let myself get wrapped up with the negative comments in here.
You just can’t and never will educate closed minds with comments
You’re 100% right they should get on with their lives, sell their own homes and stop knocking other peoples business and professions
I would love to know what everybody does in day-to-day activities and list their income so I could tear their professions apart.
Absolutely ridiculous, they have no clue what they’re doing and even when they think they had a successful sale, the chances of far greater they undersold the house.
But forget, all that I have no problem with anybody selling their own house, it’s the ridiculous comments about an industry they have absolutely zero experience and knowledge in.
And by the way, these amplified Home sellers in social media, are a needle in a haystack compared to the people who hire a real estate agent to sell one of their most prize possessions.
These people can afford and want our services for a mere 4 to 6% of the purchase price.
I have had countless for sale by owners eventually list, their homes with me, and my turnaround time just blew them away and got them the original money they wanted in their pocket to begin with.
I’m sure you will agree good God the ignorance is the only thing that drives me crazy. They want to rule over other people and what they do for a living and ignore their own professions and think they’re worth something.
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JHZR2
Staff member
No, most folks would have no idea how much E&O insurance costs. Like most insurance, it’s probably also controlled and excessive.
I doubt anyone is aware of the “risks” you take listing something either. I assume that’s monetary risk of listing the property (is it per property listing, an annual fee, etc?), and taking out ads in paper and other media. Advertising. Sure that costs. What else?
What other risk is encountered? As I recall from various transactions I’ve made, the agent is absolved of liability and risk. They’re listing to the best of their knowledge as described by the seller. And they can’t give legal advice. So it’s the gut feel of “market knowledge”, of course they probably can no longer say what is a good or bad neighborhood. Heck, realtor.com app removed the heat crime map because it was “racist”.
So this is an honest ask. What is the tangible value add besides the listing in the MLS? I doubt that Joe realtor has a proprietary valuation algorithm, and I also assume that MLS and other databases will give current listings and recent closed sales for the purpose of “comps”. Maybe I’m wrong?
So if you can’t do the legal part (which is a colluded racket in its own right, worse than realtors and MLS), and can’t give most advice, can’t inspect or deal with property faults. Then what? Run more ads and open houses? Make better ties with other realtors to steer buyers to your properties and negotiate reciprocity?
And it seems that the claim that the agent in a $1.5MM neighborhood and the agent in a $250k neighborhood do about the same work, for the same size home. But what are we missing then?
JHZR2
Staff member
Why? A property is most people’s largest purchase. And is a major source of savings or estate in the long run. People shop for deals and sales. Bigger transactions, including the actual buyer-seller are negotiated. Most everything in this world is (except the thieves at Carmax, lol). So why shouldn’t informed customers expect a very clear basis for what value and tangible product they’re getting, and negotiate accordingly?
I don’t really have a dog in the fight, but that ask is reasonable imo.
That’s valid, but there is a difference imo. In many cases there is a specific skill. A specific product.
And it’s reasonable in other places to ask too. If I don’t have an AC machine, I can’t work on my car’s AC. So I have to pay someone to do that work. But it doesn’t mean I can’t shop who will vac a car for less money. A lower overhead shop will charge less, excellent. Is it such a bad thing to ask?
And I’ve seen a LOT of bad listings, bad responsiveness, lack of knowledge. I’m not saying a realtor shouldn’t get a commission. But some listings aren’t great. Yet the asking prices are similar. Is the realtor selling, or is the property selling itself?
Well I think that is the actual ask. Lots of times it is said that folks don’t know what they’re doing. I don’t know. But I’ve never listed a property, only ever bought. So it’s an honest question. What dont people know??!? How to take and upload photos? Measure size of a home? Write a few paragraphs? Create adds? Correlate data to make an estimate on valuation? Draw lines between good and bad neighborhoods? That’s where I think most folks start to draw a blank.
It’s not like someone is coming out to say, “it costs $1000 for a legit realtor to list a property in the MLS” or something along those lines….
And of course, no legal advice, no financial advice, no inspections by the agent.
So it’s a legit question. Maybe not even salient to the lawsuit. But if the commission claims are tied to MLS and other fees and other value added, understanding what it is, is useful for all. Not just that someone not exposed has no idea what they’re doing.
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Yup, very good points made by JHZR2 above. Since when shopping around or asking what exact services are worth the price, equals controlling/wanting to control how much money someone makes?
If that logic is used, then we are all guilty of "controlling" someone else's pay when we shop around for the best price.
If that logic is used, then we are all guilty of "controlling" someone else's pay when we shop around for the best price.
Ive had this discussion many times and I have no skin in it either. I was one of the top agents in the NY Metro area and one of the most trained and educated. Not going into specifics for that reason but I know what I am talking about.
My post #58 is my statement and that sums it up. It's more to do with the media and this thread is a perfect example. The media says commissions will get hit and people in this forum and the media think the industry is going to get crushed because of this ruling. No, not a chance so its pointless going through your long post because we have to admit I spend to much time and my posts long enough. Im not getting into bringing you car into fixing it because the air conditioner doesnt work.
People pay for services since the beginning of time, if you dont want a service dont use it. You question fees on something you dont need, yet 1,2,3% brokers have been around for decades now, just use one, most dont and many, many have gone out of business, Imagine that. So how can one complain? there are your commissions, look it up, list your home for 1%.
For some magical reason people fail to realize this talk has been around for 50,60, 70 years. Same type of mentality real estate firms make to much money. Post #58 states nothing changes and why. That is all I am saying. Nothing is going to change, unlike a small percentage of the population and a large percentage of the media no one cares. Oh, how the internet was going to do away with the real estate commissions, one by one those companies borderline went out of business. Im not sure Zillow even makes money I believe they have a negative P/E ratio still but they get all their information from MLS.
BTW- 10% of the homes are sold FSBO - For sale by owner, the internet didnt change anything, might have made it harder in fact. Gone are the local newspapers.
Of that 10% half of those sellers knew the buyer, so 5% sold to strangers.
1% to 3% brokers are around, so what is the problem if you want one? go get one. *LOL*
That fact is, people hire an agent to sell their home and the fact is buyers want to work with agents. Nothing is going to change that.
I swear I wont let myself get caught up in this thread. Come back to me in a year or five years, it will be the same discussion and people will still have agents handling their transactions.
Here is one small thing never mentioned when people question what agencies do. They bring buyers into homes. We can acknowledge you need to show your home to buyers.
Buyers DO NOT want to deal with For Sale by Owners, OMG the stories.
One can not possibly think that a buyer looking for a home wants to search for sale by owners, then on a Saturday go out to look at homes talk 4 to 8 different sales people (the owners are the salespeople as they are selling the home) homes all being sold by owners.
Trusting each and every one of them, telling them all the great things about their home and why its the best, all the time the buyer wants nothing but to get out of the house and away from them. They have to repeat this week after week, different owner each time/
Then there is the real estate agent who builds a relationship with them, they can talk honestly about what they like and hate about any house they see. They can see all areas and all homes without getting stuck entertaining a homeowner who wants to sell them a home they have no interest in and they have to do that with every FSBO they see.
This is why real estate will always be a service people will look for, in fact, hands down the most successful service industry in the country but it makes a great news item that the media KNOWS you will click on. Any product or any successful business it wide open to misinformation from people who have no knowledge of a particular industry.
PS. I think you know me well enough, hope nothing I wrote sounds personal in answering your question, not my intention at all, I honestly only care about misinformation, and in this case, Im telling everyone, the real estate agencies are NOT going to get crushed.
It's easy to read text the wrong way and one of the ways the media keeps people tuned in.
Can things evolved over time? Sure, what industry doesnt but one thing for sure, serious buyers will always be with real estate agents and avoid FSBO in the vast, vast majority of cases, like its been for 50+ years.
BTW- it's easy to sell your own hose if you vastly under price it.
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Except if you want the most amount of people to see your house, good news is, since you inherited it limiting showings to only people who will look at for sale buy owners, you will most likely be happy with whatever you get out of it.
Im curious, how many agencies have you spoke to and got quoted 6%?
I know different areas of the country are higher but 6% is pretty rare.
So you’re saying agents will not show his house despite being listed on the MLS? You need to specifically look for FSBO listings?
JHZR2
Staff member
I appreciate the discourse. Then don’t reply, don’t get caught up, I know I’m replying, but it’s fine if you stay away!
Don’t use an analog of people shopping for price and a deal for a service rendered.
But note that just saying “OMG the stories” doesn’t answer the question. The reality is that the answer we keep getting is that:
- the layperson doesn’t know what they’re doing
- the realtor does so much
- oh the things we’ve seen
Yet the things the realtor does, and the issues that have been seen, aren’t defined or described at all.
So in other words they might as well not be real.
Which drives peoples’ optic on why would they need to pay someone 1,2,3,6% to do this?
Just to take your word for it?!?
Tangible product is what is being asked. Sure you might argue that the property was sold.. but that’s not what is being asked.
This seems more and more like the Wizard of Oz… don’t look behind the curtain, there is nothing to see behind the curtain. Go away.
I know it’s hard to get points across in text sometimes. Frankly I think this is good discussion to answer a curiosity.
Not at all, dont take my word for it. Sell it yourself, Im good with that. One fact is you limit yourself to the vast pool of buyers out there as up to 90% of them use agents.
Hey! I change my own oil! I dont need to pay someone in a shop to change it! I save a bundle, yet all my neighbors, like every one of them, take their vehicles in for oil changes!
We all spend our money on what we choose and there is a percentage of people out there who rather do things themselves. Except the oil change is a finite. It's just oil and a filter.
A real estate agent has a pool of buyers where only 10% will want to do a transaction with a homeowner and 5% of those 10% know the owner.
JHZR2
Staff member
Yes but people shop for oil change prices often. And some folks look to verify that a new filter is on the car, and the oil is golden color…. There are tangible markers besides just getting a bill and the job done.
If realtors will only show a buyer certain properties, that’s an issue. That’s a fabricated “value added” to use a realtor, otherwise you don’t get the looks even if in the MLS.
If it’s a matter of taking photos and writing up a blurb for the MLS, I’m not convinced it’s a big lift to justify 1/2/3/6% of the sale.
Thus why it’s not clear what the tangible value added is. Not just “oh we do so much, and a layperson doesn’t know”. Ok, what?
If it’s literally that you need the realtor to realtor magic handshake to get max exposure on properties, even if others are listed in the MLS, that’s more eye opening…
Good question, the better ones will show the house and the homeowner will then pay the commission the agent asks at time of the offer from his buyers if he wants to sell to his buyer client.
That will commission will likely vary from 2 to 5% its impossible much like insurance to talk commissions on a national level. Typically the lower the house price the higher the commission. So depending on area, he could have listed his home with an agency for max exposure for lets say 2.5% and if a buyer found expect to pay another 2 to 2.5% = the same cost DEPENDING on area.
More or less in many contracts, if a buyer client buys a FSBO the commission in the offer is higher than if that same agent and buyer buys a home listed with an agent.
The reason I say the better agents will show the house is some agents wont even want to bother dealing with an unknown wild card like an unlicensed homeowner.
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Well it will be interesting to see if agents in high property value areas feel the pressure to start lowering their commission rates.
Since it seems that they will no longer be allowed to collude among themselves in order to keep their rates high, my guess is the agents that are willing to work for 1.5% are going to get a lot of listings and the crybabies that think people have no right to tell them how much they should make are going to be sitting around waiting for their phones to ring.
If you were a well organized, professional and personable real estate agent would you rather sell 3 or 4 homes a month that were worth 1.5 million each for a 1.5% commission or be all full of self-righteous indignation and sell just one for 3%. Or maybe sell zero because others are willing to work for less ? The business model is changing. Just like when the big box home improvement stores put the Mom & Pop hardware stores out of business.
The commission structure monopoly is about done. If you are in that business you either adapt or get out. Yes, people do have a right to tell you how much you should make when they are the ones paying you.
Since it seems that they will no longer be allowed to collude among themselves in order to keep their rates high, my guess is the agents that are willing to work for 1.5% are going to get a lot of listings and the crybabies that think people have no right to tell them how much they should make are going to be sitting around waiting for their phones to ring.
If you were a well organized, professional and personable real estate agent would you rather sell 3 or 4 homes a month that were worth 1.5 million each for a 1.5% commission or be all full of self-righteous indignation and sell just one for 3%. Or maybe sell zero because others are willing to work for less ? The business model is changing. Just like when the big box home improvement stores put the Mom & Pop hardware stores out of business.
The commission structure monopoly is about done. If you are in that business you either adapt or get out. Yes, people do have a right to tell you how much you should make when they are the ones paying you.
Owen Lucas
$100 Site Donor 2023
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I still want to get a premium for the property and since I am not in a hurry to sell, I'm fine waiting out a determined negotiator for a few weeks / 2 months or so. The appraisal should point me in the right direction, and my strategy is to overprice it by $25k or so to see how the market reacts. We discovered yearly vacant home insurance on this property is $5k a year so we don't want to sit on it too long since that would cut into any profit.
There are services online that will get me into the MLS. I just off those phone with them. For around $200 this agency will list the property on MLS. I have to fill out a few forms, provide a death certificate and estate paperwork. They even include support for 360* photos for virtual tours. An Insta360 camera runs for $400, I always wanted an excuse to buy one lol.
By scanning every room I think there will be enough information to maybe avoid showings for some tire kickers. It's a multi hour round trip to visit the property so I'm hoping this will reduce showings. Otherwise I'll have to schedule and batch visits, eh I guess I can use it as an excuse for some deep dish pizza.
Only 1 so far, they mentioned maybe 5.5% but that 6% is normal. Small sample but it seems consistent with other sources I've heard from, could be others out there charging less. I'll have to call around.
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Here's a good list of what a good Realtor does when listing:
lightersideofrealestate.com
I won't try yo beat a dead horse here. If you think adding your home to the MLS will get it sold, go for it.
TH
184 Things REALTORs® Do To Earn Their Commission
Much of what a REALTOR® does happens behind the scenes.
lightersideofrealestate.com
I won't try yo beat a dead horse here. If you think adding your home to the MLS will get it sold, go for it.
TH
To give an idea how balanced I try to be in my postings on any subject in here.
This could further help people selling their homes with corporations buying them.
Who knows maybe the time will come when people just accept the fact that a corporation will come in pay all cash for the home and they will be done with the deal. They are going to get less money in their pocket but they do now as everybody trades in their car for a new car.
So the corporation will buy your home and then sell it to a buyer at a higher price then if real estate commissions were involved.
Before we moved just last year, we had two solid offers from well-known corporations that buy residential homes in cash, as a standby in case we didn’t sell our home in time to move into the new one.
Well, we sold our house at the highest any Home sold in our community in the first weekend.
The back up offers we had from the corporations were 15%+ less than what we got. This is becoming big business with corporations buying homes and reselling them at higher prices.
Though I’m not so sure how aggressive they are anymore because some have got burned.
This could further help people selling their homes with corporations buying them.
Who knows maybe the time will come when people just accept the fact that a corporation will come in pay all cash for the home and they will be done with the deal. They are going to get less money in their pocket but they do now as everybody trades in their car for a new car.
So the corporation will buy your home and then sell it to a buyer at a higher price then if real estate commissions were involved.
Before we moved just last year, we had two solid offers from well-known corporations that buy residential homes in cash, as a standby in case we didn’t sell our home in time to move into the new one.
Well, we sold our house at the highest any Home sold in our community in the first weekend.
The back up offers we had from the corporations were 15%+ less than what we got. This is becoming big business with corporations buying homes and reselling them at higher prices.
Though I’m not so sure how aggressive they are anymore because some have got burned.
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The following is a statement from NAR as well as some MLS rules:
Following recent inaccuracies in media coverage, including the false representation or suggestion that the National Association of REALTORS® (NAR) requires a standard 6% commission, NAR has issued the following statement:
The National Association of REALTORS® (NAR) does not set commissions – they are negotiable. The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation. That offer can be any amount, including zero. And other rules throughout the MLS Handbook and NAR policy expressly prohibit MLSs, associations, and brokers from setting or suggesting any such amount that should be included in that field. The text of the current rule is linked here and excerpted below, the text of our MLS Antitrust Compliance Policy is linked here and excerpted below, and a notice included in NAR’s MLS Handbook is below.
Again, the current rule that has been the subject of litigation does not set commissions.
As reflected in our release about the proposed settlement agreement, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. Commissions remain negotiable, as they have been.
Excerpt from Handbook on Multiple Listing Policy – Commission/Cooperative Compensation Offers, Section 1: Information Specifying the Compensation on Each Listing Filed with a Multiple Listing Service of an Association of REALTORS®
In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.
The listing broker retains the right to determine the amount of compensation offered to subagents, buyer agents, or to brokers acting in other agency or nonagency capacities, which may be the same or different.
Excerpt from Handbook on Multiple Listing Policy – MLS Antitrust Compliance Policy
The purpose of multiple listing is the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public. Boards and associations of REALTORS® and their multiple listing services shall not enact or enforce any rule which restricts, limits, or interferes with participants in their relations with each other, in their broker/client relationships, or in the conduct of their business in the following areas.
Boards and associations of REALTORS® and their MLSs shall not:
Under the long-established policy of this association, the (state) association of REALTORS®, and the National Association of REALTORS®:
Following recent inaccuracies in media coverage, including the false representation or suggestion that the National Association of REALTORS® (NAR) requires a standard 6% commission, NAR has issued the following statement:
The National Association of REALTORS® (NAR) does not set commissions – they are negotiable. The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation. That offer can be any amount, including zero. And other rules throughout the MLS Handbook and NAR policy expressly prohibit MLSs, associations, and brokers from setting or suggesting any such amount that should be included in that field. The text of the current rule is linked here and excerpted below, the text of our MLS Antitrust Compliance Policy is linked here and excerpted below, and a notice included in NAR’s MLS Handbook is below.
Again, the current rule that has been the subject of litigation does not set commissions.
As reflected in our release about the proposed settlement agreement, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. Commissions remain negotiable, as they have been.
Excerpt from Handbook on Multiple Listing Policy – Commission/Cooperative Compensation Offers, Section 1: Information Specifying the Compensation on Each Listing Filed with a Multiple Listing Service of an Association of REALTORS®
In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.
The listing broker retains the right to determine the amount of compensation offered to subagents, buyer agents, or to brokers acting in other agency or nonagency capacities, which may be the same or different.
Excerpt from Handbook on Multiple Listing Policy – MLS Antitrust Compliance Policy
The purpose of multiple listing is the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public. Boards and associations of REALTORS® and their multiple listing services shall not enact or enforce any rule which restricts, limits, or interferes with participants in their relations with each other, in their broker/client relationships, or in the conduct of their business in the following areas.
Boards and associations of REALTORS® and their MLSs shall not:
- Fix, control, recommend, or suggest the commissions or fees charged for real estate brokerage services (Interpretation 14).
- Fix, control, recommend, or suggest the cooperative compensation offered by listing brokers to potential cooperating brokers.
Under the long-established policy of this association, the (state) association of REALTORS®, and the National Association of REALTORS®:
- The broker’s compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement.
- The compensation paid by a listing broker to a cooperating broker in respect to any listing is established by the listing broker and is not fixed, controlled, recommended, or maintained by any persons other than the lister broker. (Amended 4/92).
You have to remember in today’s society nobody wants to know the factual truths
Then they have nothing to talk about
