It will definitely force many agents out of the profession. There won’t be enough money to sustain the current amount of agents.

Dedtired - congrats on selling your Mother's house. Even though it's been a lot of work you must feel so relieved that you have a buyer. Is the buyer interested in any of the furnishings?

DS is in the market for a home and has attended several open houses where the realtors are pushing hard to get prospective buyers to sign with them. Fortunately he isn't in a rush to buy just yet.

Hmmmm we've attempted to 'negotiate' the realtor fee and got no where. Good for you. We should have hired a lawyer--bet they could get it done but then the lawyer fees suck up anything saved.......

One article I read said this would encourage more people to sell without using a realtor. I guess its less expensive to pay an attorney for a few hours of work than pay six percent to an agent.

Maire, will post more about the sale later. Settlement is in a few weeks. SO much to do between now and then.

This will be interesting. A huge change. Guessing most buyer's agents will want a contract with buyers now.

When I sold real estate every seminar I went to said two things. One, be a sellers agent . . . It is easy money. You list the property, write a decent description, get decent photos, put your sign in their front yard to build your business and get your name out their and put the listing on the MLS. From that point on, you are just waiting for an offer and presenting the offers that come in to your clients. Before the MLS listing agents had to spend a bunch of money on advertising the homes they listed. Newspaper ads, TV ads, holding broker opens (open houses for other agents) and enticing agents to come to your open house by serving food or having prizes. . . those costs have virtually been eliminated by the MLS. Every agent can see what you have listed and any buyer can see what you have listed through Zillow or Realtor or any other listing site. The average fee paid for access to the MLS is less than $100/month. A single decent sized with one picture in the newspaper may cost as much as a monthly MLS fee and will only reach a handful of buyers.

The buyers agents are the ones who are searching through the listings and finding the ones that may fit the buyers needs and using their gas and time to make the appointments, meet you at the property and show you property after property till you find the one you want to buy. Then they have to help you navigate the whole process. They may show you 10 homes or 80 before you find the one. They also risk that you won't buy anything or will buy a FISBO or buy when you randomly go through an open house and the agent holding the open house offers to do up the paperwork on the spot. In addition to visiting home after home with you, they have a responsibility to help you make an offer and follow through with all the various tasks that go along with home buying process. How much should you offer, how much should you include as your good faith deposit, what contingencies should be in the offer? Should you get a home inspection? In the recent market where sellers would get multiple offers and could pick a clean offer over one with any type of contingency, many of the good seller's agents had an inspector on call to do a non-written inspection before making an offer so buyers had some level of assurance that their wasn't a major issue and could make a clean offer without the inspection contingency. (One niece and one nephew paid for a non-written inspection in the past 2 years.). You are babysitting the home buyer and guiding them through the whole process.

There has never been a rule where a seller had to pay 6% commission. It was the norm, but you could always negotiate the fee. The only rule was that to use a Multiple Listing Service you had to enter the amount you were offering to the sellers agent. It could be 1% or less but you had to enter something. At some point the rules changed and you could enter a 0.

If you are representing a buyer you have always had the option of getting the buyer to sign a buyers agent agreement. As a buyer the only advantage that there is to signing a buyers agreement is that your agent is more likely to show you every house on the market and not just the houses offering a reasonable buyers agent commission. But that also means that if the seller isn't paying 3% to the buyers agent, you, as a buyer will need to make up the difference. Of course you could try to negotiate that percentage down, but what buyers agent is going to commit to finding you a home for less than the typical 3% commission? Especially if it is an agent working for a broker and not the broker. The agent is still spending their time and gas to take the prospective buyer to all the showings, but they are splitting that 3% with the broker who is doing none of the work and not compensating the agent for gas or other expenses.

If you are a buyers agent and have first time home buyers buying a $300k home and you have a 50/50 split with your broker it means that you are getting $4,800.00 for showing the buyers every home you find that may work for them. Both my niece and my nephew looked at homes for over a year before buying one. I am sure my niece looked at 50 or more properties. She bought a townhome for around $250 k. Essentially, the realtor made $75.00 for each home she showed her. That is not a lot of money for finding the homes, calling and scheduling a showing with the listing agent and the buyer and spending their time to meet at the property and walk you through the property.

When I sold my home I used a discount brokerage. I paid a flat fee of $500.00. They provided me with the standard paperwork and a lockbox. I had to complete all the paperwork, I took my own photos, wrote my own description, priced the house and set the commission I was willing to pay the buyers agent. (I paid the full 3%). I also took the phone calls from buyer agents, scheduled the showings and negotiated with the buyers agent to complete the sale. They offered additional services on a cafeteria menu. Want them to advise you or help fill out the paperwork. get a photographer to take pictures, help write the description of the property or negotiate the sale you pay an extra fee. This increased my profit by $13k. I didn't reduce my sales price because fair market value is still fair market value, but in reality the fair market value was created by everyone paying that extra 13k to a listing broker. It is built into the sales price.

I don't like the idea of every buyer having to sign buyers agreements. I wouldn't sign one unless I was making an offer through the agent and it would have to be limited to the purchase of that property. Why would I commit to paying them a 3% fee if I find a FSBO on my own? What if a listing agent has a pocket listing and is showing the home to her buyers before placing the home on the MLS. I won't be able to negotiate with this agent unless I am willing to pay a commission to the buyer agent that I agreed would represent me outside of the sale, while the sales price was set to include the 6% listing fee.

I also don't agree that the buyer should pay the buyer's agent. In essence they already are paying both the agents. They are paying for a house and the price of that house includes a 6% commission being split by the listing agent, the listing agent's broker, the buyer's agent and the buyer's agent's broker. The difference is that it is rolled into the sales price and therefore part of the mortgage.

If the buyer has to pay their own agent the sales price will be 3% less, but they have to pay their agent the 35% out of pocket.

For a $400k home that had the 6% commission rolled into the sales price will theoretically now be listed for 3% less or $388k, but the first time home buyer will need to have the 20% down to avoid paying PMI ($77,600) and an additional 3% to be paid to their agent. ($11,640). (total of $89,240) + closing costs, taxes and insurance. If the house sold at 400k they would only need to have $80k + closing costs, taxes and insurance. How much longer will they need to save to save an additional $9,240.00? How much will prices go up while they are saving? Were just making it that much harder for first time home buyers to buy a home. The seller isn't getting any more money at the end of the sale, but the buyer is having to spend more up front.

Who is this helping?

Jennifer Hogan - Good to hear a realtor's perspective, I agree that this change could be detrimental to buyers.

As far a realtors finding buyers their homes, that is not common here. Here typically the realtors set-up automated lists for the buyers to review and the buyer lets them know the homes they are intested in touring. From personal experience I will agree sometimes it can take visiting quite a few homes to get a deal. We probably toured over 40 homes when buying our current house. We did make offers on 4 other houses before we closed sale on our home, competition was stiff at the time. Thankfully, we love our home and feel blessed that we ended up with the "best" option. In the end our agent made a lot of money between selling our old house and our new purchase, he deserved his commission. Our vacation home, it was once and done, does this realtor deserve as much? Who should be paying his fees? Also, why do we in the U.S. pay much higher fees than in other places such as the UK?

I had read this a while back and was able to relocate the article.

https://www.myseattlehomesearch.com/blog/buying-a-home-in-the-usa-compared-to-the-uk-and-ireland/

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The Irish and British home buyer, on the other hand, does NOT have their own estate agent working for them. They are required to arrange and coordinate viewings themselves! There are no buyer estate agents in Ireland and the UK.

Homes are listed by an estate agent/auctioneer whose loyalty is to the home seller. If a buyer wants to see a home, they have to contact the seller's estate agent to see the home. The estate agent will meet them at the home and show them around the home.

That same listing agent will not pop you in their car and drive you around town showing you a bunch of other homes. You have to contact each estate individually to schedule each viewing.

The estate agent's sole responsibility is to the home seller. They want to sell that home and they are definitely going to hype up the home while showing it to you. Plus they get to listen to all your opinions on the home, get to read your body language, and gauge your level of enthusiasm for the home. If you subsequently make an offer, that estate agent will probably be pretty tuned in as to how serious you are about buying that home."

That same listing agent will not pop you in their car and drive you around town showing you a bunch of other homes. You have to contact each estate individually to schedule each viewing.

Oh no. You have to drive around yourself to save thousands of dollars instead of going into someone else's' car to look at homes yourself you found on Zillow anyway. How will people do it?

We had a thread about this before. I was THRILLED that the 6% commission is going to die. I'm even happier now that it definitely will be a relic of the past.

If the agents are worth their fees, they'll get paid by those who want their services in a fair, free market. If they weren't worth what they charged, the NAR committing anti-trust violations to force people to pay them inflated fees is wrong and illegal. Buyers and sellers can now negotiate the assistance they specifically want and pay only for services they feel provide them value.

Competent buyers can do the process themselves and hire a lawyer and inspector on their own for a few hundred bucks. Competent sellers can do the process themselves, pay a flat fee to get on the MLS and pay a photographer a few hundred bucks,. Everyone involved in the transaction ends up with more $$ left because they didn't have to pay a middle man they didn't want. Those who need more hand-holding can pay for it if they choose.

I sold my own homes FSBO. I was extremely annoyed to get stuck paying the buyer's agents in two of the sales. I was lucky enough to do two of my transactions with buyers who had no agents. Best experience of any of the sales. I lowered my price by just under 2% when I sold with no agent fees, I ended up with more money, the buyer ended up paying less -- win / win for everyone. No thank you to the middle-men neither of us wanted.

beaglesdoitbetter -

Without a realtor involved you lowered your price by 2%,

Wow - how generous of you.

Selling FSBO you still added the 3% you would have paid a realtor to your sales price and you added 1% that would have been paid to the buyers realtor to the sales price. For the sales that you had to pay the buyers realtor you didn't discount your price at all. You sold at Fair Market Value and pocketed the difference.

What makes you think that people are going to start selling for 6% less? I have zero confidence that prices will go down. People are greedy. You certainly wouldn't have wanted to sell at 6% less. You wanted to get rid of the middleman and get the money. Other sellers will want the same price for their homes and the buyers will have less representation.

In 1995 you had to be in the 67th percentile for household income to afford the median home sales price.

Today you have to be in the 81st percentile for household income to afford the median home sales price.

This is just one more barrier making it harder for first time home buyers to break into the real estate owning class.

Reiterating this from the article I shared above:

"...A turning point was a federal trial last year in Kansas City. The jury found that the Realtors’ association and several large members had conspired to keep commissions high and ordered them to pay at least $1.8 billion to home sellers in the Midwest. The verdict quickly led to more than a dozen other lawsuits. The Justice Department has also been investigating the Realtors...."

Personal experience does not always reflect reality.

You wanted to get rid of the middleman and get the money

Yup! I did. And what in the world is wrong with that? If neither I nor the buyer wanted a realtor, why should we be forced by anti-competitive monopolies to pay for them?? The buyer was quite happy to get a 2% discount, I doubt they cared how much extra I made by virtue of them not having an agent since they still saved tens of thousands. Win/win for everyone (except for the poor agents who didn't get their cut for, in this case, doing nothing).

Today you have to be in the 81st percentile for household income to afford the median home sales price.

And taking out the overpaid middleman getting paid inflated rates due to monopolistic practices and forcing real estate agents to negotiate for their fees / provide enough value to deserve them should help this situation out a bit hopefully.

Even if prices don't come down by 6% (and I suspect they won't), the fact sellers are not effectively forced to pay a middleman they don't want should still help to remove some costs from buyers enterprising enough to do things on their own. And those who WANT real estate agent's to help them can pay a-la--carte for the services they actually DO want. And pay a reasonable negotiated fee for those particular services!

I don't think most people really understand the ruling and I wouldn't expect that most people would fully understand.

Most people don't know how real estate was sold and buyers and sellers found prior to the internet and internet based data searches.

The flat 6% commission rate was deemed illegal by the Supreme Court in 1950. Commissions have been negotiable since then.

The collusion has to do with a requirement by the NAR that any property listed on the MLS had to have a commission offered to the seller's agent/broker. Many realtors made sellers think that the 6% was set in stone, but anyone who actually read the agreements and could understand what they were reading knew that this is a negotiable fee.

Here is a copy of a standard listing agreement for the State of Pennsylvania. Most states are very similar and all include the language required by the 1950 Supreme court ruling.

https://www.cnn.com/2019/05/15/economy/real-estate-commissions/index.html#:~:text=In%201950%2C%20the%20Supreme%20Court,agents%20in%20the%20first%20place.

beaglesdoitbetter I didn't say there was anything wrong with wanting a larger piece of the pie.

I used a discount broker to sell my own home. Paid a flat $500.00 fee to a broker and I offered the 3% fee to the buyers agent. I knew that buyers agents wouldn't show my home if I offered 2% and my neighbor was offering to pay them 3%.

I did not feel bad about taking the 3% (less $500) for doing the same work that I would have done when selling real estate and charging 3%.

I knew I was making more money than someone using a listing broker. I also knew I could write a better description, take better pictures and could evaluate the fair market value better than 90% of the realtors in my area. When I worked in a real estate office I charged the other agents to do their pricing research, to re-write their descriptions and get good pictures of their listings.

My argument is that no one (you, me or any other seller) is going to say "Fair market value of my home was $500,000.00 when we were paying a listing agent 6% commission, so now I should be selling my home for $470,000.00."

This law suit will not have the impact that people are talking about. It will not reduce housing prices, but it will hurt the first time home buyers and will benefit the current class of home owners.

Of course sellers are not going to discount their house by 6%. They are going to try to get the max they can get and buyers will determine what that is by making an offer.

Some buyers who decide to pay realtors will now have less money to offer because they have their agent fees so this could drive down prices if that is the case.

Supply and demand in a free market will determine price. But it will do so without NAR serving as gatekeepers and distorting the market.

I think everyone knows that, in theory, commission was negotiable. The collusion and the MLS requirements were the issue. As you yourself said, realtors would deter their clients from buying from sellers that offered less than 3%. That is the only reason I ever offered it. The NAR was essentially extorting money from sellers for buyers agents.

Buyers in other countries seem to do just fine without these middlemen taking an extorted piece of the pie.

Honestly, I hope to never buy or sell another home, so it doesn't really matter to me.

I feel blessed to have been a baby boomer and able to buy a home when you didn't have to be in the top 20% of earners to buy a home. It took my husband and I 9 years to save enough money to buy a decent home in Southern California. I cannot imagine how a young, middle income family could possibly save enough to buy a home today. Thankfully most of my nieces and nephews have advanced degrees in high paying fields and all of the ones who are out of college were able to afford homes. Have a few in college and will keep my fingers crossed that they get into the housing market before it is closed for all but the top 5%.

I agree that it is difficult for younger people to afford a home. My DD (30) and SIL (32) bought a home last year, but both have advanced degrees and my SIL in working in a lucrative field. My DS (28) would love to buy, but he does not have a spouse and while he has a good job, he does not make enough to buy as a single person at this point in life.

The fee's being controlled by the NAR is not appropriate. That said, I am guessing the realtors will figure out a workaround on this and sellers will still be paying most of the fees.

NAR got fined/punished for collusion because they required a payment be made to the buyers agent, not because they controlled the amount of the payment. That ended in 1950. The fact is that the 6% is just what has typically been paid, not what was required.