Well written and easy to understand. Thanks for posting.I've spent my career in various roles within the commercial and residential real estate industry. This settlement will greatly benefit the well established senior agents who focus on listing houses. Rookie agents get stuck working as Buyer agents because it is a lot more work having to drive buyers around, show houses, putting if offers, etc. For this reason, there will be far fewer new agents getting into the business and the part timers will get flushed out. By extension, the Brokers of Record who own and operate the agencies will take a substantial hit becase they will have less agents paying desk fees. What many don't understand, is that it is these agency fees and not home sales that are the life blood of many real estate agencies. This is why they are constantly recruiting more agents, and will hire anyone, just to get more fee paying agents most of whom will never sell anything. It will break down kind of like this:
The Losers: Rookie Agents, Part Timers, RE Agency Owners, The NAR
The Winners: Established Senior Agents (The Listing Agents), and the Consumer (almost)
So let's talk about the successful veteran agents who list the vast majority of houses. These people actually do the least amount of work. They get a house listed, put a sign in the yard and then post the listing on the Multiple Listing Service (MLS). They then sit and wait until it sells, usually by a Buyer agent who is representing the Buyer or a rookie agent who is doing their open house for them. If it doesn't sell then they just keep lowering the price until it does. The NAR says that commissions are "negotiable" but in reality Buyer agents do not take the time to show houses that don't offer the full 6% commission, split 50/50 between the Listing Agent and Buyer Agent.
What Sellers are REALLY paying for is access to the MLS, and therin lies the problem. The NAR has a monopoly over the MLS and that will be the next shoe to drop. Once their monopoly power over the Multiple Listing Service is defeated in the courts, then commissions will come down to Earth where they belong. Most likely that would end up being something like 1.5% on both sides of the transaction, similar to commission rates throughout the rest of the western world.
Many agents complain that they don't make nearly as much money as people think, and for the most part that is true. They pay all kinds of dues and fees, commission splits and have little to no benefits. They pay self employment taxes and have to fund their own health insurance, retirement plans and transportion costs. Be that as it may, this is no justification for consumers to pick up the tab for what is essentially a broken system. I believe that the MLS will be successfully challenged within the next five years, and when that happens the current real estate agency model will collapse. There will be much wailing and gnashing of teeth from Realtors, but it will be a joyous day for the American consumer.
Statistics: Posted by soretired — Fri Aug 16, 2024 8:19 pm — Replies 16 — Views 958