Holly Brink, eXp Realty
Hi! I felt like it was important to log on and tell you what is going on in the real estate industry right now. On Wednesday, March 6th there was a lawsuit filed in the United States District Court, Northern District of Illinois. To summarize its alleging that cooperation and compensation is an anti-trust violation that results in consumer harm and seeks an injunction against forcing home sellers to pay the commission of the buyer’s agent.
You may have heard agents say, “oh it’s no charge to you” or “my services are free” to represent you when you buy a home. Or maybe they even said, “my services cost you nothing.” Well these parties (involved in the suit) are saying that is unacceptable and not okay. That it’s not okay to force the seller to pay a large amount and then have it split amongst the listing agent and the buyer’s agent.
The National Association of REALTORS did respond. “The complaint is baseless and contains an abundance of false claims. The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home-buying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.” Mantill Williams, VP of Communications, National Association of REALTORS®”
So, let’s just rewind a little bit. My understanding of real estate history, which is well before my time, was that there used to only be one type of real estate agent and they just sold homes. So, they would meet with sellers, list a home, and then a buyer would come along, most likely just work with that agent, and then they would buy that home. At some point along the lines “they” … and I don’t know who “they” are, decided that that was not in the publics best interest and there should be a right for the buyers to have their own representation.
Now, my understanding, is that in many other countries the buyers pay their own real estate agent’s fees. So, if you’re from another country, or just know the answers, please comment and let us know. I’m interested to hear about that and how this could impact how we do real estate here in the United States.
So nowadays you probably hear the terms “listing agent: and “buyer’s agent.” What commonly happens is an agent will sit down with a seller and say something like, “I’m going to charge you X rate.” Now, its anti-trust to set a price in the market, so someone could charge you 1%, 4%, 7%, 10%, even a flat rate, etc.… It’s ALWAYS negotiable. Commission is always negotiable. Now, whether the agent or the brokerage want to negotiate is up to them; but officially commission is always negotiable.
So, an agent may sit down with a seller and say, “I charge X apples,” (We’ll just say 6 apples) “and of those 6 apples that you pay I’m going to offer 3 apples to whoever represents the buyer.” Now, an interesting fact about buyers’ agents is that they work for free and get paid for performance… for example, they might show one home they might show 300 homes. No money up front, gas, time, and then the actual real estate process: the paperwork, the negotiation and running that transaction from point A to closing.
So, there is a lot of time invested when working with buyers and typically, if we’re being honest, buyers’ agents tend to make less per hour. They often must invest more time with a buyer than a listing agent does with a seller. So many real estate agents really strive to work primarily with sellers because that’s just smart business. If you have a listing, then you’ll get buyers because people call on your signs. Listings rule the real estate world because you get more listings and more buyer leads. So, agents that don’t get a lot of listings and rely on representing buyers often have challenges growing their business.
This lawsuit is saying that “That is not okay.” That the buyers should have to pay for their own commission and the sellers will pay the listing agent. I think the biggest challenge is that this is “how it’s always been done.” I happen to be a Broker Associate with eXp Realty and we are already known as disrupting real estate. Well, some of our core values include transparency, integrity, agility and innovation. I think all of these #CoreValues come in to play right now as we evaluate where the real estate industry is headed.
I am curious how this outcome will affect me personally in my market because I think if I try to do something different, I will hit a lot of resistance from agents & customers in my area. I’ve moved to a smaller community where Buyer Agency Agreements are frowned upon, So, I’m really interested in what you have to say. Yes, YOU. The reader, the watcher.
I’m really interested to hear what you think about the lawsuit; do you think there’s any grounds for it? what do you think the impact on real estate is going to be? If you’re an agent what are you planning on doing about it? Are you going to wait until there’s a definitive answer or are you going to do something now? If you’re not a real estate agent and you’re a consumer, especially in my market, Northwest Iowa, I’m curious what your thoughts are on it! If you’re a seller would you like the idea? Have you had an issue in the past? If you’re a buyer how do you feel about paying your real estate agent?
The other argument is that, it all comes out of the bottom line. So, if the seller didn’t have to officially pay it to the listing agent, who then turned around and shared with another agent… will it affect home values? Are the buyers going to negotiate that in their contract and then the home is still going to have to appraise for that amount? Or are lenders going to allow that amount to be tacked on? Will this prevent a lot of home ownership?
I work with a lot of first-time home buyers, and you may even be reading/ watching this. I’ve helped you get a home for NOTHING, you know, you’ve had zero down payment, zero closing costs, you haven’t had to pay me, and some of you even walked away from closing with a check in your hand! So, those days might be over and that could seriously impact our US Real Estate market, because I’m not the only agent that can do that. Leave comments.
Please like this or don’t like it, please comment. Please share, please share, share, share, because it doesn’t matter where you live, this is very interesting! You know, how is this going to impact real estate in the United States?
So, let me know what you think down below and again, please share this. Thank you so much for reading and/or listening. If you want to discuss this privately or want to buy a home before the poop hits the fan, call me today! 712-363-2399 or send me an email: Holly.Brink@eXpRealty.com / www.NorthwestIowaLiving.com / www.ThinkHousesThinkHolly.com