Decoupling of Buyer's and Seller's Agents Fees - Real Estate - Implications on Engineering Industry

[EngineerRam]

Hello,

What are everyone's thoughts on the RAC's decision to decouple buyer's and seller's agent fees? Will this have an effect on the engineering industry? Can we expect more buyers choosing to hire engineers to do assessments prior to purchase and forgoing realtors?

 

[SWComposites]

I doubt there will be much effect.
Buyers aren’t relying on relators now to assess the condition of houses.

 

[phamENG]

If anything, it's the realtors sending buyers to us to have these houses evaluated. They understand the process of buying a house and the steps that should be taken. The more likely impact will be a bunch of people trying to forgo realtors and their commissions and skipping due diligence out of ignorance as a result.

 

[cranky108]

That is what home inspectors are for.

 

[CWB1]

No. Why would the settlement of a frivolous lawsuit change anything?

There was never a standard percentage, split, nor requirement for sellers to pay both sides' commission as alleged. If NAR suggested any of that as alleged it would obviously be price-fixing, illegal under multiple federal and state statutes. Agents have traditionally targeted a ~3% split with their brokerage x2 sides = ~6% total but that's not a requirement. Buyers and sellers are free to negotiate with their own agent/brokerage and the other party about who pays commission and how much. I typically pay my agent/brokerage 1-2% and the other party pays their own.

 

[EZBuilding]

Buyers and sellers are free to negotiate with their own agent/brokerage and the other party about who pays commission and how much.

Except that rarely happens and the profession as a whole conspires to keep their rates artificially high - through MLS listings, black balling realtors who charge less, etc. The realtor job hasn't changed a whole heck of a lot in the past 50 years, but with house prices increasing the dollar amount that they take from each transaction increases while providing the same or similar value.

 

[JohnRBaker]

The real issue with respect to the lawsuit was not over what the percentages were but rather what the RAC had been telling its members. You're right, there were no laws or even strict rules about what the realtor fee percentage was, but rather that they had been telling their members to NOT take their customers into a deal where the other parties had already agreed to a lower fee. They were steering their customers to only those deals where the full 'traditional' 6% fee (3% X 2) was being charged. As I understand it, the lawsuit was brought by a group of home sellers and buyers who claim that if their realtor had connected them with ALL the deals out there, irrespective of the pre-agreed to realtor fee, that they would have saved money, either in that the price a buyer would pay could be less because the seller didn't have to recoup as much of their costs, and sellers were upset that they were forced to pay a higher fee than what they might have if all deals had been on the table. That was the crux of the problem, not that realtor fees were not negotiable, just when they were negotiated that this impacted whether or not deals were presented to customers.

John R. Baker, P.E. (ret)
Irvine, CA
Siemens PLM:

The secret of life is not finding someone to live with
It's finding someone you can't live without

 

[cranky108]

RAC was supporting higher fees to support over paid sales people. Yes lower fees will drive some sales people out of the field. Mostly those who would only do the minimum for their customers for a fat commission.

The next part needs to be the unofficial rule of only showing the customers three homes, and expecting them to purchase one of the three.

 

[CWB1]

There's an annual 70%+ turnover of realtors bc (among other reasons) its a cutthroat industry, nobody's colluding.

Home buying today is completely different than it was 30+ years ago thanks to the internet. Very few buyers sign exclusivity contracts upfront anymore so agents are mostly working on speculation. Until an offer is signed the buyer's agent's commission is variable, and there's no guarantee that buyers wont ditch the showing agent after the tour/open-house for another with a lower commission or to avoid an agent acting as both buyer and seller's agent. Many agents standard commission is <3% bc they dont show homes (so no sunk costs), they work entirely from home writing offers and/or creating MLS listings for the sale-by-owner crowd. Many others specialize in either buying or selling and dont care about their counterparts, nvm ones from a different brokerage that likely wont be realtors long. Regardless, most agents expect buyers to find potential homes themselves via Zillow/Redfin/Realtor/etc or the brokerage's MLS portal so the claim that realtors are somehow colluding and steering buyers is comically absurd. The only claim more absurd is that this is somehow going to cause RE prices to fall by 30%.

 

[canwesteng]

The buyer's agent working on commission and not being hired by the buyer is a bizarre situation with piles of conflicts of interest as cranky pointed out. Hopefully this becomes the norm in other jurisdictions going forward. That being said, not likely many homeowners will fork over the dough for structural inspection or benefit that much from it - the structure is usually hidden behind finishing materials so your observations are limited, and all the other home inspection things (how old is the furnace? is the plumbing ok? evidence of janky wiring?) are better served by a home inspector

 

[cranky108]

Replace home sales people with AI. Have a few people to stand around and smile, to show homes etc. The agency collects the commission.
Home inspector is optional. Home stager is optional.

 

[IRstuff]

A GOOD home inspector is worth 5x what you paid them. I had a buyer with one such inspector, and they found probably $5k to $10k of stuff that needed to be addressed, so we knocked off $10k just to avoid the nuisance.

The settlement definitely changes the dynamic of the purchase price estimation, since the commission will now come on top of the offer price, instead of being buried in the purchase price.

For expensive houses, that'll need some mechanism to ensure that the buyer still has sufficient funds afterwards to pay the agent. In a previous life, that would have been ~$50k, so something that might need to be part of the escrow process to make sure it doesn't fall through the cracks.

TTFN (ta ta for now)
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