I have bought several houses and NEVER been informed that I could negotiate the commissions. Never. They gloss over the “customary rate” and move on to the next page. You did this to yourselves. Now it’s a worse mess. Like a car salesman, commissions based income forces manipulating and dishonest transactions.
I appreciate your feedback. For most agents, their commission isn't negotiable. What I mean by that is, they have set rates for themselves and if you want to work with them, that's what they charge. Like attorneys have rates. Are they negotiable? From a legal standpoint yes of course, but does that mean they will negotiate? No. So I didn't discuss my rates before with Buyers...unless we ran into a situation where my fee wasn't going to be covered. Does that make sense? If they were interested in a FSBO, or if I could see the seller's were offering to cover less than the rate that I am willing to work for....THEN we'd have those discussions. But, because what the seller was willing to offer me was on the MLS.....most of the time these discussions were not necessary because what they offered would cover my fees. So I don't know about the agents you've worked with, but this could be the case with them. It just wasn't the practice to negotiate with buyers up front, because the listing agent already negotiated the buyer's agents commission with the seller. I actually really like that Buyer Agency Agreements are now required. I think this is a better practice....it's just that in our area when it wasn't standard, buyers would be very skeptical of any agent asking them to sign something that most agents didn't ask. Now, the playing field is leveled and all realtors need to be having these conversations up front. I'm for this. Not having what the seller is willing to pay buyer's agents on the MLS just makes it trickier for buyers because it's all wrapped up in the purchase contract now....we will all get used to it....it's just the same as any other seller concession now....the problem is that it might take a while for everyone to catch up. It's going to take some time to see how it all pans out. I'm hoping for more honesty too!
Literally a manipulative omission. You have NAR members railing on TH-cam on how commission has ALWAYS been negotiable! Really? It was NEVER DISCUSSED and that’s part of why the lawsuit. I’m bitter yes? I have studied the current new process. Discussed with a realtor. Yet- because of the past, I think it’s smarter to watch how this plays out for six months or so. Don’t think I don’t appreciate the good realtors, but I have dealt with a LOT of thirsty dishonest people in your field. It’s not just the commission omission. I’ve been in legal battle. Transparent is not a word I EVER associate with realtors. Thanks for the reply. I have also done a successful fsbo
@@johnwright4456 I suppose you have manipulation and shady business in any business with high stakes. I’m sorry you’ve had such a bad experience with realtors. I’ve had the pleasure of working with some wonderful people full of integrity who are truly looking out for their clients. I’ve seen and experienced some shady dealings as well…and heard some horror stories. Thanks for your comments! I think you are right…6 months will tell a lot!
The commission was part of the contract negotiated between the seller and their realtor. The buyer agent portion of that commission is set by the seller and/or their broker. Unless your buyer's agent was charging you something over and above that commission, what were they supposed to have negotiated with you? Now it's different and sellers are less likely to offer buyer agent compensation.
Can you imagine a car salesman saying I'd love to show you this car and let you take it for a test drive, but first you have to sign this agreement. And the agreement says if you buy the car you'll owe me a 3% commission and you'll have to pay the dealership a $500 retaining fee. And even if you don't buy the car you'll still owe me and the dealership money if you buy one from someone else in the next 6 months to a year, depending on the contract's termination date. I can't imagine it, but I guess realtors can
Ok I’ll play. If there were such a thing as a “automobile agent” who you could hire to help you find just the right car you want, or when you found cars you were interested in would research that particular car for you, compare with other cars that have sold recently in that area, who went to the different dealerships with you and test drove with you and looked at hundreds of cars a year and knew just what questions to ask and what to look for….who had a network of trustworthy mechanics and car appraisers and negotiated the deal that you want and gave you time to thoroughly check everything over without losing it in the meantime and also had a network of folks who could help fix issues or maintain everything while you own it, or…since this is hypothetical…let’s say cars were an investment and they gained money over time and you could earn equity on them….and this agent also could advise on that and what improvements to make or hold off on from a return on investment standpoint, and they talked to the sales reps for you so you don’t have to, and handled all the paperwork making sure the sale is legal and t’s are crossed, etc, and ALL THIS for less than sales tax? Um…If I trusted them I’d sign up in an instant are you kidding me? I have been looking for a car for myself lately and it would be a no brainer. Now, if it weren’t with someone I trusted I’d want the one car deal. Sure, you let me drive this car and if I buy this car I pay your fee (that’s how it is when you buy a car from a dealer…you can’t go drive a car and then when you want to buy it not pay the dealer fee). The difference is, of course, buyers agents aren’t working for the seller or “dealers”….and they aren’t trying to sell a car (or house). They work to secure the house of the buyer’s choosing with the most favorable terms possible. If this were cars.,,,the dealer (seller) benefits from the buyer agents work bc they brought a buyer, and stayed on top of all the things that can go wrong and got the car sold which was the dealer (or sellers) goal. The buyer benefits by the buying agents expertise, connections, negotiating skills, administration of paperwork, coordination of all parties, thinking outside the box when problems arise, etc. Real estate agents are not just salespeople, they have fiduciary responsibilities to their clients and act as consultants and advisors which requires experience, developed skills and expertise….and time…lots of time…
@@listwithlydia Yeah right. Maybe you wouldn't mind signing an exclusive agreement to test drive a car, but most would. And if this buyers agreement holds (which I sincerely doubt, at least not in its current form) buyers agents will be trusted just like car salesmen are. And I don't think or care about what the car salesman's commission is. I'm only interested in getting a good deal for a car I want. And if I can't get it with one salesperson I'll go to another. That's how the free market system works.
@@rondorazio4921 to each his own. You get to pick whether you want to work with an agent or represent yourself. If you don't like an agent's fees....don't hire them.
@@listwithlydia The point is I don't have a choice. If I want to buy a house I have to sign an exclusive agreement with someone I hardly know. Lawyers don't even expect exclusivity! That's nuts and it won't stand. Agents will have to find their way around it, e.g. Zillow's 7 Day Touring Agreement, or sales are going to fall off rapidly
@@rondorazio4921 I see what you are saying. Right now if you don’t want to work with an agent, there’s not an easy way to see houses that are listed by agents. If you have an agent you trust and want to work with then this works fine but it ties your hands if you haven’t found an agent yet or would prefer to represent yourself.
Yes. 🤔the buyers have always brought the money. Point taken. Good point. This is a well-thought out video, that being said…. As a buyer planning to buy in the next 6 months, and having been researching intensely since this NAR settlement change, I’m feeling like there’s no point in engaging an average agent. *see point further down From my perspective as a buyer, no seller will lower what they have their home listed for - why would they? Rather, they’ll just keep the former buyers agent commission (already in the cost of the home) for themselves. It’s no problem to wait for another buyer with deeper pockets or willing to take out a larger loan. What does that mean for buyers? Hmmm 🤔 Option 1: a buyer can take the real estate course for 75 hours and $500 and represent themself. Then the control is in their hands and not in some back room agreement like in the past... or in this new arrangement whatever it’ll work out to... Informed buyer. Maybe not experienced but at least informed. Option 2: interview potential buyers agents to find a responsible and good negotiator with experience. Repercussions? Get “less” house because the commission comes from my pocket and the houses are the “same” cost. *ALSO Will I be able to find an agent that will do more than unlock doors and indicate where to sign on paperwork? During my online research I’ve heard from the mouth of real estate brokers that they and their team are holding off on representing buyers for a while… 🤔 How many agents will be doing that? Will I even be able to find a buyers agent I can work with, with confidence? I have a list of questions gathered from my research in the last few weeks. So far every agent I’ve asked has just wanted me to believe them that they will negotiate from the seller - while asking me to sign an agreement that if they aren’t able to negotiate, they will be paid directly from me. (Yes. Got it. The money has always come from the buyers… ) Option 3: Do both option 1 and 2… and it costs me an agent buyer commission AND extra time and $500 to know as much as a prospective agent who wants to write the exam to be a real estate agent. Option 4: WAIT - See where it all nets out, eventually. Keep my ears and eyes open and learning as agents and brokers, NAR and all the players in the game decide on rules. Option 5: Any other suggestions? Overall I feel like l, as a buyer, am not represented in this debacle that highlights, all around, how this buying and selling of real estate is a game of roulette. OK. My rant over - feeling quite discouraged and manipulated here as a buyer as the real estate agents say “we didn’t do anything wrong, why did NAR settle?” and “nobody works for free” over and over… Again - your video is good and quite enlightening … especially from the perspective of an AGENT. One caution is to “hear” yourself from the perspective of a buyer or seller. Because you’re being watched…. I truly wish you well and appreciate the information you provide.
Wow, I appreciate your thought out feedback. So much there. First, I'll address the thought of just getting your license and representing yourself. You don't need your license to represent yourself. You'll need to ask the seller's agent if buyer's agent compensation has already been negotiated. If it is, ask how much and then ask for that much off whatever the price is you otherwise would have offered. If buyer's representation has not been negotiated already with the seller, then just put in your offer. Seller's agents HAVE to present ALL offers to their sellers unless the seller's have instructed them otherwise. Now, a seller and their agent will likely be uncomfortable with a contract you pull off the internet, so they will either want you to use an attorney to write up the contract or the listing agent might offer to write it up for you. (either for a fee or not). Having an attorney draw up a contract is less money than paying a buyer's agent 3%. The school and test for getting your license is not going to teach you anything useful about contracts and negotiation. It literally is just a means to an end....you learn how to be a good realtor from experience and mentorship. Representing yourself is risky but it's always been available. Now as to your perspective on sellers and price, we are coming off of a hot and heavy sellers market, but we are not longer in that. Seller's are much more willing to negotiate than you think and they all know that commissions have been built into sales price historicallly. Just like FSBO, of course they are hoping to get the same price and NOT have to pay commissions, but there are so many buyers that this is just NOT a possibility for. When I'm working with a seller, I make sure they understand this. You vastly limit your buying pool if you don't offer help with this. It's one thing if you have multiple offers, but it's a whole other thing if you have an offer on the table....you said you wouldn't pay buyer's agent commission....but the offer in front of you includes paying buyer's agent commission. You'd be surprised what sellers are willing to do. Before, you didn't usually have to negotiate this part b/c the listing agent already negotiated it for you. Now, it's just like all other negotiations. Sometimes a buyer needs $10,000 toward their closing cost from the seller....and seller's are willing to do that...sometimes. It's all about the bottom line. You don't know for sure until you put in the offer. GOOD buyer's agents rock. Interview some and find one you trust and if you still aren't sure do a SHORT agreement until you are sure. That's my advise.
@@listwithlydia - thank you for your helpful response to my points. I appreciate the time you’ve taken and feel “heard”. 🙂 Interestingly, you’re the second realtor that has suggested the initial courses to become informed in real estate (the classes preceding taking the exam) wouldn’t give me the knowledge/impact I was anticipating. 🤔 Can I infer from this comment that someone who is a “newly” licensed real estate agent (less than a year perhaps?) would still be almost in an apprenticeship phase? In your opinion, when searching for a buyers real estate agent, what experience/length of time/houses acquired etc. would you recommend? Again, I’m sure you’re busy, and thank you for taking the time to respond.
@@LoriF2005 I did a video on choosing a realtor that might help and I'll link it here, but in a nutshell....yes of course a newly licensed agent is not going to have the knowledge, skills, experience.....HOWEVER, most new agents surround themselves with expertise and have mentors....plus they have TIME and CREATIVITY. Hard to generalize so interviewing and asking questions is smart. th-cam.com/video/UzXOEVdOHTU/w-d-xo.html
I pay cash, so, all the cash in the deal is mine. If the seller negotiates with the seller for a percentage and the buyer agent wants a cut that could be as much as 6% and 3% for a total of 9%. The buyer agreement wants you to go into a deal with out knowing what will happen at the end already agreeing to a percentage. Seems a very poor negotiating tactic. It looks like this is all on the side of the brokerage. What's next? Sign a buyers contract with a car dealership salesperson for a certain percentage of the sales price? Pay to buy? The buyer's agent is bringing a buyer to the listing agent, this has traditionally been considered a "finder's fee". This all adds a layer of needless bother. I have a buyer's contract in front of me. You would have to be crazy to sign this on the spur of the moment. You need to have a lawyer go over it with you, fill it out and have it ready to present it to the real estate person, whether a buyer's agent or a listing agent.
It's a bit of a mess right now. Agreed. I'm sure a solution will present itself. It's one thing if you do have a buyer's agent you trust and want to work with but I feel the pain of not being in the position and not wanting to sign something and have to "trust" someone you don't know. That's super tough...and you shouldn't have to.
Remember too that if you do sign all information gained in any offer on a specific property with that agent can be used by that agent in making an offer on the same specific property with another buyer or the agent themselves. Its called monkey in the middle.
@@junglehomes6525 What kind of info are you talking about? Buyer agents are bound by confidentiality regarding any of their clients personal information. If I have two clients interested in the same property, I'm obligated to disclose that and I could and should lose my license if I used one clients personal information that I only knew bc I was their agent to my own advantage or to another clients advantage and to that clients detriment. It's one of the things I like about Buyer agency, it establishes a fiduciary relationship that obligates certain responsibilities that I do NOT have with a customer....confidentiality, loyalty, obedience. Also the listing agent is not required to keep the buyer's offer info confidential...if the sellers want to share with potential buyers they have that right unless your offer includes a clause that the offer is void if disclosed.
Wow that’s a great question. So here is the thing, when you go straight thru the builder this doesn’t apply bc you are representing yourself, you are essentially buying for sale by owner…unless it’s on the MLS and listed with a realtor. This isn’t necessarily a good thing though bc going into such a large purchase without having your own representation is risky. You have no one reading over things for you, looking at pros and cons, you are talking to the person who is motivated to sell at the highest price… so they aren’t going to offer all the discounts or perks they could or that would be negotiated for you if you had a buyers agent working for you. If you want a buyers agent on a new build, the builders almost always will pay them so you won’t need to pay more for the house than you would have without representation….but they aren’t going to offer this info. You have to let builders know on your first visit you are working with an agent and if you’ve signed a buyer agency agreement, your agent will confirm what the builder is willing to contribute up front and if it doesn’t cover their whole fee they will have a conversation with you and figure out options. Hope this helps:
I know that you shouldn't do this by yourself. My question is about signing an agreement with a realtor to be my agent and if I'm buying from the builder my realtor gets the comimision from the builder or am I still have to negotiate payment with my realtor?
@@Peter-ok9bj you still negotiate bc if you have an agreement to pay your agent 3% of the sales price for instance but you choose Ryan Homes who only offers to pay agents a $2500 flat rate, you’ll need to have a conversation with your agent about whether they will accept a discount commission and still represent you or whether you’ll need to pay some out of pocket or self represent. Most builders are happy to pay agents 3% commission and sometimes even 4%. But every builder is different and they don’t usually negotiate at all when it comes to agent compensation they have it set, take it or leave it. Does that make sense? So it’s just like if you have an agreement with your buyer agent to pay them 2.5% and the seller only agrees to 2%….you either make up the difference or your agent agrees to accept less or you meet somewhere in the middle.
I have a few so it depends on the area and your goals. When I make referrals I like to talk to you first and then I personally reach out and interview several agents and then give you the names of 1-3 I’d recommend.
Thank you for the excellent information on this topic. There are a couple of things that seem clear to me going forward. There is now going to be more scrutiny on the fees paid to agents. Even though fees have always been negotiable years of precedence have resulted in 6% being "required" in the eyes of many customers. That has now all changed and many sellers and buyers are going to closely evaluate the asking fee of the agent vs the perceived value that the agent provides. To put this in clearer terms 3% (typical buyers agent compensation) of a typical home sale is a lot of money. There are going to be a lot of folks who may balk at having to pay that amount or having that amount affecting the negotiation of a sale price in order to buy a property. The other thing that is going to become important is communication by the agents, this is something that is a common complaint about agents, i.e. they are bad at it. This is something that will need to be improved for those agents who didn't consider it a priority in the past.
I sure hope communication is improved, by far the most annoying part of my job! And yes...what's crazy to me is that when I work for a Buyer it's so much more time and effort than when I have a listing....and I work hard on my listings too....I'm not the kind to just throw a sign in the yard and put it on MLS and call it a day....but Buyer's often are extremely time consuming. Not complaining at all, I get it, it's a big deal....but if it were much less than 3%....it wouldn't be sustainable....at least for me in my business.
Agents always say “the fees have always been negotiable” true but if you didn’t agree to the “standard fee”, agents would often steer buyers away from those houses. This is a fact but realtors don’t want to talk about that.
Thanks for the feedback! I have not personally experienced this but I would not deny that some realtors might have done that. For me, it's always been a conversation with my buyers. Buyers agents have never worked for free. I think that is why I do agree with and like the first part of this change....having conversations with buyers and contracts in place that discuss plainly the fees and how they are paid is a good step toward transparency. Now, buyers agents will all have signed agreements with their buyers before showing a house, it's up to the sellers whether they will accept an offer that includes different terms than what they wanted. Appreciate your thoughts! It will be interesting to see how everything shakes down. I'm not at all opposed to change and more transparency. I love that part.
I am a Realtor and I have never in my career steered any of my clients to certain homes. Whatever homes my clients want to see, that is where I take them. Most times, I am just happy that they chose me and want to do business with me. Many times I don’t even notice the commission until I am actually writing a contract, and then I would be like oh so that’s what I’m getting paid. I just hate how people lump all Realtors into the same category. It’s really frustrating. Of course there are some bad apples in the bunch, but that’s in every profession.
You’re just making stuff up cause you like the way it sounds. I’ve shown homes that offered 1%. Typically they’re huge pieces of shit homes and the sellers is some slumlord trying to get every dime. This usually get bought up by investment companies so who cares.
Is there any law protecting you from your Gardener from your dentist from your doctor from your heart surgeon from your lawyer no but they just created one to supposedly protect you which in turn is going to make homes more expensive for you
My prediction is listing agents will eventually become very rare. A surge in FSBO incoming. If you are an agent, I recommend that you focus on being a great and valuable buyers agent.
Hello great information here. Just need a little clarification when you stated that your fee for representing the buyer is 3% and if the seller is offering 2.5% commission that you would accept a 2.5% commission from the buyer instead of having the buyer pay the extra .5% commission. Could you also instead choose to have the seller pay the 2.5% commission that was offered and have your buyer pay the .5% difference.
Yes absolutely. That is what many do and what I would do if the seller offered less than 2.5%. It's also depends on the buyer's situation...I want to be fairly compensated, but I would not want my commission to prevent them from getting the house they want. This is why I really want to build trust and be able to have candid conversations throughout the process.
How can a buyer negotiate a fee with thier agent, when they have NO idea how much time, effort or expertise the agent will provide ? ie: 2 hrs., 2 days, 2 weeks, 2 months or longer
That’s a good question and I think the reason it’s been in that 2.5-4% range for the last few decades. No one knows how long it will take or how much time on the front end. You want someone to work hard and negotiate well and those agents are going to be more efficient but that is because they also directly benefit from that efficiency and wouldn’t want to be penalized for it with a lower commission. There will always be deals that take longer, have more hiccups, require more negotiation and wisdom and outside the box thinking. There will be some buyers who know just what they want and others who change their mind 500 times. The percentages that have become normalized are what sufficiently keep agents motivated not to quit and to work on their skills and efficiency. Usually an agent will set their rates and they aren’t negotiable. That doesn’t mean you can’t try, but if an agent is quick to lower their rate for you I wonder how good of a negotiator they are and I wonder how hard they are planning to work.
I have another suggestion, I'm a buyer too and I've come up with a commission structure that really works for the buyers. It's a long explanation below but in but shell is like I give a fixed amount to my agent + % of price they can negotiate down from CMA (comparative market analysis price, not the list price cause list price can be anything) I have 2 models which can aligns buyer's interest and the buyer's agents interests. Let say for a house that is listed, its average CMA price is at 550K. So, if the seller is selling it for 550K with buyer's commission included in it, is equivalent to them selling for 550k-2.5% = 536,250 without the buyer's commission included. In other words for the seller, selling it for 536250 with buyer paying the commission is equivalent to it selling for 550K (full CMA price) with seller paying the buyer commission. Lets Call this (CMA - 2.5%) = control point "Cp". My 2 model are as follows: Buyers agent commission = fixed component (say 7500) + (Cp-sale price)*10% ie: fixed component + % of amount negotiated down. for eg if buyers agent is able to negotitate down 20k then they will get 10% of 20K = 2000 more in commission. just like how sellers side get more if house price sells for more. This only makes the game fair. OR Buyers agent commission = 1.5% of Cp* (factor which increases based on amount negotiated down). so exact formula is: 1.5% of Cp *(Cp/sale price) *1.08 = Cp2 /sale price *0.0162. This gives buyers agent a decent kick back in commission for the price that is negotiated down like in the previous case.
Working with a few listing agents, they’ve never been transparent, they gloss over commissions, industry standard gets thrown around. More people should do for sale by owner and buyers go and buy along with an attorney. Get the comps from these MLS sites and do your homework.
I have been sharing that the buyer has always paid Realtor fees. The buyers bring the money, not the seller. I wish people would use the correct terms. IE: Fee is collected by one who has a fiduciary duties. Commissions are paid when sales-person represents the company, and work to make the company as much as possible. Realtors, like attorneys, collect fees.
Yes, it's really a semantics issue...does the chicken come before the egg or the egg before the chicken. The Buyer brings the money and always has. I think a big part of why there is miscommunications is that the closing statements show the commissions coming out of the Seller's side....so the Seller sees that as being paid out THEIR "profit".
I have another suggestion, I'm a buyer too and I've come up with a commission structure that really works for the buyers. It's a long explanation below but in but shell is like I give a fixed amount to my agent + % of price they can negotiate down from CMA (comparative market analysis price, not the list price cause list price can be anything) I have 2 models which can aligns buyer's interest and the buyer's agents interests. Let say for a house that is listed, its average CMA price is at 550K. So, if the seller is selling it for 550K with buyer's commission included in it, is equivalent to them selling for 550k-2.5% = 536,250 without the buyer's commission included. In other words for the seller, selling it for 536250 with buyer paying the commission is equivalent to it selling for 550K (full CMA price) with seller paying the buyer commission. Lets Call this (CMA - 2.5%) = control point "Cp". My 2 model are as follows: Buyers agent commission = fixed component (say 7500) + (Cp-sale price)*10% ie: fixed component + % of amount negotiated down. for eg if buyers agent is able to negotitate down 20k then they will get 10% of 20K = 2000 more in commission. just like how sellers side get more if house price sells for more. This only makes the game fair. OR Buyers agent commission = 1.5% of Cp* (factor which increases based on amount negotiated down). so exact formula is: 1.5% of Cp *(Cp/sale price) *1.08 = Cp2 /sale price *0.0162. This gives buyers agent a decent kick back in commission for the price that is negotiated down like in the previous case.
@@rondorazio4921 I am aware of them but haven’t had time to review it. I don’t see how it could follow the guidelines if no commitments are made. I could see no long term commitment but does it allow an agent to show a house and then if that buyer decides to make an offer on their own or with another agent it allows for that? I suppose I could see using something like that just to get in the door. Agents might go along bc they hope to build trust and rapport, and buyers would like it bc they wouldn’t have to commit until they want to write an offer. Can’t comment much since I haven’t read it yet.
Excellent video. Someone tech savvy needs to set up a separate website where all agents place their listings only to indicate the status of the commission. The website would be separate from any Realtor or MLS ties.
This would be difficult b/c it wouldn't be very useful unless the majority of folks participate. I think we're all just going to adapt to doing business without knowing since calling everyone ahead of time is unrealistic and for most sellers now instead of offering a certain percentage....they are just going to take it an offer at a time and look at the bottom line and I think that *might* become more normal and ok. Exciting times :)
@@listwithlydia A simple database. Every MLS subscriber pays five bucks per year; most would join. You can enter only two fields: Address of property and percentage commission payable by the seller to the buyer's agent.
I’ve sold many houses without an agent. It’s not complicated. Complete a disclosure form and lead paint . Come to an agreement and have a title/escrow company take it from there for $400. Save 10’s of thousands $$$$
Yes a Rambo stitched his own arm and I'm sure there are people that pull their own teeth how many full-time employee first-time buyers do you think there are that definitely couldn't do it without agents
@@MAZDAKPRODUCTION I somewhat agree. A buyer would be better off using an agent if they have no negotiation skills and/or don’t want to do any leg work going to the property and setting up appointments, inspections, etc. A buyers market may warrant the additional exposure of the MLS. The Title/Escrow companies can hold your hand and walk you through the paperwork. You don’t need to do it yourself.
@@braemp of course you would agree because all sain Minds would agree unless you are the criminal catch Mark and the criminal judge that ordered this ruling on NAR or the d o freaking J
Could you imagine a car salesman receiving 6% commission on the sale price and not gross profit. Realtors are a factor in sky rocketing cost 15k dollars commission on average for 350k house that the seller owes 290k on is criminal. That’s why sellers are listing their houses higher to cover those cost. The service isn’t needed would be cheaper to have an attorney type up and review the contract. Literally had a buyer wanting my house I was covering seller and buyers fees 2.5% each. The buyers agent added in the offer realtor buyer commission would be 3%. I countered and said no she called my realtor and said the buyers really want my house and can’t cover the other .5% and I would be preventing the sale if I didn’t cover it. Like sorry no you are preventing it on greed I’m already covering it plus closing cost. Anywho went with the other offer their realtor lost that sale no one else
comparing car sales and real estate is not at all accurate. A good agent proactively represents, consults, advises, negotiates, researches, counsels, strategizes, etc...it's just not at all the same thing
Well it is the same it’s sales. There are a variety of differences in sales depending on your product you sell. I was stating realtor commissions are inflated. Hence car sales rep example this isn’t paid commission on sale price rather it’s gross profit. If it was on sale price it would be unsustainable. Realtors can because the product selling is individually owned there is no sustainment needed other than the seller having to list higher than they would sell to cover your commission.
@@donaldarmstrong08 I don't agree with you in it being sales. Of course their is a sale taking place in a real estate transaction, yes, however a real estate agent is not selling a house....they are representing the seller or the buyer in the sale of a house. My job is not to sell houses, although I help my clients in selling their house and/or aquiring the house they want. My job is to lend my expertise in knowledge or the market, negotiation skills, strategic thinking, problem solving, administration, marketing, presentation, advise, consultation, asking the right questions, pointing out potential issues and pros/cons, providing referrals from my network of contractors, providing resources, etc etc etc. Sometimes the best thing I can do for my client is advise them to walk away from a bad deal (which means I don't get paid by the way), other times it's to push through and close even if it gets complicated and looks impossible....my success isn't in whether or not I close a sale, it's in whether or not I provided good service to my client.
I don’t disagree with you that it isn’t sales for you and you have a passion in helping your clients. Your commission sounds like it’s absolutely worth the cost but you’re the minority in the industry that provides that level of service. From my experience with buying and selling the properties I owned and from friends and family that have it’s not the norm. I will happily pay a higher commission for superior services vs subpar. I do also believe the commission should reflect the level of service provided. I guess what I was referring to with houses prices increasing significantly versus historical trends commission should be realigned it does add to inflated prices every seller is considering the commissions when they determine their sale price. I am not saying it needs to affect the realtors bottom line it can be realigned with the broker fees that the realtor loses to the company they fall under if not independent. Anyways appreciate the responses and I didn’t mean any offense to trade there is just a lot of upfront and backend cost to purchasing the home that the buyer, seller, and realtor loses out to due to companies profiting on a need.
@@donaldarmstrong08 Thanks for watching and commenting! I appreciate the feedback and we don't have to agree, although it seems maybe we do on this one 🙂
It should not be built into the list price. Because that is the opposite of transparency. If you try to put it in the list price now it will have zero transparency now since you aren't allowed to put the commission fees on the page. Just because you know doesn't mean a buyer or seller knows. Edit: The simple fact is you're already living in the past. There is no longer a need to call listing agents to see if they offer a fee. The buyer should directly be paying their agent. THAT is what you call a straight forward transaction. Sellers offering the buyer's agent a fee is a thing of the past. But sure it will take some time to get used to.
Thanks for your feedback. I do understand this opinion and I'm sure it's what the big companies that offer discount listings are hoping for. I have decided that unless my buyer asks me to, I won't be calling ahead of time, but I'm sure most buyers will want me to include seller paid commissions in the offer. There are so many who simply can't afford a home otherwise. Unless lenders start allowing buyer's to finance, which is what they've been doing when it's built into the price. Buyer's agents represent buyers, yes....but they are needed to SELL a house (or at least they make it a lot easier). I work with both buyers and sellers and when I'm working with a seller and our buyer has a good agent on the other end it is so much more likely to close in my experience anyway. We shall see where the chips land.
@@listwithlydiaYour second to last sentence is spot on. The key word in this new paradigm is “negotiation”! IMHO, experienced agents who are savvy negotiators will have a smoother transition than newer agents entering the industry.
@@shutupsugarfly are you talking about as a buyer or seller? Really it all depends on the contracts you sign. If you are listing and you sign with a listing agent, you are agreeing to pay them a certain commission. Previously that same contract (Exclusive Right to Sell), would also lay out how much (if any) was being offered to a Buyer's agent. If you are a Buyer, you should be signing a Buyer's Agency Agreement that stipulates the Buyer agent rates and how they will be paid. Sometimes that Buyer agent commission comes from the seller and sometimes from the Listing Broker (sharing commission) and sometimes you'd be paying out of pocket, it all depends on the final purchase contract and what you and the seller (and the agents) agree to.
I have bought several houses and NEVER been informed that I could negotiate the commissions. Never. They gloss over the “customary rate” and move on to the next page. You did this to yourselves. Now it’s a worse mess. Like a car salesman, commissions based income forces manipulating and dishonest transactions.
I appreciate your feedback. For most agents, their commission isn't negotiable. What I mean by that is, they have set rates for themselves and if you want to work with them, that's what they charge. Like attorneys have rates. Are they negotiable? From a legal standpoint yes of course, but does that mean they will negotiate? No. So I didn't discuss my rates before with Buyers...unless we ran into a situation where my fee wasn't going to be covered. Does that make sense? If they were interested in a FSBO, or if I could see the seller's were offering to cover less than the rate that I am willing to work for....THEN we'd have those discussions. But, because what the seller was willing to offer me was on the MLS.....most of the time these discussions were not necessary because what they offered would cover my fees. So I don't know about the agents you've worked with, but this could be the case with them. It just wasn't the practice to negotiate with buyers up front, because the listing agent already negotiated the buyer's agents commission with the seller. I actually really like that Buyer Agency Agreements are now required. I think this is a better practice....it's just that in our area when it wasn't standard, buyers would be very skeptical of any agent asking them to sign something that most agents didn't ask. Now, the playing field is leveled and all realtors need to be having these conversations up front. I'm for this. Not having what the seller is willing to pay buyer's agents on the MLS just makes it trickier for buyers because it's all wrapped up in the purchase contract now....we will all get used to it....it's just the same as any other seller concession now....the problem is that it might take a while for everyone to catch up. It's going to take some time to see how it all pans out. I'm hoping for more honesty too!
Literally a manipulative omission. You have NAR members railing on TH-cam on how commission has ALWAYS been negotiable! Really? It was NEVER DISCUSSED and that’s part of why the lawsuit. I’m bitter yes? I have studied the current new process. Discussed with a realtor. Yet- because of the past, I think it’s smarter to watch how this plays out for six months or so. Don’t think I don’t appreciate the good realtors, but I have dealt with a LOT of thirsty dishonest people in your field. It’s not just the commission omission. I’ve been in legal battle. Transparent is not a word I EVER associate with realtors. Thanks for the reply. I have also done a successful fsbo
@@johnwright4456 I suppose you have manipulation and shady business in any business with high stakes. I’m sorry you’ve had such a bad experience with realtors. I’ve had the pleasure of working with some wonderful people full of integrity who are truly looking out for their clients. I’ve seen and experienced some shady dealings as well…and heard some horror stories. Thanks for your comments! I think you are right…6 months will tell a lot!
The commission was part of the contract negotiated between the seller and their realtor. The buyer agent portion of that commission is set by the seller and/or their broker. Unless your buyer's agent was charging you something over and above that commission, what were they supposed to have negotiated with you? Now it's different and sellers are less likely to offer buyer agent compensation.
@@marye930 yes.
Can you imagine a car salesman saying I'd love to show you this car and let you take it for a test drive, but first you have to sign this agreement. And the agreement says if you buy the car you'll owe me a 3% commission and you'll have to pay the dealership a $500 retaining fee. And even if you don't buy the car you'll still owe me and the dealership money if you buy one from someone else in the next 6 months to a year, depending on the contract's termination date. I can't imagine it, but I guess realtors can
Ok I’ll play. If there were such a thing as a “automobile agent” who you could hire to help you find just the right car you want, or when you found cars you were interested in would research that particular car for you, compare with other cars that have sold recently in that area, who went to the different dealerships with you and test drove with you and looked at hundreds of cars a year and knew just what questions to ask and what to look for….who had a network of trustworthy mechanics and car appraisers and negotiated the deal that you want and gave you time to thoroughly check everything over without losing it in the meantime and also had a network of folks who could help fix issues or maintain everything while you own it, or…since this is hypothetical…let’s say cars were an investment and they gained money over time and you could earn equity on them….and this agent also could advise on that and what improvements to make or hold off on from a return on investment standpoint, and they talked to the sales reps for you so you don’t have to, and handled all the paperwork making sure the sale is legal and t’s are crossed, etc, and ALL THIS for less than sales tax? Um…If I trusted them I’d sign up in an instant are you kidding me? I have been looking for a car for myself lately and it would be a no brainer. Now, if it weren’t with someone I trusted I’d want the one car deal. Sure, you let me drive this car and if I buy this car I pay your fee (that’s how it is when you buy a car from a dealer…you can’t go drive a car and then when you want to buy it not pay the dealer fee). The difference is, of course, buyers agents aren’t working for the seller or “dealers”….and they aren’t trying to sell a car (or house). They work to secure the house of the buyer’s choosing with the most favorable terms possible. If this were cars.,,,the dealer (seller) benefits from the buyer agents work bc they brought a buyer, and stayed on top of all the things that can go wrong and got the car sold which was the dealer (or sellers) goal. The buyer benefits by the buying agents expertise, connections, negotiating skills, administration of paperwork, coordination of all parties, thinking outside the box when problems arise, etc. Real estate agents are not just salespeople, they have fiduciary responsibilities to their clients and act as consultants and advisors which requires experience, developed skills and expertise….and time…lots of time…
@@listwithlydia Yeah right. Maybe you wouldn't mind signing an exclusive agreement to test drive a car, but most would. And if this buyers agreement holds (which I sincerely doubt, at least not in its current form) buyers agents will be trusted just like car salesmen are.
And I don't think or care about what the car salesman's commission is. I'm only interested in getting a good deal for a car I want. And if I can't get it with one salesperson I'll go to another. That's how the free market system works.
@@rondorazio4921 to each his own. You get to pick whether you want to work with an agent or represent yourself. If you don't like an agent's fees....don't hire them.
@@listwithlydia The point is I don't have a choice. If I want to buy a house I have to sign an exclusive agreement with someone I hardly know. Lawyers don't even expect exclusivity! That's nuts and it won't stand. Agents will have to find their way around it, e.g. Zillow's 7 Day Touring Agreement, or sales are going to fall off rapidly
@@rondorazio4921 I see what you are saying. Right now if you don’t want to work with an agent, there’s not an easy way to see houses that are listed by agents. If you have an agent you trust and want to work with then this works fine but it ties your hands if you haven’t found an agent yet or would prefer to represent yourself.
Yes. 🤔the buyers have always brought the money. Point taken. Good point.
This is a well-thought out video, that being said….
As a buyer planning to buy in the next 6 months, and having been researching intensely since this NAR settlement change, I’m feeling like there’s no point in engaging an average agent. *see point further down
From my perspective as a buyer, no seller will lower what they have their home listed for - why would they? Rather, they’ll just keep the former buyers agent commission (already in the cost of the home) for themselves. It’s no problem to wait for another buyer with deeper pockets or willing to take out a larger loan.
What does that mean for buyers? Hmmm 🤔
Option 1: a buyer can take the real estate course for 75 hours and $500 and represent themself. Then the control is in their hands and not in some back room agreement like in the past... or in this new arrangement whatever it’ll work out to... Informed buyer. Maybe not experienced but at least informed.
Option 2: interview potential buyers agents to find a responsible and good negotiator with experience. Repercussions? Get “less” house because the commission comes from my pocket and the houses are the “same” cost. *ALSO Will I be able to find an agent that will do more than unlock doors and indicate where to sign on paperwork? During my online research I’ve heard from the mouth of real estate brokers that they and their team are holding off on representing buyers for a while… 🤔 How many agents will be doing that? Will I even be able to find a buyers agent I can work with, with confidence? I have a list of questions gathered from my research in the last few weeks. So far every agent I’ve asked has just wanted me to believe them that they will negotiate from the seller - while asking me to sign an agreement that if they aren’t able to negotiate, they will be paid directly from me. (Yes. Got it. The money has always come from the buyers… )
Option 3: Do both option 1 and 2… and it costs me an agent buyer commission AND extra time and $500 to know as much as a prospective agent who wants to write the exam to be a real estate agent.
Option 4: WAIT - See where it all nets out, eventually. Keep my ears and eyes open and learning as agents and brokers, NAR and all the players in the game decide on rules.
Option 5: Any other suggestions?
Overall I feel like l, as a buyer, am not represented in this debacle that highlights, all around, how this buying and selling of real estate is a game of roulette.
OK.
My rant over - feeling quite discouraged and manipulated here as a buyer as the real estate agents say “we didn’t do anything wrong, why did NAR settle?” and “nobody works for free” over and over…
Again - your video is good and quite enlightening … especially from the perspective of an AGENT.
One caution is to “hear” yourself from the perspective of a buyer or seller. Because you’re being watched…. I truly wish you well and appreciate the information you provide.
Wow, I appreciate your thought out feedback. So much there. First, I'll address the thought of just getting your license and representing yourself. You don't need your license to represent yourself. You'll need to ask the seller's agent if buyer's agent compensation has already been negotiated. If it is, ask how much and then ask for that much off whatever the price is you otherwise would have offered. If buyer's representation has not been negotiated already with the seller, then just put in your offer. Seller's agents HAVE to present ALL offers to their sellers unless the seller's have instructed them otherwise. Now, a seller and their agent will likely be uncomfortable with a contract you pull off the internet, so they will either want you to use an attorney to write up the contract or the listing agent might offer to write it up for you. (either for a fee or not). Having an attorney draw up a contract is less money than paying a buyer's agent 3%. The school and test for getting your license is not going to teach you anything useful about contracts and negotiation. It literally is just a means to an end....you learn how to be a good realtor from experience and mentorship. Representing yourself is risky but it's always been available.
Now as to your perspective on sellers and price, we are coming off of a hot and heavy sellers market, but we are not longer in that. Seller's are much more willing to negotiate than you think and they all know that commissions have been built into sales price historicallly. Just like FSBO, of course they are hoping to get the same price and NOT have to pay commissions, but there are so many buyers that this is just NOT a possibility for. When I'm working with a seller, I make sure they understand this. You vastly limit your buying pool if you don't offer help with this. It's one thing if you have multiple offers, but it's a whole other thing if you have an offer on the table....you said you wouldn't pay buyer's agent commission....but the offer in front of you includes paying buyer's agent commission. You'd be surprised what sellers are willing to do. Before, you didn't usually have to negotiate this part b/c the listing agent already negotiated it for you. Now, it's just like all other negotiations. Sometimes a buyer needs $10,000 toward their closing cost from the seller....and seller's are willing to do that...sometimes. It's all about the bottom line. You don't know for sure until you put in the offer.
GOOD buyer's agents rock. Interview some and find one you trust and if you still aren't sure do a SHORT agreement until you are sure. That's my advise.
@@listwithlydia - thank you for your helpful response to my points. I appreciate the time you’ve taken and feel “heard”. 🙂 Interestingly, you’re the second realtor that has suggested the initial courses to become informed in real estate (the classes preceding taking the exam) wouldn’t give me the knowledge/impact I was anticipating. 🤔 Can I infer from this comment that someone who is a “newly” licensed real estate agent (less than a year perhaps?) would still be almost in an apprenticeship phase? In your opinion, when searching for a buyers real estate agent, what experience/length of time/houses acquired etc. would you recommend? Again, I’m sure you’re busy, and thank you for taking the time to respond.
@@LoriF2005 I did a video on choosing a realtor that might help and I'll link it here, but in a nutshell....yes of course a newly licensed agent is not going to have the knowledge, skills, experience.....HOWEVER, most new agents surround themselves with expertise and have mentors....plus they have TIME and CREATIVITY. Hard to generalize so interviewing and asking questions is smart.
th-cam.com/video/UzXOEVdOHTU/w-d-xo.html
@@listwithlydia - thank you. Wishing you well.
@@LoriF2005 you too!
I pay cash, so, all the cash in the deal is mine. If the seller negotiates with the seller for a percentage and the buyer agent wants a cut that could be as much as 6% and 3% for a total of 9%. The buyer agreement wants you to go into a deal with out knowing what will happen at the end already agreeing to a percentage. Seems a very poor negotiating tactic. It looks like this is all on the side of the brokerage. What's next? Sign a buyers contract with a car dealership salesperson for a certain percentage of the sales price? Pay to buy? The buyer's agent is bringing a buyer to the listing agent, this has traditionally been considered a "finder's fee". This all adds a layer of needless bother. I have a buyer's contract in front of me. You would have to be crazy to sign this on the spur of the moment. You need to have a lawyer go over it with you, fill it out and have it ready to present it to the real estate person, whether a buyer's agent or a listing agent.
It's a bit of a mess right now. Agreed. I'm sure a solution will present itself. It's one thing if you do have a buyer's agent you trust and want to work with but I feel the pain of not being in the position and not wanting to sign something and have to "trust" someone you don't know. That's super tough...and you shouldn't have to.
Remember too that if you do sign all information gained in any offer on a specific property with that agent can be used by that agent in making an offer on the same specific property with another buyer or the agent themselves. Its called monkey in the
middle.
@@junglehomes6525 What kind of info are you talking about? Buyer agents are bound by confidentiality regarding any of their clients personal information. If I have two clients interested in the same property, I'm obligated to disclose that and I could and should lose my license if I used one clients personal information that I only knew bc I was their agent to my own advantage or to another clients advantage and to that clients detriment. It's one of the things I like about Buyer agency, it establishes a fiduciary relationship that obligates certain responsibilities that I do NOT have with a customer....confidentiality, loyalty, obedience. Also the listing agent is not required to keep the buyer's offer info confidential...if the sellers want to share with potential buyers they have that right unless your offer includes a clause that the offer is void if disclosed.
Does this also include new builds.
Wow that’s a great question. So here is the thing, when you go straight thru the builder this doesn’t apply bc you are representing yourself, you are essentially buying for sale by owner…unless it’s on the MLS and listed with a realtor. This isn’t necessarily a good thing though bc going into such a large purchase without having your own representation is risky. You have no one reading over things for you, looking at pros and cons, you are talking to the person who is motivated to sell at the highest price… so they aren’t going to offer all the discounts or perks they could or that would be negotiated for you if you had a buyers agent working for you. If you want a buyers agent on a new build, the builders almost always will pay them so you won’t need to pay more for the house than you would have without representation….but they aren’t going to offer this info. You have to let builders know on your first visit you are working with an agent and if you’ve signed a buyer agency agreement, your agent will confirm what the builder is willing to contribute up front and if it doesn’t cover their whole fee they will have a conversation with you and figure out options. Hope this helps:
I know that you shouldn't do this by yourself.
My question is about signing an agreement with a realtor to be my agent and if I'm buying from the builder my realtor gets the comimision from the builder or am I still have to negotiate payment with my realtor?
@@Peter-ok9bj you still negotiate bc if you have an agreement to pay your agent 3% of the sales price for instance but you choose Ryan Homes who only offers to pay agents a $2500 flat rate, you’ll need to have a conversation with your agent about whether they will accept a discount commission and still represent you or whether you’ll need to pay some out of pocket or self represent. Most builders are happy to pay agents 3% commission and sometimes even 4%. But every builder is different and they don’t usually negotiate at all when it comes to agent compensation they have it set, take it or leave it. Does that make sense? So it’s just like if you have an agreement with your buyer agent to pay them 2.5% and the seller only agrees to 2%….you either make up the difference or your agent agrees to accept less or you meet somewhere in the middle.
Can we please get this information to the DOJ???
@@jenniferhodgson7640 I know right? So much confusion
Do you have a trusted referral for Columbus OH?
I have a few so it depends on the area and your goals. When I make referrals I like to talk to you first and then I personally reach out and interview several agents and then give you the names of 1-3 I’d recommend.
Feel free to fill out this form if you’d like to explore: www.listwithlydia.com/agent-referrals/
Thank you for the excellent information on this topic. There are a couple of things that seem clear to me going forward. There is now going to be more scrutiny on the fees paid to agents. Even though fees have always been negotiable years of precedence have resulted in 6% being "required" in the eyes of many customers. That has now all changed and many sellers and buyers are going to closely evaluate the asking fee of the agent vs the perceived value that the agent provides. To put this in clearer terms 3% (typical buyers agent compensation) of a typical home sale is a lot of money. There are going to be a lot of folks who may balk at having to pay that amount or having that amount affecting the negotiation of a sale price in order to buy a property. The other thing that is going to become important is communication by the agents, this is something that is a common complaint about agents, i.e. they are bad at it. This is something that will need to be improved for those agents who didn't consider it a priority in the past.
I sure hope communication is improved, by far the most annoying part of my job! And yes...what's crazy to me is that when I work for a Buyer it's so much more time and effort than when I have a listing....and I work hard on my listings too....I'm not the kind to just throw a sign in the yard and put it on MLS and call it a day....but Buyer's often are extremely time consuming. Not complaining at all, I get it, it's a big deal....but if it were much less than 3%....it wouldn't be sustainable....at least for me in my business.
Agents always say “the fees have always been negotiable” true but if you didn’t agree to the “standard fee”, agents would often steer buyers away from those houses. This is a fact but realtors don’t want to talk about that.
Thanks for the feedback! I have not personally experienced this but I would not deny that some realtors might have done that. For me, it's always been a conversation with my buyers. Buyers agents have never worked for free. I think that is why I do agree with and like the first part of this change....having conversations with buyers and contracts in place that discuss plainly the fees and how they are paid is a good step toward transparency. Now, buyers agents will all have signed agreements with their buyers before showing a house, it's up to the sellers whether they will accept an offer that includes different terms than what they wanted. Appreciate your thoughts! It will be interesting to see how everything shakes down. I'm not at all opposed to change and more transparency. I love that part.
I am a Realtor and I have never in my career steered any of my clients to certain homes. Whatever homes my clients want to see, that is where I take them. Most times, I am just happy that they chose me and want to do business with me. Many times I don’t even notice the commission until I am actually writing a contract, and then I would be like oh so that’s what I’m getting paid. I just hate how people lump all Realtors into the same category. It’s really frustrating. Of course there are some bad apples in the bunch, but that’s in every profession.
@@fitwill73 the great thing is you get to build your business how you want, keep operating with integrity!
You’re just making stuff up cause you like the way it sounds. I’ve shown homes that offered 1%. Typically they’re huge pieces of shit homes and the sellers is some slumlord trying to get every dime. This usually get bought up by investment companies so who cares.
Is there any law protecting you from your Gardener from your dentist from your doctor from your heart surgeon from your lawyer no but they just created one to supposedly protect you which in turn is going to make homes more expensive for you
This is a very well done video, clears up a lot of confusion, and really ties in well to your previous videos. TY!!!
Thank you I'm glad you found it informative! There's a lot of confusion out there right now!
My prediction is listing agents will eventually become very rare. A surge in FSBO incoming. If you are an agent, I recommend that you focus on being a great and valuable buyers agent.
We shall see!
Hello great information here. Just need a little clarification when you stated that your fee for representing the buyer is 3% and if the seller is offering 2.5% commission that you would accept a 2.5% commission from the buyer instead of having the buyer pay the extra .5% commission. Could you also instead choose to have the seller pay the 2.5% commission that was offered and have your buyer pay the .5% difference.
Yes absolutely. That is what many do and what I would do if the seller offered less than 2.5%. It's also depends on the buyer's situation...I want to be fairly compensated, but I would not want my commission to prevent them from getting the house they want. This is why I really want to build trust and be able to have candid conversations throughout the process.
How can a buyer negotiate a fee with thier agent, when they have NO idea how much time, effort or expertise the agent will provide ? ie: 2 hrs., 2 days, 2 weeks, 2 months or longer
That’s a good question and I think the reason it’s been in that 2.5-4% range for the last few decades. No one knows how long it will take or how much time on the front end. You want someone to work hard and negotiate well and those agents are going to be more efficient but that is because they also directly benefit from that efficiency and wouldn’t want to be penalized for it with a lower commission. There will always be deals that take longer, have more hiccups, require more negotiation and wisdom and outside the box thinking. There will be some buyers who know just what they want and others who change their mind 500 times. The percentages that have become normalized are what sufficiently keep agents motivated not to quit and to work on their skills and efficiency. Usually an agent will set their rates and they aren’t negotiable. That doesn’t mean you can’t try, but if an agent is quick to lower their rate for you I wonder how good of a negotiator they are and I wonder how hard they are planning to work.
I have another suggestion, I'm a buyer too and I've come up with a commission structure that really works for the buyers. It's a long explanation below but in but shell is like I give a fixed amount to my agent + % of price they can negotiate down from CMA (comparative market analysis price, not the list price cause list price can be anything)
I have 2 models which can aligns buyer's interest and the buyer's agents interests.
Let say for a house that is listed, its average CMA price is at 550K. So, if the seller is selling it for 550K with buyer's commission included in it, is equivalent to them selling for 550k-2.5% = 536,250 without the buyer's commission included. In other words for the seller, selling it for 536250 with buyer paying the commission is equivalent to it selling for 550K (full CMA price) with seller paying the buyer commission. Lets Call this (CMA - 2.5%) = control point "Cp".
My 2 model are as follows:
Buyers agent commission = fixed component (say 7500) + (Cp-sale price)*10%
ie: fixed component + % of amount negotiated down. for eg if buyers agent is able to negotitate down 20k then they will get 10% of 20K = 2000 more in commission. just like how sellers side get more if house price sells for more. This only makes the game fair.
OR
Buyers agent commission = 1.5% of Cp* (factor which increases based on amount negotiated down).
so exact formula is: 1.5% of Cp *(Cp/sale price) *1.08
= Cp2 /sale price *0.0162.
This gives buyers agent a decent kick back in commission for the price that is negotiated down like in the previous case.
Hi lidya, great video. Question if possible! What is the average sold homes price in your area?
I think it's around $200-250,000 for average.
Working with a few listing agents, they’ve never been transparent, they gloss over commissions, industry standard gets thrown around. More people should do for sale by owner and buyers go and buy along with an attorney. Get the comps from these MLS sites and do your homework.
I am sorry you’ve had a bad experience with real estate agents. That stinks.
I have been sharing that the buyer has always paid Realtor fees. The buyers bring the money, not the seller. I wish people would use the correct terms. IE: Fee is collected by one who has a fiduciary duties. Commissions are paid when sales-person represents the company, and work to make the company as much as possible. Realtors, like attorneys, collect fees.
Yes, it's really a semantics issue...does the chicken come before the egg or the egg before the chicken. The Buyer brings the money and always has. I think a big part of why there is miscommunications is that the closing statements show the commissions coming out of the Seller's side....so the Seller sees that as being paid out THEIR "profit".
I have another suggestion, I'm a buyer too and I've come up with a commission structure that really works for the buyers. It's a long explanation below but in but shell is like I give a fixed amount to my agent + % of price they can negotiate down from CMA (comparative market analysis price, not the list price cause list price can be anything)
I have 2 models which can aligns buyer's interest and the buyer's agents interests.
Let say for a house that is listed, its average CMA price is at 550K. So, if the seller is selling it for 550K with buyer's commission included in it, is equivalent to them selling for 550k-2.5% = 536,250 without the buyer's commission included. In other words for the seller, selling it for 536250 with buyer paying the commission is equivalent to it selling for 550K (full CMA price) with seller paying the buyer commission. Lets Call this (CMA - 2.5%) = control point "Cp".
My 2 model are as follows:
Buyers agent commission = fixed component (say 7500) + (Cp-sale price)*10%
ie: fixed component + % of amount negotiated down. for eg if buyers agent is able to negotitate down 20k then they will get 10% of 20K = 2000 more in commission. just like how sellers side get more if house price sells for more. This only makes the game fair.
OR
Buyers agent commission = 1.5% of Cp* (factor which increases based on amount negotiated down).
so exact formula is: 1.5% of Cp *(Cp/sale price) *1.08
= Cp2 /sale price *0.0162.
This gives buyers agent a decent kick back in commission for the price that is negotiated down like in the previous case.
Are you aware of the Zillow 7 day Touring Agreement in which no committees are made? If so, what do you think?
@@rondorazio4921 I am aware of them but haven’t had time to review it. I don’t see how it could follow the guidelines if no commitments are made. I could see no long term commitment but does it allow an agent to show a house and then if that buyer decides to make an offer on their own or with another agent it allows for that? I suppose I could see using something like that just to get in the door. Agents might go along bc they hope to build trust and rapport, and buyers would like it bc they wouldn’t have to commit until they want to write an offer. Can’t comment much since I haven’t read it yet.
Thank you for the heads up on the audio 😊it meant a lot
Yes, it bugged me I couldn't fix it before I released it, but at least I could give a warning 😉
Excellent video. Someone tech savvy needs to set up a separate website where all agents place their listings only to indicate the status of the commission. The website would be separate from any Realtor or MLS ties.
This would be difficult b/c it wouldn't be very useful unless the majority of folks participate. I think we're all just going to adapt to doing business without knowing since calling everyone ahead of time is unrealistic and for most sellers now instead of offering a certain percentage....they are just going to take it an offer at a time and look at the bottom line and I think that *might* become more normal and ok. Exciting times :)
@@listwithlydia A simple database. Every MLS subscriber pays five bucks per year; most would join. You can enter only two fields: Address of property and percentage commission payable by the seller to the buyer's agent.
I’ve sold many houses without an agent. It’s not complicated. Complete a disclosure form and lead paint . Come to an agreement and have a title/escrow company take it from there for $400. Save 10’s of thousands $$$$
I'm glad you've had good FSBO experiences! I think when it works and when it's smooth it's great.
Yes a Rambo stitched his own arm and I'm sure there are people that pull their own teeth how many full-time employee first-time buyers do you think there are that definitely couldn't do it without agents
@@MAZDAKPRODUCTION doing it on your own is always an option, whether it’s the best one or not most of the time you won’t know.
@@MAZDAKPRODUCTION I somewhat agree. A buyer would be better off using an agent if they have no negotiation skills and/or don’t want to do any leg work going to the property and setting up appointments, inspections, etc. A buyers market may warrant the additional exposure of the MLS. The Title/Escrow companies can hold your hand and walk you through the paperwork. You don’t need to do it yourself.
@@braemp of course you would agree because all sain Minds would agree unless you are the criminal catch Mark and the criminal judge that ordered this ruling on NAR or the d o freaking J
Could you imagine a car salesman receiving 6% commission on the sale price and not gross profit. Realtors are a factor in sky rocketing cost 15k dollars commission on average for 350k house that the seller owes 290k on is criminal. That’s why sellers are listing their houses higher to cover those cost. The service isn’t needed would be cheaper to have an attorney type up and review the contract. Literally had a buyer wanting my house I was covering seller and buyers fees 2.5% each. The buyers agent added in the offer realtor buyer commission would be 3%. I countered and said no she called my realtor and said the buyers really want my house and can’t cover the other .5% and I would be preventing the sale if I didn’t cover it. Like sorry no you are preventing it on greed I’m already covering it plus closing cost. Anywho went with the other offer their realtor lost that sale no one else
comparing car sales and real estate is not at all accurate. A good agent proactively represents, consults, advises, negotiates, researches, counsels, strategizes, etc...it's just not at all the same thing
Well it is the same it’s sales. There are a variety of differences in sales depending on your product you sell. I was stating realtor commissions are inflated. Hence car sales rep example this isn’t paid commission on sale price rather it’s gross profit. If it was on sale price it would be unsustainable. Realtors can because the product selling is individually owned there is no sustainment needed other than the seller having to list higher than they would sell to cover your commission.
@@donaldarmstrong08 I don't agree with you in it being sales. Of course their is a sale taking place in a real estate transaction, yes, however a real estate agent is not selling a house....they are representing the seller or the buyer in the sale of a house. My job is not to sell houses, although I help my clients in selling their house and/or aquiring the house they want. My job is to lend my expertise in knowledge or the market, negotiation skills, strategic thinking, problem solving, administration, marketing, presentation, advise, consultation, asking the right questions, pointing out potential issues and pros/cons, providing referrals from my network of contractors, providing resources, etc etc etc. Sometimes the best thing I can do for my client is advise them to walk away from a bad deal (which means I don't get paid by the way), other times it's to push through and close even if it gets complicated and looks impossible....my success isn't in whether or not I close a sale, it's in whether or not I provided good service to my client.
I don’t disagree with you that it isn’t sales for you and you have a passion in helping your clients. Your commission sounds like it’s absolutely worth the cost but you’re the minority in the industry that provides that level of service. From my experience with buying and selling the properties I owned and from friends and family that have it’s not the norm. I will happily pay a higher commission for superior services vs subpar. I do also believe the commission should reflect the level of service provided. I guess what I was referring to with houses prices increasing significantly versus historical trends commission should be realigned it does add to inflated prices every seller is considering the commissions when they determine their sale price. I am not saying it needs to affect the realtors bottom line it can be realigned with the broker fees that the realtor loses to the company they fall under if not independent. Anyways appreciate the responses and I didn’t mean any offense to trade there is just a lot of upfront and backend cost to purchasing the home that the buyer, seller, and realtor loses out to due to companies profiting on a need.
@@donaldarmstrong08 Thanks for watching and commenting! I appreciate the feedback and we don't have to agree, although it seems maybe we do on this one 🙂
Well said Lydia. If you were in CA, it would have been awesome to do a deal with you 🙌🏼
@@DSGQR awww ☺️ thanks! What part of California?
@@listwithlydia Southern California. More inland but I’ve done deals in LA, Hollywood, Palm Desert, Corona, the high desert etc.
@@DSGQR Nice! Maybe I'll get to send you a referral some time! :)
Your video fantastic
Thank you!
@@listwithlydia Wellcome
It should not be built into the list price. Because that is the opposite of transparency. If you try to put it in the list price now it will have zero transparency now since you aren't allowed to put the commission fees on the page. Just because you know doesn't mean a buyer or seller knows.
Edit: The simple fact is you're already living in the past. There is no longer a need to call listing agents to see if they offer a fee. The buyer should directly be paying their agent. THAT is what you call a straight forward transaction. Sellers offering the buyer's agent a fee is a thing of the past. But sure it will take some time to get used to.
Thanks for your feedback. I do understand this opinion and I'm sure it's what the big companies that offer discount listings are hoping for. I have decided that unless my buyer asks me to, I won't be calling ahead of time, but I'm sure most buyers will want me to include seller paid commissions in the offer. There are so many who simply can't afford a home otherwise. Unless lenders start allowing buyer's to finance, which is what they've been doing when it's built into the price. Buyer's agents represent buyers, yes....but they are needed to SELL a house (or at least they make it a lot easier). I work with both buyers and sellers and when I'm working with a seller and our buyer has a good agent on the other end it is so much more likely to close in my experience anyway. We shall see where the chips land.
@@listwithlydiaYour second to last sentence is spot on. The key word in this new paradigm is “negotiation”! IMHO, experienced agents who are savvy negotiators will have a smoother transition than newer agents entering the industry.
@@jackf.7415 yes although for new agents this will all be business as usual, they won’t know any different!
I wish this was all outlined months ago!
@@jenniferhodgson7640 it’s amazing to me how unclear it’s been and how even now with today going into effect most folks don’t understand.
If I use a sellers agent a person on their team, do I still pay a buyers agent fee or is the seller agent split the commission?
@@shutupsugarfly are you talking about as a buyer or seller? Really it all depends on the contracts you sign. If you are listing and you sign with a listing agent, you are agreeing to pay them a certain commission. Previously that same contract (Exclusive Right to Sell), would also lay out how much (if any) was being offered to a Buyer's agent. If you are a Buyer, you should be signing a Buyer's Agency Agreement that stipulates the Buyer agent rates and how they will be paid. Sometimes that Buyer agent commission comes from the seller and sometimes from the Listing Broker (sharing commission) and sometimes you'd be paying out of pocket, it all depends on the final purchase contract and what you and the seller (and the agents) agree to.
@@listwithlydia thank you,
@@shutupsugarfly you're welcome
This woman is trying to deceive you. Don’t take any of her advice. Realtors should be receiving nowhere near 2.5% commission.
Thanks for watching and the feedback. I’m certainly not trying to deceive anyone. But you are entitled to your opinion.
I bet the average realtor spends less than 2 hours with a buyer lmao
@@Ttow49 thanks for watching. That certainly hasn’t been my experience.
@@listwithlydia LIsting agent does the work, not the buying agent. Am I correct?
@@mkeltycom Listing agents and Buyers agents both do a lot of work.
Be careful buyers
Think of them as
USED CAR SALES PERSON
@@Green-jl9yh nope.