Steve Murray on the implications of NAR’s commission lawsuit settlement
ฝัง
- เผยแพร่เมื่อ 3 ต.ค. 2024
- We are dropping a breaking news episode in your feed today as Steve Murray of RTC Consulting joins us to discuss an important update in the class action commission lawsuits brought by home sellers across the nation.
The National Association of Realtors (NAR) has settled for $418 million and will make several policy changes, pending court approval. This proposed settlement has several implications for the real estate industry, including the removal of compensation offers from the MLS. Murray talks about the potential for more commission compression as well as the possibilities for new business models, additional brokerage services and the future of NAR and state associations.
Here’s a glimpse of what you’ll learn:
The settlement in the class action commission case has several implications for the real estate industry.
The settlement opens up possibilities for new business models, with big brokers having an advantage.
The billions in savings for homebuyers is a myth. Murray explains why it may not lower home prices.
The settlement is significant, but its effect on DOJ’s broker compensation concerns is yet to be determined.
Related to this episode:
Connect with Tracey Velt on LinkedIn: / traceyvelt
The Gathering: events.realtre...
Enjoy the episode!
The RealTrending podcast features the brightest minds in real estate. Every week, brokerage leaders, top agents, team leaders, and industry experts share their success secrets, trends, and lessons learned navigating this ever-changing industry. Hosted by Tracey Velt and produced by Dalton Johnson.
I will adapt by dropping my membership with NAR 😂
I wish I could.
Just form a title 1 section 1 international corporation, then say you're Canadian 🤯 then you'll probably be exempt from all these laws 😉🤦🏻♀️😅🤣😂🤷🏻♀️
There is some question as to whether you are released from liability if you are not a member of NAR when the changes go into effect.
That doesn't make any difference in the new changes about sellers paying commission to buyers agent
The speaker makes a mistake. The settlement does not state that "off market listings" can offer cooperative compensation; rather, it states that offers of cooperative compensation can be made off of the MLS. Big difference!
the buyer-agent mandatory contract signing will make the cooperative compensation null. No buyer agent will leave their pay to seller's grace. Also, no seller will voluntarily give say $20k away to the person who worked for someone else!
I shared similar thoughts to Steve in my YT video. Home prices will go up and their will be way less transparency moving forward. More pocket listings for sure. Consumers will lose in the end. The attorneys are laughing all the way to the bank.
This will be great for sellers, bad for buyers. An already fragmented market will become even more fragmented.
The net result is that good Realtors, Brokers, and Agents would do better, and the bad ones will lose. It is the way should be.
Seems like it's entirely possible for the bad ones to stick around and continue screwing things up for everyone else.
Or AI can just handle all of it for a flat fee
@@_cghrey2795 There is a reason why people still prefer to go through the cash register with a human than self checkout. AI is not replacing Real estate Agents any time soon.
Hope this video goes viral. Great insights and takeaways from the settlement.
This is one of the best takes I've seen on this nonsense
Pocket listings in have been discontinued for last year or so by NAR. So it’s back to pocket listings and violations be damned….lol
Lol, exactly. That the same thing I said!
This appears to be another case I'm from the government and I'm here to help you, 🤯 like President Reagan used to say 🤭👍🏻👏🏻👏🏻
u make absolutely no sense!
I Believe we have to adapt. The referral agent agreement is one way. Lenders and Mtg brokers have to allow a higher YSP to credit the buyer for assistance. I Mean its insane that buyers need funds for Down payment, closing cost, and Buyers fees! I think as a Listing agent I can charge less but let my seller know its important we assist in Buyer concessions to allow competitive offers. Listing agents will double end when this was not allowed without giving the other offers a chance.
"How this settlement could impact the industry." Every home seller hopes 85% of these agents go back to their previous job of selling cosmetics at Bloomies or Macy's.
That is the way it has always been. Only 10% of agents make it in this business. You didn't need this settlement to make 85% of agents to leave the business. It happens every year. Out of the 1.5 million agents only 10% of them are doing transactions. Those 10% are not leaving the business.
It was needed to protect the sellers from the 85% that are inept. Why should I pay one farthing extra to thees rascals. A good listing agent is all that is needed and that is hopefully what we will get. As the conservatives always like to say -- "The market will take care of itself." Well, the market is doing just that.
@@davebonilla4561
It is a really bad deal for home buyers, period.
I've sold several homes FSBO and I do my research on market price, staged the home properly, and have all day open house's Saturday and Sunday and have always sold them within two weeks, this was in 2001, 2003, and 2008. The key was to price it about in the middle of what a 6% commission would take so the buyer got it for 3% under market, and I saved 3% commission for doing a little selling work myself. Used basic offer agreements for office depot and the title company does the legal work and escrow.
They think they’re hurting the agents, but they’re actually hurting the buyers. The lie was this would it decrease home prices? No it will not. This is going to be bad for buyers, especially first time home buyers.
For American people, the homeownership represented their biggest wealth. Of this wealth, 6% was owned by the RE agents. Not just once in forever, but every time ppl had to move the 6% was sliced away by the RE Agents. This is just totally absurd. UK charges less than 2% to sell/buy homes. American RE brokers charged 6%!!!!!!!! It's a rip-off. They should charge less than 2%: 1% max for seller agent, 1% max for buyer. RE agents never went to a school to learn their trade. Anybody can become an RE agent after some quick prep and a State license test. Why the hell do they charge so much? For a $800k home, they charge $48,000. In contrast, RE attorneys charge like $1,000 to close the transaction. Lawyers went to a law school for 6-7 years to earn their license. RE Agent to RE Attorney fees are 48-to-1 for this $800k home. Can you see how absurdly high the agent commission is? This commission now has surfaced to the top of American mind. Now RE commission will go only down longterm. I like 2% max, combined.
Even though I've never met a realtor worth 6%, the new law will not help anyone in the housing market. It really just made it more complicated for a first time home buyer.
The entire model will likely change. This harms good brokers, for sure, and will weed out the ones that need to go. If any agents or brokers make an assumption that the old comp model will survive, they will learn the hard way. Richmond Fed has made a proposal that will likely become the model (or basis of it) moving forward. The days of 5-6% comp are officially gone. And this is only ONE of the judgements. When the rest of them shake out, it'll be game over.
The first time buyers will be hurt because they will most likely be forced out of the market. The lower demand will hurt the sellers. The only winners are the attorneys.
Why does everyone keep saying it only affects the buyer? How about the listing agent only present his own offer to seller at just asking or below asking because without compensation there is less viewings. Also, aren’t most sellers become buyers too?
Dang so now we won’t have a middleman deliberately extracting as much money out of a transaction for their own profit?! Oh the humanity !!
Really good insight. Flat fees for selling and flat fees for buying. Shouldn’t be more than 2500 for a seller and 2000 for a buyer. Currently there is zero incentive for a buyers agent to negotiate the price down. A buyers agent transaction needs to be completely separate from a sellers contract.
I completely disagree about your comment about no incentives for a buyers agent to negotiate the price down. I can only speak for myself but an agent who has foresight in his/her business will tell you that negotiating a deal even as much as $20K less, will net around $400 less on commissions. I will always take a $400 hit and have a chance to gain the trust of my clients for future business. Buyers will become sellers. I helped my last two clients negotiate down and they were appreciative for it. It’s too easy to negatively speculate how business is conducted when you’re not in it.
I would go even further and say that if I'm the buyer, my agent could receive a higher commission if he get's me a lower price!
You're dead on. I've done over 40 transactions in 10 years and the vast majority of agents just want to get the deal done and get paid.
All other costs in a transaction are set fees, why not the sales agent as well???
@@MartyGray-y6t I’m only speaking from experience, and my experience with buyers and sellers agents. I usually just represent myself but occasionally give someone a shot. I know the business well. It’s going to be a crazy shake up. Or, nothing at all.
@@chuckdawit I just told someone that. I said. If you’re my buyers agent, I will pay you $1000 for every $10,000 you negotiate down the price. If you negotiate down $50,000. Here’s your $5000 check. All day. I would do that all day for a dedicated buyers agent.
I don't need a real estate agent to help me buy a house as long aa i can see the homes for sale on the MLS. Why pay 3% for an agent to help me buy a house?
You can go direct to each listing agent and get hounded constantly…:)
The impact of this new regulation on real estate agents and brokers is significant and depends on how the National Association of Realtors addresses the situation. If buyers are permitted to find homes on the internet, it is likely that they will go directly to the seller's agent, potentially eliminating the need to pay any commission to a buyer agent.
Conversely, if buyers are not allowed to find homes on the internet, it raises the question of how they will be able to find a home. This could result in buyers being required to hire an agent to assist them in their search, as they have the ability to access multiple listing websites to find their dream home.
This is exactly what I wonder about. Listings migrate to a number of sites and those sites all lead directly back to the listing agent. Bypass a buyers agent. Get a showing from the listing g agent. Have the lawyer you were going to use anyway review the offer and voila … buyer still pays nothing.
Does This apply to rentals too
Rates were always negotiable? Anyone had that conversation with a realtor without offending them? If you managed a lower rate you got zero foot traffic.
Hahaha I thought the SAME EXACT THING! Perhaps this was the reason for the lawsuit.. because 6% was put forward to me like “the law”.. in the Bay Area it was 10%
Yes when I was an active agent I had many sellers where we did have a reduced commission like 3.75% total and in the MLS the co-op commission was 1.5 or 2%. Let me tell you if you don't have 2.5% - 3% as a cooperating commission to the buyers agent, there will be zero showings. Then many other companies saw that we were offering lower total commissions they steered away from our company altogether. We were just trying to save the homesellers but no the bigger remax and coldwell bankers did not even want to deal with us
Actually they are and always have been...I often give what I call my "Friends and Family" discount...
so ur implying the lawsuit was right....its a monopoly!
It seems that first-time home buyers and people who have saved for years to save a 20% down payment will be locked out of the market. How will they have access to viewing a home without a realtor when they cannot afford to pay one since they barely have the down payment.
They'll just work directly with the listing agent... just like in Europe. And likely multiple brokers will list every home.
This guy said "buyers will little legal representation for the purchase of the home". These agents claiming to provide legal advice is a shining example of why NAR got sued and lost. This industry needs a complete flush.
As a tennis player I have learned that when I try to plan a type of return before The opponent serves it goes bad. All of these conversations are the same. A mind f until the serve. Keeping your eye on the ball matters when it’s in play. For now the can is open and we are flipping for sides and serve. Not relevant. The question that matters is when will the decision actually be made?
Sorry Mr Seller we are a 5% agency...would you like to offer 50% to buyers agents?? Do you want 1 agent working to sell your home or 500? What will happen is full service listings vs non full service listings and agencies. Full service will be selling all of the houses.
Sorry Mr. Agent guy down the street will do it for 1% . It will go just like that. Agents will undercut Agents all day long.
Sounds like they will come up with a crooked way to get money
The fact that agents can work with the buyer and seller, in layman terms, makes it a cartel. Gotta break up monopoly. Also with AI, Zillow doesn’t need MLS to provide data
less buyer will bring the market done ,yes supply and demand has a-lot to do with real-estate market
In most cases, sellers will be turning around and buying a home after selling. So either they go it alone, which means no money out of pocket, or they pay a buyers agent to negotiate the deal, in which case it’s the same money out of pocket that it would have been prior to the settlement. If a buyer goes on to buy alone without representation, this means a lot of work will be falling on the listing agent. They will be opening up the home, showing the home, writing and negotiating that offer as a transaction broker, all while walking the line and maintaining their fiduciary duty to the seller. This is certainly not an ideal situation for a first time home buyer. It’s a little like insider trading. I see a potential for lawsuits. Secondly, listing agents will need to be compensated as a transaction broker for carrying out those additional tasks. So it’s still money out of pocket for the original seller.
In your scenario of an unrepresented buyer and a transaction broker, who pays the transaction broker in the deal? Because if the seller pays that on top of the listing fee agreement, that would be problematic. From what I know of transaction brokers they have no duty to either seller side or buyer side but I could be wrong.
A lesser commission does not mean prices will go down. When has a For Sale By Owner ever reduced their sale price to reflect their neighbors sale price minus the commissions. NEVER. Listing agents will charge the same amount they always have and if they represent the buyer on top of that there will be additional expenses to the sellers. Also, smart sellers will offer compensation to the buyers agents to expedite the sale. Other sellers will follow suit and we will be back to where we are today.
Well, it looks like you solved it. The problem is if you are correct and “we will be back to where we are today” then this industry will be sued again until it fixes itself properly. Attorneys smell blood in the water and they will continue to litigate because that’s what they do. I would love for realtors to explain dual agency and its benefits to an attorney. In fact, some might have to in a deposition in the near future if nothing changes.
I've sold several homes FSBO and I do my research on market price, stages the home properly, and have all day open house's Saturday and Sunday and have always sold them within two weeks, this was in 2001, 2003, and 2008. The key was to price it about in the middle of what a 6% commission would take so the buyer got it for 3% under market, and I saved 3% commission for doing a little selling work myself. Used basic offer agreements for office depot and the title company does the legal work and escrow.
You should be interviewing some of the plaintiffs, not Realtors like this guy. He's only going to give you a bias one sided narrative on how this was a bad decision.
For the most part, the real estate selling and buying has been a criminal operation and a Ponzi scheme. Please Consider the Following:
1) In most countries, the commission is around 1%. But in the U.S., a large number of Parasites decided to use the real estate license, which takes less effort than a high school diploma, to demand 6% commission..!!! .
2) In many cases, the seller and the buyer agents work together to fleece both the seller and the buyer, and share the loot with the Brokers and the Realtors. This encourages collusion among real estate companies to provide sellers and buyers for each other and laugh all the way to the Bank.
3) The game starts with seeking a listing by telling the seller that without a listing agreement the property cannot be posted on multi-listing, and thus trapping the seller into a listing agreement. And to tighten the trap, they encourage some cosmetic work and "staging" for the property and offer $50,000 or more interest free loan for 1-3 months. This set the stage for pushing the seller to lower the original price, or face the additional cost of paying interest.
4) The next step is to ask other agents to visit the property and provide the so-called "Feedback", which is intended to highlight the negative aspects of the property and push the seller to lower the price even further. For every $10,000 deduction in price, the reduction in commission is only few hundred dollars, which the agents are happy to let go to get their money fast.
When agencies still can offer buyer agency compensation via their own channels. it seems like they will continue overcharging it to their seller clients, and continue misleading them that the offering somehow is an incentive for the buyer agent to show the listing.
You are correct. But the difference is that the seller has a choice, and can give nothing or may be 1%., which is better for the buyer agent than getting nothing, or only whatever the buyer agrees to pay them. In some cases, it may even help the buyer agent because of getting payment of 1% from the seller and 3% from the buyer, and make the total 4%...!!!
If commissions are lower, prices will fall. It's basic economics. Supply and demand determines prices and it's NET proceeds to the seller that makes the market, not the gross price.
This is a huge maybe
Michael, let's track it and see what happens. Sellers will simply keep the difference, it's not that difficult to see. Market value is market value, regardless of commission.
I'm not sure I follow. Reduced commissions means lower transaction costs to buy and sell. Wouldn't this make homes a more liquid investment and thus increase the price?
Prices will certainly not fall. If I’m selling my home for $1 million and suddenly I don’t have to pay 30,000 in commission to the buyers agent, does that mean I sell my home for 970,000 or does that mean I make more money?
Duh
@@cbrucrew88 I'm thinking the same thing, but this naturally won't occur for a while. Real estate is a very slow moving sloth, takes many months to see what happened in the rear view mirror.
The fee for the buyers agent is already baked in and financed with the higher prices, seller is not going to lower the price for the buyers now. NAR can’t fight for shit. They had bad counsel. Appeal the Verdict
This is False information. There is no requirement for a buyer agent agreement.! The buyer has the choice to hire an agent and pay the fee. The only difference is that the seller is no longer responsible to pay for the buyer agent, which was wrong anyways.
BBA will be a requirement if a person wants to use an an agent, outside of the listing agent, to see a house. That’s already fact
@@antcaruso3465 But the buyer has the choice to hire a buyer agent or not...!!! So, hiring the buyer agent is a choice, not a requirement...LOL
@@antcaruso3465 that doesn’t make any sense. If I want to see a home first, and then decide to use an agent, it is my right.
They just can’t list the SOC in the MLS. It can be listed on agent websites.
A Buyer Brokerage Agreement is a mandatory requirement in the NAR proposed settlement agreement before any home is shown after this agreement is approved by the court.
Thus will add a special statement to the sales contract where the seller signs an acknowledgment that they understand that the commission fees are completely negotiable
Murray is pretty arrogant about his OPINION. When he makes hyperbolic statements and insults other views of the situation he shows that he is purely partisan and ideological and has no reasoned flexibiltiy in his fixed mindset. He seems like a real man of the future, definitely not stuck completely in some ancient model of business that hasn't been 'creatively disrupted'. Nothing wrong with informed opinions, but please find a guest less inclined to hyperbole and insulting other views.
Anyone up for timeshare sales? 🤣
6% commission for a sale is the highest among developed nations!
Sellers can always offer (off MLS) credit to buyers who can negotiate a fixed (or percent) commission with their agent.
Buyers win, sellers win!
This is grossly overly simplified comparison. Many other countries don't even have 30 year fixed rate mortgages, different contract laws and higher/lower taxes too. Sales volume vary to where customs determine how much commissions are.
The free market has determined that 5-6% has been customary here in the US
@@KevHomeboy Mortgage/rates/taxes blah blah blah has nothing to do with grossly inflated commissions. The whole point of the lawsuit was that there was no free market to determine commissions, which has already been settled.
@@mytunes2922 The truth is that if it was "grossly inflated" then you would just sell your house yourself and so would everyone else. Yet you don't. Big companies have paid graphic designers millions for rebrandings that took 10 minutes to complete. Did they pay for their time or for their experience? Did they do nothing or did their years of experience allow for them to be able to deliver results regardless of task volume or hours worked?
@@mytunes2922 you don't know what you're talking about. Some countries pay even higher than 6%. And if our commission is "grossly inflated" then you and everyone would just sell it yourself but yet 90% of all homes are sold by a realtor.
@@mytunes2922 if it's "grossly inflated" then you'd just sell your house on your own. Yet 90% of all homes are sold by a realtor
These people clearly don't know the industry and the real estate laws of supply & demand
There is no requirement for buyer agent. It is the choice of the buyer to hire an agent. It is absolutely false to say that the buyer without buyer agent will lose legal representation, because the vast majority of buyer agents are not lawyers.!!! As long as the buyer has an attorney who reviews the documents, it should not make any difference.
Doesn’t sound like you’ve ever hired a lawyer draw up contracts for you
Buyer's agents produce the offer purchase and sale contract to the seller. I wonder if buyer's will be able to write the offer contract without an agent? Will buyer's be able to understand their requirements per the contract with regard to time, cash, rights to cancel?
@@yesitchris I always depend on my lawyer advice and review before buying or selling property. I would never depend on the advice of a real state agent, because they are not lawyers and most likely to make a mistake.
Agents better start cancelling their subscription fees for Conversion Monster.
@@theowl3756 The majority of state real estate contracts are boiler plate, they're not too difficult....doesn't take an attorney to understand them; any real estate agent that can't interpret it doesn't deserve to be an agent. It's the extra items written into the additional terms that can be the difference maker. Next time you consult with your lawyer, ask him/her how many homes they've sold.
Tracey looks like Liz Cheney. I kept double checking. Anyone else think so?
They got off cheap.