In reply to BrazosDog02 You are looking at the situation from a legal standpoint. Nobody disagrees that the agreement/offer is valid as it stands. That's not the point I'm making but that is the entirety of your counter argument.

I'm looking at it in a moral sense. Would you feel the same way if this deal happened between you and your best friend? Or your sibling? I would assume you wouldn't. That is my stance here. Because it's a stranger though morals go out the window and it's only looked at through a legalistic lens. I'm not discounting the win or value added. But I do feel bad for the seller if this was a retirement plan or inheritance that was meant to be passed on. He placed his trust in his agent and now his life plans could be forever altered. I don't understand how the empathy here would be construed as a troll.

In reply to 1939

1939 said:

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6% in this day and age is highway robbery. Lowest amount of work for agents ever and record home prices that have far exceeded inflation.

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You can always do FOR SALE BY OWNER...

In reply to 1939

1939 said:

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ATM9000 said:

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I get the frustration around agents getting paid 6%. But at the same time, it feels like every few years a new model like OpenDoor is introduced that's allegedly set to completely disrupt how real estate deals are done. And… none of those models take off because they are prohibitively more expensive than how it works now.

Discount brokers can and do exist and do ok but they also don't disrupt the market but end up being a niche.

So… I dunno… maybe around 6% isn't a grand cabal against the public but actually just the market equilibrium cost to transact real estate.

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It hasn't taken off because all the agents collude and won't show houses if they aren't getting their 3%-6%. They have no incentive to offer properties at less than the standard.

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If you believe in the concept of economic rent (which clearly you do as your perception is 3-6% is the result of collusion and price fixing), it makes no sense that the market wouldn't be flooded at this point by discount brokers who would be able to game this open opportunity as a result of the perceived price being out of equilibrium.

In reply to southernskies

southernskies said:

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You are looking at the situation from a legal standpoint. Nobody disagrees that the agreement/offer is valid as it stands. That's not the point I'm making but that is the entirety of your counter argument.

I'm looking at it in a moral sense. Would you feel the same way if this deal happened between you and your best friend? Or your sibling? I would assume you wouldn't. That is my stance here. Because it's a stranger though morals go out the window and it's only looked at through a legalistic lens. I'm not discounting the win or value added. But I do feel bad for the seller if this was a retirement plan or inheritance that was meant to be passed on. He placed his trust in his agent and now his life plans could be forever altered. I don't understand how the empathy here would be construed as a troll.

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Ok, I get it. I understand your point. I don't agree but I understand.

From a legal standpoint, it's valid.

From a moral standpoint, it's definitley valid. A deal was offered. A deal was accepted. Is it morally OK to crawfish the deal for the buyer? Of course not. The deal is the deal.

From an emotional standpoint, sure, we can feel bad for the seller that didn't read and his agent that didn't do his job. But, that's not anyone's problem and that broker probably has E&O. Maybe that will play into it, I don't know.

If it was my friend or my sibling, I'd rib my friend until he died and I'd rib my sibling for a while and then treat them like a baby and explain why they ****ed up and why it's completely their fault and the best thing to do is learn from it and not do it again. My sibling is very naive in real estate and the fact is, if they had a realtor, they'd still defer to me to check a contract. It's just prudent.

I HIGHLY doubt this seller lost his minerals from his 500 acres in the Permian. If the minerals were that important, they'd have triple checked that contract.

In reply to southernskies

southernskies said:

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You are looking at the situation from a legal standpoint. Nobody disagrees that the agreement/offer is valid as it stands. That's not the point I'm making but that is the entirety of your counter argument.

I'm looking at it in a moral sense. Would you feel the same way if this deal happened between you and your best friend? Or your sibling? I would assume you wouldn't. That is my stance here. Because it's a stranger though morals go out the window and it's only looked at through a legalistic lens. I'm not discounting the win or value added. But I do feel bad for the seller if this was a retirement plan or inheritance that was meant to be passed on. He placed his trust in his agent and now his life plans could be forever altered. I don't understand how the empathy here would be construed as a troll.

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You say empathy but what you are describing is actually sympathy. I do have empathy for this situation but I don't have sympathy in this situation.

Agent screwed up. But if you have significant value on the line and you don't go and read the contract yourself, review it with your agent and not only verify the point together but have a common understanding of what you were giving up. If you don't even bother to do this work with your agent then I'd argue your bad morals are with yourself as much as it is with others and no… not gonna have loads of sympathy for the seller.

End of the day, buyers and sellers are still the ones making the financial decisions here. Just because you are using an agent doesn't absolve you from gaining an understanding of what deal you are actually signing up for. In fact, I'd argue that's the seller's responsibility for more than an agent's.

In reply to SquareOne07

SquareOne07 said:

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Perhaps this has been discussed, so if so, I apologize.

As a prospective seller, I'm not interested in paying for the representation of the opposing (not meant in an antagonistic way) party. They are, from a fiduciary perspective, acting in the best interest of their client which could very easily and understandably not be in the best interest of me as the seller.

Is there another industry or profession where one party pays for the legal representation of another party directly involved in the case or transaction?

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1-The 6% is cooperative compensation. 3% for your listing agent broker and 3% for your buyer agent broker. You have always had the flexibility to negotiate this. If you don't want to pay anything towards a buyers agent, then just pay the listing agent 3% and 0% to the buyers agent.

2-This means that the buyer will have to pay the 3% to their buyers agent (or whatever fee they negotiated)

3-In order for a buyer to tour your property, they will have to hire a buyers agent and enter into a representation agreement with them. If their agreement with their buyers agent is negotiated at 3%, then that is what they will owe the agent. Unless they find a house they want to buy that offers cooperative compensation to the buyers agent. Then, the seller would pay the buyers agent.

Obviously, sellers that offer a buyers agent cooperative compensation will be most attractive to buyers than sellers that do not.

As a Realtor when I sell my own house, I offer 3% cooperative compensation to a buyers agent. I know the value that a buyers agent brings to the table. They will make sure their buyer is able to complete the transaction and they will ensure that we can negotiate to resolve any issues. Buyer and Sellers can at times be unreasonable with their demands on each other. It's up to the Listing and Buying agents to work together to make sure everyone stay calm and get to the finish line. I want good buyers agents to bring good buyers to purchase my home.

In reply to Houston Lee

Houston Lee said:

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SquareOne07 said:

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Perhaps this has been discussed, so if so, I apologize.

As a prospective seller, I'm not interested in paying for the representation of the opposing (not meant in an antagonistic way) party. They are, from a fiduciary perspective, acting in the best interest of their client which could very easily and understandably not be in the best interest of me as the seller.

Is there another industry or profession where one party pays for the legal representation of another party directly involved in the case or transaction?

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1-The 6% is cooperative compensation. 3% for your listing agent broker and 3% for your buyer agent broker. You have always had the flexibility to negotiate this. If you don't want to pay anything towards a buyers agent, then just pay the listing agent 3% and 0% to the buyers agent.

2-This means that the buyer will have to pay the 3% to their buyers agent (or whatever fee they negotiated)

3-In order for a buyer to tour your property, they will have to hire a buyers agent and enter into a representation agreement with them. If their agreement with their buyers agent is negotiated at 3%, then that is what they will owe the agent. Unless they find a house they want to buy that offers cooperative compensation to the buyers agent. Then, the seller would pay the buyers agent.

Obviously, sellers that offer a buyers agent cooperative compensation will be most attractive to buyers than sellers that do not.

As a Realtor when I sell my own house, I offer 3% cooperative compensation to a buyers agent. I know the value that a buyers agent brings to the table. They will make sure their buyer is able to complete the transaction and they will ensure that we can negotiate to resolve any issues. Buyer and Sellers can at times be unreasonable with their demands on each other. It's up to the Listing and Buying agents to work together to make sure everyone stay calm and get to the finish line. I want good buyers agents to bring good buyers to purchase my home.

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I think the biggest issue is much of the market for buyer agents is set by uniformed buyers who are under the misconception that "the seller pays the buyer's commission" perpetuated by many Realtors over the years. A "cooperative compensation model" hides price discovery these uniformed buyers and hence the antitrust lawsuits. Not to mention the inherent steering incentive created by this model.

A seller and buyer should be agnostic to how the other party wishes to compensate their agent. A "seller pays" model where the agent compensation is grossed up into the purchase price and rolled into the loan ultimately makes sense so the buyer doesn't have to bring additional capital to the table. The cooperative compensation model results in the seller making the default offer on buyer agent compensation, rather than true price discovery between buyer and buyer's agent. Further, in your scenario where you offer the buyer agent 3% cooperative compensation, the only way an unrepresented buyer can get that portion intended for the buyer agent (without being a Realtor) is to hire a discount realtor to get 1.5% back (assuming I give Red Pear a call ), perpetuating the need and market for more Realtors.

As a seller, I don't give a **** what the buyer wishes to pay the buyer's agent as long as the net proceeds are acceptable to me and it's the best offer on the table. If the Buyer want to pay the agent 5% and gross up home value to offset it and ask for a concession, fine by me.

In reply to Heineken-Ashi

Heineken-Ashi said:

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Sorry those people had poor representation. On the flip side, Jamie's client wanted the minerals, asked for them in writing, and it was accepted.

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Did they though? Buyer most likely didnt mention anything about minerals and when the seller forgot then came back later and asked for the mineral addendum to be signed, they were told too bad.

In reply to BrazosDog02

BrazosDog02 said:

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Holy cow. I can't believe this is being discussed or that these responses are getting 'stars'. This is the problem with a lot of society now. No one wants to own up to mistakes and be accountable for their actions, or lack of actions. NOTHING WAS SLIPPED IN. NOTHING WAS SCAMMED. NO ONE WAS DEFRAUDED. Jamie did EXACTLY what he is supposed to be doing as a rep. These are his clients. The request and documentation/negotiation is clearly and succinctly stated in the contract. If the seller's agent did not read it, that's no one's problem except the agents. If the buyers didn't read it, that's also not the buyer's problem. Seriously think about what you are defending here. How many people missed a clearly written agreement????

Before I had a license, even I read the contracts that were presented to me. My Realtor did as well. My wife did, too. That's three sets of eyes. You will NEVER convince me that the fault would lie anywhere except with the sellers. These aren't difficult contracts to read...literally all you need to do is look at them.

Are you being serious or are you trolling the board?

I work with insurance, and when I have a client that has a contract with me, I will write in THOUSANDS of dollars worth of items for an insurance carrier to review. If they approved every single one of them because they didn't feel like going through a list of 73 items, so be it. It's legal. It's binding. My client gets a bunch of money. THAT IS MY JOB.

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It seems a lot of people here don't know how reserving minerals works. If no-one brings it up, they transfer. No buying agent is going to write an offer "with minerals". If you do nothing on the buying side, you get the minerals.

How it most often goes down- Seller tells agent- "I want to reserve minerals". Listing agent adds in MLS that minerals dont convey. Buyer presents offer with no mention of minerals. Seller agrees to offer and signs contract. Sometime between signature of contract and closing, seller realizes they forgot the mineral reservation and ask buyer to sign it. Buyer says, "too late". And legally he is correct.

In reply to CS78 If that's the case, I really feel for the seller because he was probably thinking that the offer met the terms of the listing because there was no specific call out to include minerals. Then his lazy agent didn't catch it and now he is screwed. For all we know the seller could have read the offer thoroughly and still not catch it because of that implied conveyance.

In reply to southernskies

southernskies said:

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If that's the case, I really feel for the seller because he was probably thinking that the offer met the terms of the listing because there was no specific call out to include minerals. Then his lazy agent didn't catch it and now he is screwed. For all we know the seller could have read the offer thoroughly and still not catch it because of that implied conveyance.

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This is a cop out for the seller still. Yeah the agent bears some responsibility… but anytime I've ever signed a contract where a point is that important or valuable to me, I have a conversation with my attorney or agent and specifically ask about this prior to signing and to show me how it is stipulated. If I don't, then I'm not bearing any sort of control on my side of the transaction.

In reply to Ed007

Ed007 said:

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This is word salad nonsense that Realtors and their lobby have convinced the market of for years. Big Tech is about to bury this old antiquated way of thinking, and I'm here for it.

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OpenDoor and Zillow say "hello"

Quote:

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Opendoor's loss for the full year of 2022 came in at $1.35 billion. Analysts had expected a net loss of $533 million in the fourth quarter of 2022, according to FactSet. Shares of Opendoor fell 1.6% to $1.82 a share on Thursday ahead of the results, and they were essentially flat in early after-hours

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Quote:

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Zillow's $6 billion home flipping business was a disaster. Now, a cooling housing market could foil its comeback plan

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Ideally we'd see a repricing from 6% down to 4-4.5%.

Sellers can make it happen but most don't understand they can or the agents will convince them "reasons" why it's a bad idea. I imagine we'll just be seeing a different form of collusion to keep the fees the same.

Good thing no other professional services are over priced. How often does the cost of a Realtor come into play? Every 5 or 10 years? What about people we get services from on a regular basis that are overpriced?

In reply to Houston Lee If you don't think your realtor world is about to be disrupted on several levels, then good luck. There was once a time when realtors were a necessary evil due to low tech and lack of access access to data. Nowadays, realtors are only needed to open a door and fill out a promulgated form contract a third grader could fill out…get it to a title company…then wait to collect their commission check at closingwhich absolutely does not justify a high commission. The market is only beginning to realize this finally, and the millennials will certainly know it when they control the market. Adapt or die.

realtor Instagram has been doing the most on this news
https://www.instagram.com/reel/C4vgi_zrvhO/?igsh=eWZmM2Y0Z3dpZjBn

In reply to Tex117 Exactly right.

In reply to Tex117 the number of realtors who call themselves "new construction experts" is going to skyrocket as well.

In reply to CS78

CS78 said:

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Heineken-Ashi said:

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Sorry those people had poor representation. On the flip side, Jamie's client wanted the minerals, asked for them in writing, and it was accepted.

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Did they though? Buyer most likely didnt mention anything about minerals and when the seller forgot then came back later and asked for the mineral addendum to be signed, they were told too bad.

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Why don't you ask Jamie how it went down?

In reply to Ed007

Ed007 said:

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If you don't think your realtor world is about to be disrupted on several levels, then good luck. There was once a time when realtors were a necessary evil due to low tech and lack of access access to data. Nowadays, realtors are only needed to open a door and fill out a promulgated form contract a third grader could fill out…get it to a title company…then wait to collect their commission check at closingwhich absolutely does not justify a high commission. The market is only beginning to realize this finally, and the millennials will certainly know it when they control the market. Adapt or die.

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You have always been welcome to negotiate whatever you want with a Realtor. If you think they aren't worth their commission, then don't pay it. But I'm going to need to see a little more than the bolded above before I just say "whelp, that's convincing".

We received notice concerning a class action lawsuit in the mail. Supposedly we'd receive some compensation if we send our closing statements into the court. I've always been leery of class action lawsuits. Any merit to this one?

In reply to TRD-Ferguson

TRD-Ferguson said:

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We received notice concerning a class action lawsuit in the mail. Supposedly we'd receive some compensation if we send our closing statements into the court. I've always been leery of class action lawsuits. Any merit to this one?

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Sure, put more money in the lawyer's pockets. That is who benefits from Class Actions.

Wow to some of the comments.

Most laypeople just believe and accept that 6% is standard and do not believe they can negotiate the percentage. With this law and word of mouth, more sellers and buyers will be negotiating percentages.

I understand why those in RE are protective of the 6% and no one is questioning their worth. I think everyone should be paid what they are worth and if a RE can get 6% or 20%, then more power to them.

What I never could grasp is the 6% accepted "norm/standard"

Say I own and put 2 homes on the market

1. 3000 sq foot home in the Rollingwood Austin area that would sell for 2M very quickly and pay commission of 120K

2. 3000 sq foot home in the Southeast Austin area that would sell for 500K that may sit awhile and pay commission of 15K.

I think the work and added danger of showings in Southeast Austin would be much harder.

If I were a plumber and charged 8x as much to replace a garbage disposal in Rollingwood, people would have a problem with this eventhough the work is safer/easier.

In reply to Medaggie

Medaggie said:

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Most laypeople just believe and accept that 6% is standard and do not believe they can negotiate the percentage. With this law and word of mouth, more sellers and buyers will be negotiating percentages.

I understand why those in RE are protective of the 6% and no one is questioning their worth. I think everyone should be paid what they are worth and if a RE can get 6% or 20%, then more power to them.

What I never could grasp is the 6% accepted "norm/standard"

Say I own and put 2 homes on the market

1. 3000 sq foot home in the Rollingwood Austin area that would sell for 2M very quickly and pay commission of 120K

2. 3000 sq foot home in the Southeast Austin area that would sell for 500K that may sit awhile and pay commission of 15K.

I think the work and added danger of showings in Southeast Austin would be much harder.

If I were a plumber and charged 8x as much to replace a garbage disposal in Rollingwood, people would have a problem with this eventhough the work is safer/easier.

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So Real Estate transactions are the same as a changing out a garbage disposal?

In reply to Ed007

Ed007 said:

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If you don't think your realtor world is about to be disrupted on several levels, then good luck. There was once a time when realtors were a necessary evil due to low tech and lack of access access to data. Nowadays, realtors are only needed to open a door and fill out a promulgated form contract a third grader could fill out…get it to a title company…then wait to collect their commission check at closingwhich absolutely does not justify a high commission. The market is only beginning to realize this finally, and the millennials will certainly know it when they control the market. Adapt or die.

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My Realtor world isn't going to be disrupted because I know how to educate sellers and buyers on the worth of my services. I do this with every client already. When I read the responses and comments on this thread, it is obvious to me that the general public and many people on this thread have no real clue what a Realtor actually does to make sure a deal gets to the closing table. Every transaction is different. Some are easy, but most are not.

Most people here (and in general) only do a couple of Real Estate transactions in their entire lives. That's when they buy or sell their own home. Buying and selling a home is the biggest financial transaction that most people do in their whole life. Most buyers and sellers need someone to hold their hand and guide them through this huge financial and emotional transaction. It's not the loan officer or the title company rep that helps their clients in this way. It's their Realtor.

Our clients know we will take care of them and protect their interests through the entire process. "Big Tech" can't develop relationships with clients to gain this kind of trust. This is why Big Tech fails. There isn't that human connection where you know a person will take care of you and be with you to the end. So much of this job is psychological and being reassuring and coaching/teaching. This is why successful Realtors have repeat clients and gain an abundance of referrals. This is why good Realtors are worth every dollar of commission they earn. And it's not just being a coach. The abundance of tasks, paperwork, phone calls, texts, travel time, coordination with various services/people, research and negotiation that is involved in every transaction is extremely time consuming. I work 7 days a week and always on-call and we pick up the phone regardless if we are selling your $250K starter home or a $1.2 Million house. It's not just opening a door and filling out a form. That kind of statement is just plain ignorant.

When you have done hundreds of Real Estate transactions, then you might have a real understanding of the industry and a good Realtor's value.