It's over. DOJ kills buyer agency.
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- Опубліковано 15 лют 2024
- Today the DOJ released it's statement of intent regarding the Nosalek/MLS PIN lawsuit. No longer will a seller be allowed to offer a blanket offer of compensation to potential buyer agents. Given the fact that most buyers do not have the ability to pay for a buyer agent out of pocket, most will purchase a home unrepresented. Oh, and commissions won't actually go down, total commissions will go up. You heard it here first!!
One of our forms actually has a box to check for buyers that their agent can or can’t FILTER listings according to fees offered!!!!!??? How is this not steering????
It’s so frustrating of what is being communicated! Lehigh Valley Realtor here! We haven’t seen much change…yet! Everything you said is true! My buyers are asked up front what properties they want to see or not see.
It's extremely frustrating! There won't be any big changes until the MLS's are forced to remove the cooperating compensation field. For the DOJ to imply that we, as agents, inflate home prices is so offensive and shows how they have zero clue how the current system works.
@@brianfitzrealtyor they being paid by ZILLOW, BlackRock and company in secret to act like they do not have a brain.
DOJ can ASK states do to things, but they have zero authority to ORDER a state to change its laws. Remember that this AG is on borrowed time and he will leave a legacy of being among the most overturned in history. The laws in place in California encourage buyers to be represented by agents who help to protect their rights. Eliminating buyers agents makes about as much sense as outlawing defense attorneys and housing advocates.
True, but in the current commission lawsuit environment, it's ever more likely that it's going to happen. I would anticipate that these changes will be in place by mid-summer. Perhaps they will revert back after a short period, but it's tough to predict. Even though they will not outright ban buyer agency, they will effective do it because so few buyers have the money up-front to pay for one. Thx for taking the time to share your thoughts!
Department of justice is America's KGB , current government is trying to stop the economy , They would like people to depend on the government, because they like the power
Who will this change affect the most? Those buyers who can't afford to pay for buyer representation. What does that mean? A buyer who would need to have the seller pay the buyer agent would not be able to compete on the more desirable homes that may have multiple offers. They will only be able to compete on a lower tier listing that are less desirable.
I agree - at least as the new rules are written today. But it looks like listing agents are still going to be able to offer buyer agent compensation, just not in MLS. It's such a weird time right now and nobody really knows what's going on. But from the listing appointments I've been on, every seller has been more than happy to provide a buyer agent commission if it means they sell for 5-10% more than they would have otherwise. Sellers aren't dumb and can do simple math. This lawsuit was nothing but a cash grab.
I have taken so many classes on this subject and issue I can’t count them all. From WAR attorney and other sources to include 2 different MLS associations and still don’t have a clue what we are truly supposed to do. I’m not the only one and have gotten contradictory answers from WAR attorney and MLS associations. How can we be expected to follow the laws when it’s a moving target and forms are creating illegal actions and there isn’t any one source to get correct answers from! This isn’t to mention agents aren’t using the right forms when they deliver offers!!!???
The problem with charging hourly rates is that you could never have a sufficient and consistent supply of buyers to make for a steady income such that anyone would desire to be a buyer agent. That's why we work on commission in the first place. Not to mention the fact that if you worked with a sufficient number of buyers to actually make it work, the buyer agent would be overwhelmed with the volume of transactions. And considering the complexity of those transactions the buyers would probably not be well represented. The average buyer agent is maxed out at 3 to 4 transactions a month. I know there are exceptions but having run a team for the last 20 years that's been my experience.
Well said! It's a numbers game already - an agent needs to be working with about 6 potential buyers to get 2 to actual closing and commission earned. I am seeing TONS of buyers at my open houses this weekend that are desperate to get something under agreement before the change goes into place. They simply don't have the money to pay a buyer agent out of pocket, yet they all want to work with one. This whole thing is a mess and no one is benefitting from it except for the personal injury lawyers that are laughing all the way to the bank.
Sellers only paid the listing brokerage a fee. The buyers agent fee was paid from those funds. Now you want buyers that can barley afford the down payment and closing cost to also pay the agent STUPID DOJ
I've talked with so many panicked buyers over the past few weeks about what the future is going to look like for them. They are all desperate to get something under agreement now because there is no way they can afford to pay for buyer agent services out of pocket in the future.
Lawyers charge hourly rates to their clients for their services in some cases. That does not create a w2 situation for the lawyer. A broker or agent are allowed to contract with buyers for buyer agency comp on an hourly basis.
Lawyers are employed by a law firm and are not self-employed. If we agents switch to W2, we would have to become employees of the brokerage. That's my understanding of it anyway. Even if we could charge an hourly rate, I'm not sure we'd have many buyers agreeing to pay it because they are so cash-strapped just to the buy the house in the first place.
Lawyers may work for a law firm with w2 status or they may have their own firm and be self-employed. Regardless they can still invoice clients hourly, whether they're self-employed or W2 employees. Invoicing clients/customers will not affect employment w2 status either way. @@brianfitzrealty
Why does my buyers agent that’s old friends with the mortgage agent keep only looking and wanting to make offers that are my absolute max offer on houses?
I'm not at liberty to discuss how other agents should, or shouldn't, be running their business. However, I will say that if you are not getting the results you desire (accepted offer/home purchase) perhaps it it time to consider working with a different agent that may employ a strategy to win in this very competitive market.
Love your videos!
Glad you like them! Welcome to the community!
Seller's agent will represent both a seller and a buyer and they will negotiate by themselves and agree on a deal !
Absolutely! We are taking a step BACKWARD in terms of consumer protections. Buyer agency was promoted because so many buyers were getting screwed when dealing with the listing agent - who represents and is loyal to the SELLER! The listing agent commissions are not going to go down - they will actually go UP because they will be getting both sides of the transaction.
Buyers agents contribute little. The internet produces most buyers and a lawyer can represent buyers at far less cost!
Ok. And your point is? No one is being forced to work with a buyer agent. If you have the skills to buy a home yourself, nothing is preventing you from doing that right now. These changes will not affect people like you that don't value agents. But for those that do (~90% of buyers and sellers) the cost of using one, especially buyers, just went up dramatically for no reason whatsoever.
@@brianfitzrealty if the seller has already committed u to a buyers agent then your are stuck! That’s why the law changed. If you want a buyers agent then go hire your own., your comment makes no sense..,
Huh? The seller doesn't commit to use a buyer's agent. That makes no sense at all. If an unrepresented buyer offers the highest price and best terms, why would the seller not accept that offer? Also, there is no "law change". Is this a fake bot account?
Well done
What article in the code of ethics are you refering to @ 13:09?
It's 16-16 and it's suuuuuper murky. NAR basically wants the seller and listing agent to modify their contract if an offer comes in that is requesting shared compensation from the listing agent. The other option is to request a direct seller credit/concession that will pay for (or at least contribute to) a buyer's agent commission. I can absolutely envision that credit getting used toward closing costs in lieu of agent commission. As a buyer agent, you are going to have to watch it like a hawk to make sure you are compensated correctly. This may all be a moot point because there are a few MLS's that are fighting back and there is a ground swell of support from others that may challenge the settlement terms as well. We'll have to wait and see!
There is way deeper problem in real estate world that will go deeper than most can handle. This is not even close to the root of problem
Could you please elaborate a bit more? What is the root problem?
LOL. Buyers can't afford representation. You don't understand a free market do you. the price sellers pay will come down to what they can afford, which is not 3% like you probably are hoping or thinking. Maybe 1% max or by the showing. If a buyer can't afford that they shouldn't be buying a house. This will be a boon for buyers. They will be paying the agent who if not corrupt will show them what they want instead of the property where the seller is paying the most commission. My fear is that most agents will still conspire and do under the table deals with sellers agents. The IRS should be on the lookout for that.
This will be a disaster for buyers, not a boon. You nailed it - many home buyers (especially first time) cannot afford to pay out-of-pocket for representation which is why current system of cooperating compensation works well. Is your suggestion that they continue to rent? I don't think they'll like that option of making someone else wealthy. There is no conspiring between agents - just because you think there is does not make it so.
The buyers drive the process, not the agent. If they want to see a house where the listing agent is not offering to share their commission, they absolutely can. But more often times than not, they don't because they realize they will have to pay the buyer agent commission out of pocket which makes that property a LOT less attractive to the BUYER - it has nothing to do with the agent.
Such a BS. First things first, the buyer pays for everything - seller and both agents. Period. Irrespective of buyers affordability, both agents are motivated to close a deal - to pocket their commission. This is good for the seller who is sitting on so much equity in this frenzy of a market. The buyers have been pushed to a point where they prefer renting over buying more now than ever before. You dug your own grave. 😂😂🎉🎉🎉
The agents have already be found guilty of conspiring. The real estate industry bribes so many politicians I am amazed this happened. They should be ecstatic the states and DOJ aren't going after them for criminal charges using the RICO act(so far- the investigation is ongoing). @@iniyanse176
Realtors and brokers are almost as good as “erotic entertainers” at tax evasion. They take a trip to the Keys, drop by a listed house and write it off as business expense in “investigating a property for an investor client” The industry is reaping what it’s sewn through culture and practice. Nobody reads the contract, people just sign and realtors know that 😑. Buyers just need to be specific in their contracts on a specific house. This is waking people up to the racket.
@@patmagic3301 The semi-good news(we'll see what happens-campaign donations, etc.) is the DOJ is investigating them for criminal charges.
The DOJ wants to eliminate the “possibility” of steering - they will most likely file a Statement of Interest with the court stating theses proposed settlements - All of them (Not just PIN and NARs) don’t go far enough - just like they did here in the PIN MLS case - just removing the offer of compensation from MLS isn’t enough - neither the seller nor the listing agent will be allowed to publish or communicate a preset fee - like they do in commercial real estate it will be a term to be negotiated - In the DOJs eyes, nothing shot of a complete eradication of the predetermined offer of compensation will achieve the elimination of steering and also increase the competition for buyer agents fees and new models - just reread what the DOJ wrote - they already told us what they want - it’s right there for all of us to see - not sure how so many people are ignoring it
Also if look at what the DOJ wants, in another way - from a different perspective
- If the commission a seller is willing to pay to the buyer’s agent - and yes I believe the seller will still end up paying because it’s in their best interest - but if you look at the buyer’s agent’s fee as a term of the contract
- then wouldn’t that information be something which should be kept confidential from the other side under the listing agent’s fiduciary responsibility
- sure the listing agent could say the seller is open to paying a fee
- but they couldn’t disclose how high the seller was willing to pay for a buyer side commission
- any more than they could disclose how low the seller would go on their price 🤔
I'm in the same camp. By allowing a blanket offer of compensation outside of MLS, all you've done is moved the "problem", not eliminated it. I don't think there is any way that the DOJ signs off on this settlement as it sits. There are very few buyer brokers in commercial real estate and the same will happen in residential once these blanket offers of compensation disappear. Thank you for taking to the time to write such a thoughtful comment!
@@brianfitzrealty I just made a similar post on one of Anthony’s videos too - i don’t think it will reduce buyers agents disproportionately compared to that of listing agents - so much as it will thin the herd of all agents - nor do I think the industry is doomed - we will be fine - sure there will be commission compression but that’s been happening regardless - nor do I see any significant disintermediation from the “prop tech” or “limited service” sectors - buyers and sellers want professional full service representation from quality brokerages and agents - just my humble opinion - hope you and everyone at Lamaccahi Realty have a great 2024 and beyond - Greg
Brokers can be 80% replaced by AI. They are just the first very visible casualties.
Kinda like cashiers at the Amazon virtual store. Oh. Wait. It was actually staffed by real people working remotely and managing everything via cameras. They can't get it right with groceries, but yeah, let's trust it with the largest purchase of one's life. 🤣
Granted buyer agency agreements have been around several decades But they didn't require a fee from the buyer bc most listing broker shared the commission, or part of it, with the selling broker. Now the buyer has to pay a commission to the selling broker, which isn't allowed with VA financing, and will keep buyers from accessing the total inventory resulting in Lower selling prices and longer DOM imo. So I say sellers, buyers and brokers will all be losers.
Nah, it's going to look very similar to the way it's done today. If every offer comes in requesting a seller concession for the buyer agent, a seller would be silly not to consider it. I do agree it's a problem for VA buyer specifically though - I'm sure that will get ironed out before the cutover date. Also, I don't think anything is going to happen mid-July. It'll probably be closer to the end of the year. And make no mistake about it, there will be NO blanket offers of compensation. Instead, the listing agent will disclose that the seller has a willingness to consider it.
@@brianfitzrealty It'll be interesting to see what happens. I've been out of the biz for 20 years when I saw a crash in prices were inevitable and just do my own deals as a principal.
The real problem is that buyers agents were really just pretending to "represent" their clients. At the end of the day, all the buyers agent cares about is whether the person buys a house or not; they don't really care if they get a "good deal" on it. In fact, since buyers agents were typically compensated the same way the sellers agent are (a percentage of the sale price), it's actually in the best interest of the buyer's agent for the buyer to overpay for the house. The term for that is "perverse incentives."
Sounds like you may have had a bad experience using a buyer's agent. Our objective is to help the buyer achieve their goals, whatever they may be. I cannot tell you how many times I have encouraged a buyer to say NO to house because it did not meet the criteria they established at the beginning - not enough bedrooms, no garage, long commute, etc. In a tight inventory market, a lot buyers get desperate and start making offers that they shouldn't be making - it's our job to help temper that frustration. Agents do not have any impact on prices - supply and demand do.
@@brianfitzrealty LOL. I've been a broker for over a decade. You're missing the point.... Whether or not some brokers do actually act in good faith (that only happens a small fraction of the time), the fact of the matter is that the perverse incentive exists, and that's a problem. Would you hire a lawyer that got paid $0 if you win your case, and $10,000 if you lose?
@@jeremyrangel8138for you not to understand the perversion in thinking that caused such a backwards useless decision to be made maybe the State you are Broker licensed in made a mistake because your thinking is WAY OFF. For example; A 10k change in offer price is a $300 increase (at %3) in the buyer agent commission....it is absurd for you to even make a comment accusing other Brokers of primarily being dishonest, however, just because you are licensed does not make you a REALTOR so it would make sense why your thinking is that way.
True
Hey disruption in this industry is about time
I'm all for disruption. In fact, the real estate industry is constantly being disrupted. But often the disrupter doesn't last long because their business model stinks or they can't deliver on their promises. Sellers and buyers want proper representation - these new rules will severely limit that, especially for those that can least afford it.
‘They’ do not understand what they are talking about! 1) ‘They’ don’t like the amount of money we have opportunity to make. 2) ‘They’ won’t be happy until we are working for free.
Right?!! If it was so easy, why aren't more people doing it? Buying and selling real estate is difficult work and agents are deserving of everything they EARN!
Such a BS. First things first, the buyer pays for everything - seller and both agents. Period. Irrespective of buyers affordability, both agents are motivated to close a deal - to pocket their commission. This is good for the seller who is sitting on so much equity in this frenzy of a market. The buyers have been pushed to a point where they prefer renting over buying more now than ever before. You dug your own grave. 😂😂🎉🎉🎉
I've never met a renter would rather rent than buy (unless it's short term). Most simply can't afford to buy. Both agents are motivated by their clients - one that one wants to sell a house the other that wants to buy a house. On a number of occasions I have encouraged my buyer client to walk away rather than continue with the purchase because it was in their best interest to do so - even though they couldn't see it. I am so tired of this narrative that agents are only in it for the commission. Maybe some are, but they get flushed out quickly.
Sellers should have to opt-in and agree to pay for the buyer's rep. What other industry defaults to paying for your counter-parties representation so they can better negotiate against you? None!
Once again, someone who does not understand how it works. The seller does not pay the buyers agent - the listing agent agrees to share THEIR commission with a buyers agent if they bring a ready, willing, and able buyer to the property and seller accepts the offer. If there is no buyers agent, the listing agent keeps the entire commission.
Nobody cares...nobody knows...except Realtors
Nobody cares? Sure, until they go to sell a house and wonder why the sale falls through after the buyer, without agent representation, bails for no reason in particular leaving the seller with lost time and a probable price reduction. It never matters, until it does. This is a HUGE deal for both buyers and sellers and everyone needs to be educated.
@@brianfitzrealtylicensed agents protect the public from being scammed and that is what non thinking people seem to not understand. Zillow and others who want the public to be scammed are doing their best to remove any public protections.