$1.8 Billion NAR Lawsuit Could Change How Homebuying Works FOREVER
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- Опубліковано 18 гру 2023
- The National Association of Realtors lost a major lawsuit in Missouri for $1.8 billion!
In this video, I'll share my thoughts about the lawsuit and how this could affect the future of buying homes in America.
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The problem isn’t the listing agent side, it is the fact that it is essentially a bribe to the buyer agent. Each side should pay their own side, that is the only way for commission rates to go down and for buyer agents to negotiate their payment with a buyer directly.
I don't know if it's a bribe per-se since industry standard is to just split the commissions between buyer and seller agents. But yea, I could see a system where the buyers are responsible for paying for their agent directly for every property that they get taken too and every contract they help prepare (since buyers agents do A LOT of upfront work).
They could be compensated on how much savings from list price they achieved
Commissions should be 1% each agent...no more. And incorrect..closing costs can definitely be financed....
Depends on the lender and the total LTV.
How stupid! You you understand how much work it takes to sell a home???????
Paying the buyer's agent a percentage of the selling price only incentivizes the agent to help the seller get as high a price as possible. Both agents will conspire either way, especially if the seller is the one paying the buyer's agent. You work for whoever cuts your check!
They're already getting a percentage of the sale so that part wouldn't change (via the commission split). But what we've seen is that buyers agents LOVE to promote that they saved their client $XX,000 off of the listing price to get more buyers to use their services.
I would argue that the money is coming from the buyer in the first place, it's not the seller's money that is paying the agent if you follow the origination point. I could see the counter-argument that the listing agent should take the hit, since the buyer agent is bringing the money in the first place.
Additionally, If this goes through, those $100s of thousands of dollars that come from the buyer will likely become unrepresented because home prices are so high -which is a huge risk to the buyer. What this could mean is that first time home buyers now have a greater chance of making HUGE errors in their steps towards homeownership, and resulting in a financial crisis for themselves.
If homebuyers are smart, they will want representation -which lowers their buying power, which lowers the number of buyers available for each price tier of homes, which would lower the home values in the long run. So the seller is likely going to take the hit anyways.
Sellers have had their homes appreciate tremendously over the last 30 years. This only helps the rich get richer. I truly hope that the appeal goes through.
Flawed logic
If you don’t own an asset like a home then you are coming in with less money.
If you own a home you have money to pay for both the seller and buyer.
Eventually if you buy and sell you will have evened the cost.
It will be a lot harder to get people into homes as they’re already come in with so little down for all their costs. It’s worth it for the seller to pay for a good fiduciary and qualified buyer that won’t waste their time and place their property at risk of not selling for the best price point in the event a deal falls through because of a bad buyer.
Real Estate is such an emotional business you can’t take away the commissions. There’s too much bs working with clients and companies and processes that reducing the % is not going to motivate your agent.
Most of the clients I worked with no nothing about the market and I would have to educate them on every little details of the process to make the deals work and prevent the deal from falling through.
No only that a lot of loan officers are total noobs and title agents and sometimes as an agent I would have to be on top of everyone and know their job to make the deal happen.
Just a giant school project with this industry 😅
There just needs to be an AI app to do the processing & paperwork & get rid of both agents!!!
I think a flat fee model would be better since I would like some real life representation (in case any issues come up).
Real Estate is an emotional business more than anything. The paperwork and process is the least of the issue in the business.
Processing and paperwork aren't the issue at hand. Buying and/or selling a home is an emotional process not to mention there are legalities involved. It's the same thing as hiring a lawyer to represent you in court. It isn't required by law to do so but it's a good idea to do so and increases your likelihood of being successful.
I agree, the "percentage model" sucks. It should be a negotiated flat fee. Seller pays the selling agent and the buyer pays the buyers agent.
I think it'd be more efficient, but then we wouldn't have amazing tv shows like Selling Sunset right? 😂
But the flat fee would still change based on the price of a home. Is selling a $2 million dollar home the same as selling a $10 million home? No I don't really think it is.
I don't understand why it would be harder to sell a 10 million dollar house compared to a 1 million dollar house. I understand it might take longer but don't understand how it would be harder. @@chrischris7003
@@chrischris7003 A $3,000 fee to sell a $100,000 home or a $20,000,000 should be more than adequate. If I contact 50 agents in my city, I can probably find an agent who needs the work, and will sell my home for $3,000.
THANK YOU for explaining the suit. I am sitting for my real estate exam soon so I am not yet an agent but between how the market looks right now and how the suit played out, it is likely going to be very tough for new agents.. I completely agree with your prediction on more dual agent deals and unfortunately there will likely be suits revolved around that as well so right now I'm very skeptical about where all of this headed as it seems like a very dark and deep rabbit hole.
The lawsuit is ridiculous. Everything is negotiable. The sellers can choose whoever they want to list their house with and however much they want to pay commission to the buyer’s agent. Most sellers take the “default” industry standard. Now, this lawyer wants to sue the NAR? Only in America.
yup, insane. I get that most agents don't want to do the work for under the industry standard, but there are definitely agents who are happy with making a flat fee or a 1% listing fee. I don't think the NAR has anything to do with "fixing" listing prices and making them mandatory for sellers to pay.
They should be put to prison for breaking the fiduciary responsibility by colluding with the other side's agent. Prison.
@@DoubleBob Cope
@@volcrazy89 Why? Why would you be for that practice?
The fee system should probably have a couple different tiers instead of flat rate or percentage. Buying a house has always been a significant investment as is and adding onto the cost makes it even more so. Making single dwelling and family homes a flat easy fee makes the possibility for sales to slightly increase and focus on selling and specializing in volume. High end and millionare level homes have less volume but pay out in a larger amount but against those that can afford more of that cost.
I'm not in the industry such as you but those are my thoughts in the purchase/rental market where things are spiraling to unaffordable or almost unlivable in so many areas. There needs to be some sort of relief in increasing quantity and availability because even renting has tripled in the last 12 years, even small hometowns have had prices drastically escalate. Imo we have made a lot of commercial space in recent years but we have not kept pace with residential space. I get that our current labor pool is less inclined for construction than it has been historically but we need to find a solution to that.
Btw Sean love your stuff, I've just finished renovating my inheritance home and I'll be renting it out for at least 5+ years.
the buyer agent will not work for the buyer if he is motivated by the seller's agent as a percentage of the deal amount. That BS should stop.
What is his commission on 1.5 billion
I think most law firms make 30% of a judgement. But every case is different so who knows.
Bummer
Dang
NAR is such a scam
true, it's definitely easier for the seller (who has equity) to carry the burden of paying both sides
And I’m sure the cost of the home was price according knowing this because this has always done like this
It's an expected cost when you sell and it's also a cost you didn't bear when you purchased the home.
Well if this seller wanted the home sold this was the only way
As a first time home buyer you just go with the flow
The seller’s agent should get more for doing most of the work. The seller agreed to give away 5% so it does not matter if it’s the seller’s or buyer’s agent, or a UFO from space. It used to be that a mortgage was a 5-year loan, now it’s 30 years, which means prices are pushed higher against the consumers by all sides.
I tried to sell a property I had for 20k and the realtor wanted 10k, 50% of the property value. So for you to say a flat fee of $5000 is also ridiculous, but there should be a cap on how much they make. In reality, agents should all be gone since it can all be automated for you to pay $1000 and not 5% of 1 million to be $50k.
But most physical buyer’s agents do more work trying to find a home for their client than the seller’s agent, which does absolutely nothing after they list it, which takes less effort.
Charge to visit every property you say? You’re kidding since they try to show so much junk property they try to push, it would make things worse, and I had to get rid of some buyer’s agents.
Without the buyer’s agent, the homes would not be sold since the buyer’s agents also do not show ‘for sale by owner’ which shows who pushes the market and sells, which is the buyer’s agent and not the seller’s agent.
The seller’s agent does not care if you sell for 500k or 600k since they won’t get much since they have to split with the company as well and want to sell the property fast against the seller’s interest. Which would be 12.5k to 15k since that is a loss of 2.5k which is worth losing so that the contract does not expire. And that is if they find a seller which they usually do not, which would be less than 6.25k to 7.5k which is even worse for the seller and no one really on the seller’s side fully.
Some agents lie and say they will sell it for 2% if you hire them and if they find the buyer which they don’t, which is a sales pitch to get it and sit on their asses. Sellers really should be removed and the buyer’s agent does most of the work to push the sale. The secret is there are seller’s agents that take a flat fee of $1000 which you have to look for them which advertise independently which will list your home but you have to put the info and images up and other little things.
So this new rule, the home will not sell as fast or maybe not at all and the seller’s agent will have to work harder to sell the home a bit more. Might as well put it all for sale by owner and you would need someone to draft the papers which I hope the lawyers don’t rip you off, which a lawyer can do it all for $1000 which is cheap at the closing."
This is an awesome comment, thanks for your thoughts!
At the end of the day, the commission split should be a negotiation between the seller and the listing agent (whether they agree to a 2.5-3% commission or flat fee), but I don't believe that the organization should have been the subject of this lawsuit.
The sellers have a choice of which agent they want to use, and just because agents aren't agreeing to do the work below the industry standard, it doesn't mean that they're colluding and screwing over the home seller.
Wish Texas could join the Lawsuit. Should be a flat rate.
Why are mortgage companies making all this money off of people when giving them a home loan cut them out also they are colluding to make way too much money off of people. Buying and selling a home should be free and legal fees should be free also. Everything should be free why is anyone getting paid for anything.
Why in the world should it be free?? It's a service just like your tax person is completing a service for you. Why would they make no money when they're doing the work and have the knowledge to completethe deal?
People are performing a service. Why would they do it for free?
I think she is being sarcastic
So is the system becoming fair for both sides now or is it the complete opposite?
Not sure, all I know is that this lawyer got PAID!
and the buyers are technically "paying more" for these commissions that are baked in the price
Makes me feel a little bad for the realtors. Cool vid though
It's already a pretty rough industry, but it can also be incredibly lucrative, especially if you're working in an area with very expensive housing. A typical commission on a $2M house is $50,000!
The insane hypocrisy and irony of this douche attorney thinking he deserves like $600 million (33% attorney's cut on $1.8B) for one lawsuit. Everybody's arguing the percentage standard on home sales commissions being ridiculous but how ridiculous is a 1.8B lawsuit where this greedy bastard gets the $600m pay day to last him this and several lifetimes? Like, he is arguing that 2.5-3% commissions to buyers agents are basically too high or unjust but there he is fighting for a 33% cut on $1.8B. Can someone make sense of this? The NAR should countersuit greedy attorneys like this and have them explain why they should get paid these exorbitant amounts. How long have attorney's fees been this high but no one did anything because "it's the standard and its been going on for over 100 years? Why don't we put an end to that instead? If for example, someone loses a leg in a car accident and gets a $600,000 settlement, why do they have to give away $200,000 (33% attorney's cut) to their attorney? Now THAT, is some actual BS.
I saw some dummy on another video like this comment that "we should get rid of middlemen like agents and just let attorneys handle everything" and I'm over here like "WTF do you think an attorney is?? That's right, A MIDDLEMAN." Attorneys think nobody in this country should be able to make money except them. It's always been that way.
Exactly.. and if you think all I do is open doors.. I have not worked with a buyer when they devalue my service .. I don't have to work for free.. I have made my buyer millions from my reserch and information..you mean to tell me you have an issue with me make 3% (of what u get) an I got you a check over 300k profits? NO thanks.. Ill just become a lawyer.. and you have to pay 5k retaniner before we even talk.. how about that..
Will you be my mentor
Thanks for asking, but I'm not doing mentorships at this time. Maybe sometime in the future :)
@@seanlovesrealestateif you help me out I would be of a great value
screw agents
You have it mostly wrong..
They are cheery picking the subject..this isn't about the parties, principles of the transaction.
Sellers paying the realtor fees is standard practice because the sellers recieve money but the buyer may not have money.
Get rid of realtors
Nobody is forced to use an agent. FSBO is legal in all states as is buying without an agent. Bottom line is people want agents to do the grunt work -- paying for promotion, advertising, open houses, etc -- but don't want to pay them for it. Buyers agents sometimes show dozens of homes to their clients. Find off-market listings that regular consumers can't find on their own. There's a reason why hardly anyone uses FSBO and it's because it's hard work and $$ to get a house sold.
When you make the buyer pay their agent, you are screwing over first time home buyers which make up a large portion of the consumers. First time home buyers will not be able to afford homes (especially right now because home prices are so inflated) and sellers will have less options to choose from. When you give sellers less offers, they have less leverage in the transaction. So the people who are able to afford the homes, are going to have the most leverage and be able to get more concessions and even cheaper prices. With this lawsuit, you are benefiting very wealthy people, and getting rid the ability for the lower and middle class to afford homes. So don’t go ahead and call the NAR a cartel when you don’t understand basic economics. Great video Sean, I thought you did a very great job of addressing both sides.
Thanks! I had a lot of opinions on this one 😂